Appraising Agricultural Land With Mixed Uses

[Mark K]

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.

I didn't say 'summed' the values. There were two reported values, one for each parcel and the report included a statement that the highest and best use would be to separate the subject into two distinct properties since there were two distinct HBU's. An additional statement was that parcel A=$100k, parcel B=$100K but that the report was not a single valuation of $200K for the total subject.

If the OP has a subject that has two HBU's I'd prefer to have and I think its more reasonable to report two distinct values as opposed to attempting to combine them into one value. I suppose you can report one value (that is probably less than two combined individual values) but then the definition of HBU 'maximally productive' gets left behind.

 

[Terrel L. Shields]

If there is only one parcel then there is only one value "as is". Creating a nonexistent two parcels is not "as is". What you have is a mixed use transitional property. I weighted the cost approach in the one I just finished because there was a lack of comps and the bulk of value was in the land. But divvying up the property into components of different utilities is my definition of summation.

It is like the fellow who argued his farm was a future airstrip therefore should be valued as airport property as its "highest and best use ". That didn't fly in court.

 

[Mark K]

In my case splitting the subject was not an issue since the whole tract was comprised of multiple parcels with unique parcel numbers.

In the case of the OP, what value would be reported if the HBU is to split the property (assuming no legal hurdles) but the appraisal reported an "as-is" valuation of one parcel? If its not appraised to its HBU, is it Market Value by the typical definition? Noboby's talking Airports or WalMarts here, a relatively simple split into the uses desired by local buyers that would result in maximum value to the owner.

 

[Terrel L. Shields]

relatively simple split into the uses desired by local buyers that would result in maximum value to the owner.

If there are separate parcels, then yes, whatever (plottage or separation) would apply. But when asked to appraise a property "AS IS"...then it should be "as is", not subject to surveys, divisions, zoning change requests, etc.

 

[Mark K]

But when asked to appraise a property "AS IS"...then it should be "as is", not subject to surveys, divisions, zoning change requests, etc.

Agreed, but I don't see where the OP stated 'as-is' as a requirement.

 

[J Grant]

One assumes OP is asking how to arrive at an "as is" value, since they did not state they want to make report subject to anything.

If there are zoning changes imminent or future building likely to occur in area with land /improved land being bought for speculation or possible future subdivision, the prices now should reflect that buyer motivation. The prices now reflect that a well informed/well advised buyer is aware area may change and property become more valuable in future. Is this a transitional area, re did original poster did indicate that?

What buyers pay now/ paid recently includes their well informed/well advised knowledge of possible land use/zoning use changes in the area.