Can you value as vacant.if its improved?

[nstanbru]

Reference Pete's post #89. I have a client who leases a site to a major auto dealership. The lease requires that the land be appraised every 7 years "as if vacant". A percentage figure is then applied to the land value, as determined by the appraisal, to arrive at the land lease rate for the following 7 years.

 

[The Warrior Monk]

Land under improvements conveyed all the time. Could cite numerous examples of houses, retail buildings, warehouses, etc. constructed on leased ground. As Mr. Wiley notes, property rights are what we appraise all the time.

Expanding on Mr. Wiley's example, I can sell the 10 acres of land without selling the house--enter into a long term lease for the land. Not an uncommon situation in some parts.

Sure you could sell it...after the property rights are divided, which of course is after the date of valuation. Property rights that could exist aren't the same as property rights that do exist. And they have different values.

 

[Webbed Feet]

Land under improvements conveyed all the time. Could cite numerous examples of houses, retail buildings, warehouses, etc. constructed on leased ground. As Mr. Wiley notes, property rights are what we appraise all the time.

Expanding on Mr. Wiley's example, I can sell the 10 acres of land without selling the house--enter into a long term lease for the land. Not an uncommon situation in some parts.

One has to love how we take situations as specific examples, that do not reflect a subject properties situation that is being discussed. It's a great way to alter the problem to suit our arguments.

 

[Couch Potato]

Sure you could sell it...after the property rights are divided, which of course is after the date of valuation. Property rights that could exist aren't the same as property rights that do exist. And they have different values.

There is a difference between not existing and not being utilized that you are ignoring.

 

[Pittsburgh Pete]

One has to love how we take situations as specific examples, that do not reflect a subject properties situation that is being discussed. It's a great way to alter the problem to suit our arguments.

One also has to love the somewhat simplistic thinking that concludes that the underlying land cannot be valued because it doesn't exist as a separate entity. Many, many reasons why a property owner or lender might want the underlying value of the land.

The CR box seems to be somewhat restrictive. Commercial appraisers are often asked to look and work outside that box and do so efficiently, ethically, and thoroughly.

BTW--the intent of the request to the OP is not disclosed, so you gotta love the assumption some make that the situation mirrors the only specific example they can handle or get their minds around.

 

[Webbed Feet]

Reference Pete's post #89. I have a client who leases a site to a major auto dealership. The lease requires that the land be appraised every 7 years "as if vacant". A percentage figure is then applied to the land value, as determined by the appraisal, to arrive at the land lease rate for the following 7 years.

And I once got stipped by an UWer wanting a statement that the market value of an electrical breaker panel in a subject house was not over $500.

 

[Pittsburgh Pete]

And I once got stipped by an UWer wanting a statement that the market value of an electrical breaker panel in a subject house was not over $500.

And did you walk to school or carry your lunch??????

 

[DWiley]

One has to love how we take situations as specific examples, that do not reflect a subject properties situation that is being discussed. It's a great way to alter the problem to suit our arguments.

OK, let's use the OP. Suppose I have fee simple ownership of the rights to the property discussed in the OP. Does my ownership not also include the rights to the underlying land? Sure it does. So, those rights (the rights to the underlying land) already exist, and they can be sold separately.

 

[Webbed Feet]

The CR box seems to be somewhat restrictive. Commercial appraisers are often asked to look and work outside that box and do so efficiently, ethically, and thoroughly.

Yes, and it's either comical or sad to see many of them carry those incredible skills over into a residential assignment and end up on the losing end when trying to explain themselves to the state board over it. A few too many of them seem to have only gotten that first element down, but never quite understood the second two elements.

 

[The Warrior Monk]

There is a difference between not existing and not being utilized that you are ignoring.

I understand that, and in fact it proves my point. Property rights are a legal characteristic, which is one of the characteristics that is referred to in the comment section of the definition of hyptothetical condition. If they don't legally exist, appraising a property as if they do exist is constitutes a hypothetical condition.