Direct Sales Comparison of Vacant Land in an Improved Market

[ZZGAMAZZ]

Does the following statement from the Opinion of Site Value of the Cost Approach make sense?

Due To There Being No Vacant Lot Sales In The Subject's Neighborhood, The Lot Value Was Taken From Direct Sales Comparison Or Abstracted From Improved
Property Sales In The Area.


IMO the first sentence contradicts itself because Direct Sales Comparison requires an analysis of vacant land; and the second "sentence" is the second of two parts of a canned comment included in a template to address any possible scenario so the appraiser isn't required to do ANYTHING, EVER. [I'm trying to enhance my understanding of the CA.]

 

[sputnam]

I agree that it needs clarification. The likelihood is that the appraiser, like many appraisers, has that language built into his template. It's also likely that he or she didn't write the languages themself, but lifted it from an appraisal they had seen. The part that makes me crazy is the "Or". Tell me what you actually did for THIS assignment.

 

[Tom D]

Should have left out the 1st sentence. The second sentence covers his butt either way, no need to repeat no vacant land sales.

 

[J Grant]

If "canned" comments explain what the appraiser did and why they did it , along with why they were not able to or chose not to do something, they serve a good purpose.

When canned comments just try to CYA they come off as ridiculous.

In the cost approach, the appraiser is expected to give a site or lot estimate of value ( site as vacant ). If there are no sales of vacant land in the last 5 plus years, then it is not possible to do it. So then state, "No vacant land sales or listings found in the relevant market area, therefore the appraiser used the extraction method to derive a land value estimate from improved properties. "

The URAR states the appraiser relied on the sales comparison approach anyway, so even if the land value is somewhat "off" in the SCA approach, it usually does not impact the assignment market value opinion of the subject.

The land estimate for the appraisal can indicate whether the site is more valuable vacant (HBU) of the house is an over improvement or such. So we should try to get a reasonable firgure for the site value estimate when we do a simple cost approach of a comp to extract the land value from it.

 

[Functional Obs]

Does the following statement from the Opinion of Site Value of the Cost Approach make sense?

Due To There Being No Vacant Lot Sales In The Subject's Neighborhood, The Lot Value Was Taken From Direct Sales Comparison Or Abstracted From Improved
Property Sales In The Area.


IMO the first sentence contradicts itself because Direct Sales Comparison requires an analysis of vacant land; and the second "sentence" is the second of two parts of a canned comment included in a template to address any possible scenario so the appraiser isn't required to do ANYTHING, EVER. [I'm trying to enhance my understanding of the CA.]

It's bad for many reasons. Capitalizing the first letter of every word starts the whole thing off confusingly. The phrase "due to their being" is fine for the first thought out of the author's head, but it kind of extends the sentence for no reason and would be a lot better if it just said "There were no lot sales...blah, blah." But the real offender is the contradictory nature of the appraiser's own words: No Sales + Direct Sales Comparison. You can't have both. And the cover of "or abstracted..." doesn't save the statement; it just reeks of boilerplate nonsense.

 

[ZZGAMAZZ]

It's bad for many reasons. Capitalizing the first letter of every word starts the whole thing off confusingly. The phrase "due to their being" is fine for the first thought out of the author's head, but it kind of extends the sentence for no reason and would be a lot better if it just said "There were no lot sales...blah, blah." But the real offender is the contradictory nature of the appraiser's own words: No Sales + Direct Sales Comparison. You can't have both. And the cover of "or abstracted..." doesn't save the statement; it just reeks of boilerplate nonsense.

Yep. Bingo. However, I admit that I too have one canned, self-contradictory comment in my template, although I respect the wisdom, in the SCA, that "... bedroom count differences are Incorporated into the GLA adjustment factor unless otherwise described" to address an occasional exception. To realize that illiterate and illogical peers are taking work that I need is similar to appraising properties with $10000000's in equity owned by dummies who were intelligent enough to "buy low" a decade and 60% less ago.

 

[sputnam]

If "canned" comments explain what the appraiser did and why they did it , along with why they were not able to or chose not to do something, they serve a good purpose.

When canned comments just try to CYA they come off as ridiculous.

In the cost approach, the appraiser is expected to give a site or lot estimate of value ( site as vacant ). If there are no sales of vacant land in the last 5 plus years, then it is not possible to do it. So then state, "No vacant land sales or listings found in the relevant market area, therefore the appraiser used the extraction method to derive a land value estimate from improved properties. "

The URAR states the appraiser relied on the sales comparison approach anyway, so even if the land value is somewhat "off" in the SCA approach, it usually does not impact the assignment market value opinion of the subject.

The land estimate for the appraisal can indicate whether the site is more valuable vacant (HBU) of the house is an over improvement or such. So we should try to get a reasonable firgure for the site value estimate when we do a simple cost approach of a comp to extract the land value from it.

The problem with canned comment is that a lot of appraisers don't bother to change them as appropriate to fit the assignment. I constantly see the exact same wording in appraisal after appraisal. Some of that is fine. It's not so fine when it's the Highest and Best Use comments. When the Cost Approach says something like... "Site value was determined using extraction or allocation or assessment data or land sales." It's not so fine when the canned comments contradict something that the appraiser actually wrote for this assignment.

The attitude, and it's one that too many appraisers hold, that it doesn't matter is a big part of the reason that appraisers aren't widely respected.

But... it's faster and easier. Yeah, it is. Until a reviewer catches it and you have to revise your appraisal report or someone files a complaint and the state appraisal board catches it. In either case, you will have spent more time than if you had done it carefully to begin with.