Can you value as vacant.if its improved?

[DWiley]

If we take this to reality, instead of theory, and toss in a lender asking for an appraiser to determine the "Market Vaue" of those air rights, for a mortgage intended use,

Sweet. You start with reference to reality, but then fly off on a discussion of a mortgage lender lending on air rights. That is just classic. Thank you for that humerous interlude.


Who was it criticizing others because he felt they were twisting a scenario to prove a point? I think you just forfeited your right to play that card, WF.

The reality is that the OP addressed an appraisal of the rights to the underlying land, something that is done a very regular basis. No one has yet explained why it is that those rights do not already exist within the full bundle of rights.

 

[Hamlet]

SS would roll in his grave...if he was dead.

Instead he is sipping a pina colada somewhere under the rainbow. woohoo

 

[CANative]

I will say this, no matter what side of the coin anyone is on, such an assignment is FAR, FAR, more complicated regarding complying with the SOW Rule than hardly anyone is bothering to post about. And I believe, in my skeptical way, that well over half of the real estate appraisers out there, both commercial and residential, would royally scew up the assignment no matter how much reading of this thread they did before completing it. Or anything TAF/ASB has put out to date on it.

See my post on page 2

Greg Boyd
Join Date: Jun 2003
Location: Hopland, CA
State: California
Professional Status: Certified Residential Appraiser
Posts: 18,200

Seems this issue is fraught with many issues. So many issues that IMO the OP, at the OP's current experience level (probably similar to mine) should either decline this assignment or reneogotiate the scope of work (agree to a standard 1004C appraisal and let the client decide if they want to use the land value opinion contained in the cost approach).

 

[The Warrior Monk]

But they do exist.

I disagree. Potential and actual rights are not the same thing. It's why, for example, a buyer would pay a different price for a 20-acre parcel with the potential for subdivision, and a 20-acre parcel that can be developed as of the current date.

 

[CANative]

For this assignment what would be the presumptions as to the property condition and right other than that the MH is not there? Any entitlements as of the date of value, grading or site preparation, completion of building applications and studies, etc, etc, etc.

Complicated assignment that requires a lot of ground rule agreements between the appraiser and the client.

 

[Mr Rex]

The owner has full rights to the underlying land. Too bad somebody has put a DW in the way of him enjoying all the rights unencumbered. If you want to parse that wording, lets go with nothing in the way...:new_smile-l:

 

[DWiley]

I though I remembered another Q&A on this topic. The March 2008 Q&A begins with a scenario identical to that in the OP. The ASB says, in part,

Simply put, the land is the subject of the assignment and the improvements are not......In this example, a hypothetical condition would not be required because the land does, in fact, exist.

March 2008 Q&A

 

[PropertyEconomics]

I though I remembered another Q&A on this topic. The March 2008 Q&A begins with a scenario identical to that in the OP. The ASB says, in part,



March 2008 Q&A

Mr Wiley ... there is one issue that the Q&A doesnt address. While the land does exist ... it does not exist as vacant land. What would one use for comparables when valuing land only on which improvements existed as of the effective date of appraisal?

 

[Ken B]

You could use vacant land comparables. But, as the subject is encumbered by improvements, an adjustment would be appropriate for the subject's inferior utility.

 

[DWiley]

Mr Wiley ... there is one issue that the Q&A doesnt address. While the land does exist ... it does not exist as vacant land. What would one use for comparables when valuing land only on which improvements existed as of the effective date of appraisal?

PE,

You are correct in noting that the Q&A does not address the type of comparables to use. That is methodology issue rather than a standards issue. Therefore, addressing it in the Q&A, or any other ASB correspondence, would be inappropriate.

The Q&A does address whether or not appraising only the underlying land requires using a HC, which is a USPAP matter that has been the focus of discussion in this thread.

DW