Comping Land For Property With House.

[Debra]

I'm not sure how to put this, but...If you are doing an appraisal on a property that has acreage with a house, how many acres does the property contain before you comp the land as if vacant? For example, do you comp every lot that you do no matter what size or do you do the ones with 5 acres or more with the house or what? Do you put the vacant land sales into your appraisal report? If so, how many do you usually give? Thanks!

 

[Pamela Crowley (Florida)]

Land value as though vacant is supposed to be done with EVERY appraisal.

 

[Debra]

I know, I guess what I meant to ask is at what point (how many acres (5+ for example) do you actually show in your appraisal report the land comparables that you used to come up with the land value and therefore how you figured how much to adjust per acre for difference in acreage units between the subject property and the comparables??? Does that make sense?...be nice.

 

[Pamela Crowley (Florida)]

Me? Be 'nice'???

I think I've only actually shown the vacant land comps when the subject was already improved with a residence for the 1004C and once with a really unique one on a URAR and a couple of times on narratives. I do go into much detail explaining my adjustments when applicable.

Something I've found very helpful and have never had UW questions over because I do explain what I've done is to combine the Location, Site, and View Line Items into a single adjustment.

I use an * at the beginning of each of those line items for the subject and each comp. Typically, the single adjustment I put on the Site Line. At the beginning of my comments I *explain the combined Line Items. For each comp, I then explain whatever adjustment I made.

When this kind of combination and adjustments become necessary, I usually do a land as though vacant on each comp. My workfile will be full of vacant land sales and all sorts of notes and stats.

 

[CANative]

Originally posted by Pamela Crowley (Florida)@Jun 6 2005, 06:46 PM
Something I've found very helpful and have never had UW questions over because I do explain what I've done is to combine the Location, Site, and View Line Items into a single adjustment.

I gotta tell you Pam, it really annoys me when I review reports where site size/views have been combined into one adjustment. Most of the time the appraier has not adequately explained the combination.

Debra... if it's a summary report, I don't think it's necessary to include land sales as exhibits. But land is funny and difficult. If you haven't done a lot of land appraisals on acreage, homes on acreage and just in general kept up with how land works, you should be careful about making adjsutments. Interview Realtors in your area and especially Realtor who specialize in land sales. There are always a few of them. You can get their names from other Realtors.

 

[Pamela Crowley (Florida)]

And I can totally understand your annoyance if it wasn't fully explained.

 

[Couch Potato]

I would say it is not the size of the land, but the size of the contribution the land makes to the value that would make it prudent to include information in the report. If a one acre water front site is worth $600,000 and the improvements $150,000 I would think most lenders would want to see some supporting facts for the land value, but five acres worth $150,000 with improvements worth $600,000 I doubt they would want any extra details on the land.

 

[The Warrior Monk]

I'm not sure how to put this, but...If you are doing an appraisal on a property that has acreage with a house, how many acres does the property contain before you comp the land as if vacant? For example, do you comp every lot that you do no matter what size or do you do the ones with 5 acres or more with the house or what? Do you put the vacant land sales into your appraisal report? If so, how many do you usually give? Thanks!

I don't concern myself with acreage.

If no similar improved sales exist, then I consider whether or not the improvements are underimprovements. If the vacant parcels are significantly more similar than the improved parcels, then I will the vacant parcels and determine what the contributory value of the improvements are, if any.

I come across this type of situation quite often. As a real example, there's a property here that sold for $6,250,000. The depreciated value of the improvements is approximately $175,000 (LTV 97.2%). The home is an underimprovement by market standards. Similar vacant parcels exist, as well as improved parcels. Using improved parcels will require adjustments for the home alone that will exceed $2,000,000. The choice is either to do a nominal adjustment for the improvements (the improvements have value, can be converted to an accessory structure; long story) or an extremely large adjustment for the improvements. Naturally I used the vacant land sales, since they are much more similar.