Distance From Ocean As A Factor In Determining Property Value

[OBX Dan]

In Ocean Resort type communities, should distance from the ocean be considered in determining a property’s value? Also, must Ocean Front Comps be excluded from consideration in determining a Semi-Ocean Front Appraisal? As a general rule, for similar houses ocean front properties command a higher market value than Semi-Ocean Front properties (or “1 Off Ocean”), and “1 Off Ocean” properties are more valuable than “2 Off Ocean” properties and so on. Given these price differences based on location, I can understand it would be better to compare “1 Off Ocean” properties to other “1 Off Ocean” properties. If there are not enough similar Semi-Ocean Front properties, other properties must be considered as comps. However, must all Ocean Front Comps be excluded as comps in appraising a Semi-Ocean Front property even if there are recent sales of Ocean Front houses very similar in SF, # of bedrooms, etc? A recent appraisal done for my Semi Ocean Front excluded all recent Ocean Front sales and since there weren’t enough Semi Ocean Front comps the appraisal used mostly 2, 3 & 4 Off Ocean Properties as the comps. As a result, a weight of 25% was applied to available Semi-Front comps and a weight of 75% was applied to other comps that were 2, 3 & 4 Off Ocean properties. I’m not an appraiser, but to me if no adjustment is made for the value of the proximity to the ocean and the resulting better view, it would seem like the appraised value of the property is diminished. Is it wrong to adjust property values to reflect the proximity to the ocean? In common sense terms, assuming identical houses consisting of Ocean Front, 1, 2, 3 & 4 Off Ocean properties, wouldn’t you expect the market value of the 1 Off Ocean property to be higher than the 2, 3 or 4 Off Ocean properties? (Disclosure - I challenged this appraisal and lost. So I’m trying to decide if I should pay for my bank to hire a different appraiser for a second appraisal or if that 2nd appraisal would result in a similar value.)

 

[Meandering]

Save your money.

You don't have beach frontage, beach front sales won't be considered as comps.

As far as 1 off beach, or 2 off beach or 3 off beach, do the taxes diminish between these locations?

 

[Terrel L. Shields]

Ocean FRONT
Ocean VIEW
Everything else

 

[Randolph Kinney]

A recent appraisal done for my Semi Ocean Front excluded all recent Ocean Front sales and since there weren’t enough Semi Ocean Front comps the appraisal used mostly 2, 3 & 4 Off Ocean Properties as the comps. As a result, a weight of 25% was applied to available Semi-Front comps and a weight of 75% was applied to other comps that were 2, 3 & 4 Off Ocean properties.

You are correct in observing price versus distance to the ocean.

Appraisers are tasked with bracketing your property and making adjustments for dissimilarities. I can't say what would be proper in your market for adjusting or weighting value.

 

[George Hatch]

Randolph and I live in a beach town (albeit on the west coast), and the pricing here is super sensitive to proximity. View amenities notwithstanding, if the property is within 3 blocks of beach *access* then that is an easy walking distance. Beachfront is beachfront and comprises its own market that's almost separate from the properties that are across the street, even though the access might be similar.

If my subject is 3 blocks from access then my comps need to have comparable proximity and will usually be subject to significant location adjustments for any variances, sometimes on a block-by-block basis.


Believe it or not.

 

[Mike Kennedy]

In Ocean Resort type communities, should distance from the ocean be considered in determining a property’s value? Also, must Ocean Front Comps be excluded from consideration in determining a Semi-Ocean Front Appraisal? As a general rule, for similar houses ocean front properties command a higher market value than Semi-Ocean Front properties (or “1 Off Ocean”), and “1 Off Ocean” properties are more valuable than “2 Off Ocean” properties and so on. Given these price differences based on location, I can understand it would be better to compare “1 Off Ocean” properties to other “1 Off Ocean” properties. If there are not enough similar Semi-Ocean Front properties, other properties must be considered as comps. However, must all Ocean Front Comps be excluded as comps in appraising a Semi-Ocean Front property even if there are recent sales of Ocean Front houses very similar in SF, # of bedrooms, etc? A recent appraisal done for my Semi Ocean Front excluded all recent Ocean Front sales and since there weren’t enough Semi Ocean Front comps the appraisal used mostly 2, 3 & 4 Off Ocean Properties as the comps. As a result, a weight of 25% was applied to available Semi-Front comps and a weight of 75% was applied to other comps that were 2, 3 & 4 Off Ocean properties. I’m not an appraiser, but to me if no adjustment is made for the value of the proximity to the ocean and the resulting better view, it would seem like the appraised value of the property is diminished. Is it wrong to adjust property values to reflect the proximity to the ocean? In common sense terms, assuming identical houses consisting of Ocean Front, 1, 2, 3 & 4 Off Ocean properties, wouldn’t you expect the market value of the 1 Off Ocean property to be higher than the 2, 3 or 4 Off Ocean properties? (Disclosure - I challenged this appraisal and lost. So I’m trying to decide if I should pay for my bank to hire a different appraiser for a second appraisal or if that 2nd appraisal would result in a similar value.)

Can we assume that all the closed sales used occurred within the prior 6-12 months?

What's the local typical exposure time (time on market prior to sale) for:
1. ocean front,
2. "semi" ocean front ??
3. very proximate but "off-ocean" properties.

Please explain the term "semi-ocean front" in your market.

 

[Meandering]

I believe you.

But how far off is semi-Ocean front?

That's like being semi-pregnant in my mind,

and couple it with the question of:
must Ocean Front Comps be excluded from consideration in determining a Semi-Ocean Front Appraisal?

I'm thinking its 2 or 3 blocks away and might have a view of the ocean if you stick your head out the 2nd floor bathroom window and crane your neck to the left.

.

 

[DJBanas]

I used to work the S. Jersey shore towns and distance from beach was a factor. Even houses on the Beach Block had lower prices the further from the beach they were. Also, do you have to cross a street to get to the beach? How busy of a road? Ocean view from down the block or a block or two away didn't carry much, if any, weight. It's all about location, location, location!

 

[OBX Dan]

Thanks for your input. To answer your questions, my semi-oceanfront is roughly 100 ft back from the closest ocean front property and there are no roads separating the ocean front from the semi-ocean front. I am fortunate enough to have an empty oceanfront lot in front of my property, so in terms of the view, for now, it is an ocean front view. Our lots are staggered like stair steps so even if an ocean front home is built in front of our home, our view will be partly obscured on one half of the house but will still be unobstructed on the other half. So while I don't expect a valuation equal to an ocean front, it seems my property has more in common with ocean front properties than in 2, 3 & 4 off ocean properties. There were two recent ocean front comps of similar size homes. To give you a perspective, the appraised value I received was 55% less than lowest of the 2 recent ocean front comps I provided. I may be wrong, but again if there are identical houses on ocean front and semi ocean front properties, would you expect a buyer of the semi-ocean front property to demand a discount of 55% from the ocean front property just because the property is 100' back from the ocean front property?

Sorry but I don't know average time on the market for any of these properties.

 

[Meandering]

We have an OBX appraiser that is a member of the forum.

Maybe start the thread as OBX and see if you get his attention.