Appraising Agricultural Land With Mixed Uses

[runner52]

I was assigned an appraisal that has 34 acres of agricultural land with a manufactured home and warehouse. The parcel is zoned AGRICULTURAL. The manufactured home is affixed to the land and therefore I need to appraise it as real property. Not sure of the methods to appraise this mixed use property. Was thinking the following but am wondering if there is a more efficient way:

1) Appraise the manufactured home using URAR 1004. I have comps but most of them have 10-12 acres. Appraise the subject manufactured home on a primary parcel then of 10-12 acres.
2) Take the remaining acreage (34-12) and appraise it separately as surplus land. (I am looking hard for larger parcels with manufactured homes so I dont have to do this but just in case i dont find any...)
3) Utilize the Cost Approach to value the warehouse.

Question; In the reconciliation, I will have three values; the value of the manufactured home, value of the warehouse and value of the surplus land (unless as noted I find comps with large acreage). How do I report these values? I am always careful with "adding" values together to arrive a final value.


Thanks.

 

[J Grant]

Are there similar acreage comps with a single family home instead of a manufactured home ? (esp similar quality/size home to the man home)

Are you appraising agricultural land with contributory value of man home and then value of warehouse which contributes as well, seems like less of a 1004 assignment if most of the value is in land /warehouse (how big a warehouse and what is it used for?) income producing crops or not might be factored in. Might have to find a bunch of comps and do the adjustments...a 12 acre parcel with man home, a 30 acre parcel with SFR adjusted for quality compared to the manufactured home, a parcel with warehouse/outbuildings etc (that is my view, I am res license but this is how I got comps for diverse complex properties with acreage which had varying quality buildings and houses on the land)

 

[runner52]

Are there similar acreage comps with a single family home instead of a manufactured home ? (esp similar quality/size home to the man home)

Are you appraising agricultural land with contributory value of man home and then value of warehouse which contributes as well, seems like less of a 1004 assignment if most of the value is in land /warehouse (how big a warehouse and what is it used for?) income producing crops or not might be factored in. Might have to find a bunch of comps and do the adjustments...a 12 acre parcel with man home, a 30 acre parcel with SFR adjusted for quality compared to the manufactured home, a parcel with warehouse/outbuildings etc (that is my view, I am res license but this is how I got comps for diverse complex properties with acreage which had varying quality buildings and houses on the land)

That is what I need to decide. When I got the assignment, I was told the manufactured home was not fixed to the ground so I was going to value the property as agricultural land with contributory value of the warehouse and then value the home as personal property. Turns out the manufactured home IS affixed to the land so I need to value it as real property. I am a commercial appraiser so not used to this kind of valuation. Both improvements are newer so I could do the Cost Approach and Sales Comparison Approach but I have no idea how to adjust for different man homes.... I am trying to get a friend who is a residential appraiser to do the manufactured home but I am trying to figure out the overall approach. Given the acreage (34 acres) I am thinking to value the land as if vacant and then add the value of the contributory value of the improvements (arrived at via the Cost Approach). Seems there is more than one way to do this...I want to do it the most efficiently. Thanks.

 

[Gobears81]

If the appraisal is based on a single value, the most important thing to ascertain initially is the most likely purchaser. Obviously, that is an issue to identify for any appraisal, but is a farmer the most likely purchaser? If so, I have seen some significant discounts to the contributory value of separate components such as residences, cell tower leases, etc when purchased by farmers. A related question is, what is the current use of the 10-12 acres that you plan to regard as a homesite? If it is farmed, are the residential comps with similar site areas also farmed? The reason for asking is that in the areas around here with the most productive soils, rural homesites above 2 acres or so are less common.
After identifying the most likely purchaser, the goal would be to find sales with a similar mix of uses to identify the contributory value of said components. Hard to do, but there are certainly farmland sales with homes on them. Also, consider interviewing someone falling into the group of likely purchasers to see how such a mix of uses would appeal to them and if catch the right one at the right time, you might have a better sense of the discounts associated with said components, if any.

 

[Michigan CG]

What do you folks grow on agricultural land there? What are ag parcels going for vs. recreational land?

What condition is the MH and warehouse in?

I agree with the Bears fan that the MH and/or warehouse could take a beating in value depending on the ag land use.

Around here they parcel off a home and keep the land to farm, ag values here are $4,000-$6,000/acre. Most outbuildings are not worth much for ag purposes as they don't have the capacity to store a John Deere combine.

 

[hastalavista]

It doesn't sound to me like you've completed your H&BU yet.
Is the land currently producing any crops?
As others have said, who is the likely buyer?

From your initial post, it sounds like you've determined that the person who would pay most for this property would be buying the MH and treating the remainder as mostly surplus land.
Are you sure this isn't 30+ acres of farmland with a MH and warehouse on it? It doesn't sound like you are sure based on your post.

Good luck!

 

[Terrel L. Shields]

Summation may serve as a guide, but not a good methodology.

The land is in transition. You need land sales that are in transition. You probably need to rely upon the cost approach for solid support.

The acreage, regardless of use today (crops, pasture) appears to be in the midst of transition. It's value lies in its future utility, not in its present use.

So which is the more valuable the land? the warehouse? or the MH? I am betting the warehouse or land. I am working on a similar situation. A new 4 lane is backing up to the subject and took a portion of the site. It is now 11 acres with 3 dwellings and a shop building. It has not ripened for development yet, but will in the coming years. Two of the dwellings are producing income, and the owner lives in the third with his "junk" stored in the shop (including a moose head ?)
They have a contributory value (except Mr. Moose), but probably reduced as a functional obsolescence. Such land appears to be selling for $20,000 or so per acre, far above ag rates. The houses are older and have maybe 20 years remaining life. But then the transition should be complete. It is not an easy assignment, but in my case, I am looking for similar older dwellings on small acreage that are in this same transitional area.

For you, I would be looking at the more rural warehouses on acreage; I would adjust the MH on a NADA cost basis, and carefully vet the land contribution on the comps.

 

[Mark K]

It doesn't sound to me like you've completed your H&BU yet.

Agreed.

Can you split the residential improvements with a couple or few acres and sell to a residential buyer. That leaves the balance of the land and the warehouse (how big, construction style, etc.) as a second parcel. Who's the likely buyer?

IN THIS AREA, the likely HBU is to split the property but that doesn't necessarily apply everywhere.

I did one similar to this recently, a house with 3 acres of excess commercial land; nice house, transitional use, HBU was to split commercial and sell it separately. Two appraisals in one narrative report.

 

[Terrel L. Shields]

a house with 3 acres of excess commercial land; nice house, transitional use, HBU was to split commercial and sell it separately. Two appraisals in one narrative report.

Ugh. I would hesitate to value it by such a summation technique. After all, "as is" it is not separate, whether or not it could be is not "as is". I would still think you value the land as if vacant and available for its HBU - which likely is a transitional land value, and the improvements are added. Whichever is a lesser value (dwelling v. warehouse) likely suffers the bulk of the functional obsolescence as an over-improvement.

 

[Stone]

Ugh. I would hesitate to value it by such a summation technique. After all, "as is" it is not separate, whether or not it could be is not "as is". I would still think you value the land as if vacant and available for its HBU - which likely is a transitional land value, and the improvements are added. Whichever is a lesser value (dwelling v. warehouse) likely suffers the bulk of the functional obsolescence as an over-improvement.

Agreed. Summation isn't the right way to go (at least most of the time). There is a reason that transition lands can be some of the hardest to appraise, particularly if you don't do a lot of it. And, even if you have good data and have experience, someone else can read it differently and you can end up with legitimate differences in opinion of value.