George Hatch
Elite Member
- Joined
- Jan 15, 2002
- Professional Status
- Certified General Appraiser
- State
- California
The legal limitations now also include that deed restriction, so that could affect the land value. The question at hand is whether the property in its current condition is worth more as a house or as land value.
Without attempting to value your property sight unseen, let me draw a hypothetical for you. Let's say this property consists of 1ac lot with a similar deed restriction and no existing home, and then further hypothesize that the County's idea of maximum size home for this lot is 1200sf. Further, lets say a similar sized lot across the street but with no such deed restriction sold for $600k, the County thinking that lot could be built out with 7,000sf custom home.
To a developer your lot is only good for a 1200sf home but the other lot is good for a 7000sf home. They have different development potential. These two lots might look the same in terms of size and lot area and topography and such, but they are different in terms of how big a home is legally permissible on them. By comparison the developer will consider your lot to be worth less than the other lot and more similar to a smaller lot which is also limited to a 1200sf home. If those smaller lots are selling for $450k then that's more similar to what your lot would be worth, regardless of it being larger in size than the others.
Now lets go back to the value of this property as a home: same scenario except now we add a 900sf home built in the 1920s to our scenario. We already know the land value is in the $450k range (maybe a little more due whatever the larger lot size would do for a County-maxxed home of 1200sf). The question then becomes whether this property is worth more as the existing house or more as a lot suitable for a new 1200sf home. If we have home sales on older homes in the 1000sf range at $600k then that's higher than the $450k - $500k as land value which means the property should be valued as the existing house and not as land value. If those homes were selling for less than $450k then it would be the land value which is higher so in that event we would appraise for land value.
Without attempting to value your property sight unseen, let me draw a hypothetical for you. Let's say this property consists of 1ac lot with a similar deed restriction and no existing home, and then further hypothesize that the County's idea of maximum size home for this lot is 1200sf. Further, lets say a similar sized lot across the street but with no such deed restriction sold for $600k, the County thinking that lot could be built out with 7,000sf custom home.
To a developer your lot is only good for a 1200sf home but the other lot is good for a 7000sf home. They have different development potential. These two lots might look the same in terms of size and lot area and topography and such, but they are different in terms of how big a home is legally permissible on them. By comparison the developer will consider your lot to be worth less than the other lot and more similar to a smaller lot which is also limited to a 1200sf home. If those smaller lots are selling for $450k then that's more similar to what your lot would be worth, regardless of it being larger in size than the others.
Now lets go back to the value of this property as a home: same scenario except now we add a 900sf home built in the 1920s to our scenario. We already know the land value is in the $450k range (maybe a little more due whatever the larger lot size would do for a County-maxxed home of 1200sf). The question then becomes whether this property is worth more as the existing house or more as a lot suitable for a new 1200sf home. If we have home sales on older homes in the 1000sf range at $600k then that's higher than the $450k - $500k as land value which means the property should be valued as the existing house and not as land value. If those homes were selling for less than $450k then it would be the land value which is higher so in that event we would appraise for land value.
Last edited:
