• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Commercial use. how to handle

Status
Not open for further replies.

Jeff Horton

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
Appraising a home and 30+ acres. Irregular shaped site has a finger that is roughly 2 acres that borders on the highway. Small rural community on busy highway. Much of the highway property is commercial and this site has the potential of commercial use too.

I am appraising the house and land as one tract. There are no sales that I can find data for of similar properties used for commercial. I believe some have changed hand but I have no data at all.

How do you handle this? Value the 2 acres the same as the other and clearly state it has commercial potential but no data exists to verify the price? I know that tract is worth more than the rest but I have nothing to prove it and it is not divided out from the parent tract but could be.

I am about to drive back out and look at it again. I didn't have my plat at the time of my inspction and I am thinking (maybe hoping) there is a large ditch/low spot that may make it unsuitable to build on. That would solve my problem!
 

wyecoyote

Senior Member
Joined
Jan 15, 2002
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Washington
Jeff,

The 2 acres has commercial potential yet the area is a small rural community. What is on either side and accross the highway of the 2 acres? This could answer your question. The properties on either side and across the highway are vacant land or residential in nature? Or are the properties commercial use?

The highest and best use may be answered by the bordering properties. I've done several in rural areas where the zoning may be commercial/industrial and/or multi family however, there is no market for these types of properties in their areas and the highest and best use was as though SFR.

How do you handle this? Value the 2 acres the same as the other and clearly state it has commercial potential but no data exists to verify the price?

IF the subject's neighboring parcels are vacant or SFR in use then I would tend to agree with you. However, if they are commercial in use then perhaps you may be doing some more research.

Ryan

Had to clear that up last paragraph did not make sense sorry for any confusion. Meant the neighboring parcels not the subject's two acres.
 
A

Anonymous

Guest
Jeff,
Ryan is correct but I would ask what the zoning is, assuming that the zoning is residential and the surrounding uses are residential your question is answered. Should a portion of the property be zoned commercial perhaps you should value it seperately or omit its value as a hypothetical condition.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
You essentially have two appraisal problems, one for the main road frontage and one for the home and remainder. Where there is some commercial potential in a small community, the commercial depth is generally no more than appx. 200 feet deep, which would allow for a building, parking and some space at the rear (this is a generality but if you look at most small community commercial development this tends to be a truism). Conversely, homes along commercial frontage tend to have an economic loss due to traffic noise. Homes close, but not on the highway generally are not affected. So, just look at the property as if you were a potential buyer and use your best judgement. After all, who's going to argue with you? It's an opinion after all.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
I agree with the above posts and have another item to add to your list. I've seen a number of similar situations where the parcels adjacent to a rural offramp or intersection have lots of value to those users who must have that prime location, but the other parcels nearby have little value because of lack of demand. Whether the 'commercial' portion is readily separable is another issue to consider. Not to mention the irregular shape, which will detract from overall utility.

Probably the easiest way to deal with this is to just include this portion with the rest of it, since it isn't seperated out now anyway. The potential for commercial use, if there is any, would justify going toward the top of your range when comparing the property as a whole to other properties without such potential. If there are any commercial site sales available, they will bracket the value on the top end since this portion of the subject site isn't separated out right now. Try to keep in mind that the irregular shaped portion next to the highway only represents potential non-res use at this time, not necessarily a guarantee. Lots of bad things can happen between now and the time the site is split off, sold and developed. Lots of things.


George Hatch
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
If it is zoned residential or ag, forget the commercial as it is illegal under the current zoning. If it is zoned commercial and that is the Highest and Best Use, forget the URAR 1004. It is only for residential.
 

Jeff Horton

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
I want to say thanks for all the input. I took my plat and camera and headed back out to the site yesterday. After knowing better where everything is and walking the property I have about decided against valuing it separately.

First the property is lower than the highway and there is a large ditch that runs along it. There would have a to be a lot of site work done. While there is a lot of commercial property all around I don't think there is a big demand for commercial property in this area. Add to that the fact there are better properties (no site work) close by that are vacant along with a few existing vacant buildings. I don't know if these sites are for sale or could be bought but they would be more desirable if I was looking to buy.

And to answer a question that was asked this is an unincorporated area so there is no zoning on the property. If there zoned there is little doubt this would be commercial.

After looking it over again I have decided this is not a desirable site and I think I am going to do what George suggested and just go with the high-end value for the site. Since we have 30+ acre the small section that could be used as commercial is not going to add that much to the overall value.

As always thank for the input!!
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks