Appraising House On 60 Acres

[Doug in NC]

I am working on a sale of a house with 60 acres in a semi-rural area. I have already done preliminary searches and, of course, there have been no known sales of comparable properties in the past 2 years (in the whole county). My thought is that I will find one comp on acreage, then use other comps which may have comparable house features, and adjust for land value differences (all adjustment guidelines will be out the window on this one).

My other dilemma is pricing this thing, I know it is going to be a bear so I will request at least double the usual fee, triple may be more reasonable. I almost want to over-price it so I can get out of this one - doubt I will make much money on it even if I complete the order, considering how much time it is going to take to do it.

 

[Mark K]

I've done these a couple of different ways.

1. If the ground value alone approaches 60-70%+ of the total value, I've appraised it as vacant land and added the improvements as contributory value on a line item. The way I value the improvements is to find some similar homes on any size site, deduct the site value, divide the remaining value by the house SF. $40-$60/SF is common on older homes. Its not unusual for the grid to show something like: land value - $300,000, improvements $75,000.

2. If the land value is not the majority of the total, use 5 or 6 comps, some with similar improvments, some with acreage, and make the adjustments. I've had adjustments of well over 100% on several occasions.

In this area, I'm not worried about leaving the county for comps. Buyers for this size tract typically don't care if they have to cross county lines. They have a specific desire/need for the land, not necessarily the location. School systems are secondary to their horses.

And yeah, bill accordingly. At least double.

 

[Mike Garrett RAA]

Run like the wind! Not worth the brain damage, no matter what you do...it won't satisfy the lender. You cant make chicken soup out of chicken poop!

 

[Restrain]

Try the home on 5 acres or less (whatever is typical) and then add the remainder of the site as excess land. No one's gonna argue if there were no comps on 60 acres, but several on 5-10 or whatever is typical. As long as you can support it logically, you're o.k.

Roger

 

[Mountain Man]

I've approached it in ways very similar to how Mark has.
At the very least, I give 'em the best improved sales on the largest lots I can find, adjusting for land value. And give 'em raw land acreage tract sales, with adjustments for improvements.

Make sure the client knows this is NOT going to be conforming loan; and quote a fee high enough to make it worth your driving time. The last "horse farm" I did on 100+ acres, I pulled sales from a 5 county area.

 

[xm39hnu]

Land tracts that small generally are not working farms, so I assume the H&BU is SFR with recreational acreage. Here, we do'em like Roger Strahan stated: House and five as a typical improved site, with the other 55 acres as excess land valued at vacant land prices pulled out of the market over about three years. Pay attention to road frontage, access, geometry, standing marketable timber, water, and other land features which change its value; it isn't just an average vacant land price if you're going to be accurate.

We think this is more accurate than land only + contrib. value of improvements because our market is full of buyers looking for homes with acreage. Those who want acreage on which to build a home tend to shop in the vacant land market, rather than purchase improved properties. Your mileage may vary depending on your market.

 

[Ben Vukicevich SRA]

Doug,

What does your HBU analysis say? What minimum site size is allowed by current zoning? IE: is the lot subdividable?

If the lot is subdividable, then you have excess land which can have different values based on the degree of further subdivision allowed by current zoning. For that you will need a professional land planner.


Ben

 

[Big ole Boy]

In a linear plane of value, I was thinking.

Large land supports large house.

But, when does large land maxmize its size for large house.

Now?

 

[Steve Wyrick]

In my part of the world I charge $1,500 to $2,000 for these. But, they are done as rural residential with residual farmland value. While a 60 is not a commercial farm by and unto itself in my part of the world it is an economic unit and treated as such with a value for the home and farmstead based on smaller non-commercial farm parcels in many instances.

 

[Doug in NC]

Mike, I took your advice and pleaded incompetent. I am glad I did. I don't need the added headaches and liability of an assignment which the client probably would not have wanted to pay reasonably for in the first place.