Extra Well & Extra Septic: Extra Value?

[Gulf Coast]

Appraising a 23 acre parcel which contains two wells and two septics. Bank wants a value of the entire 23 acres as one parcel (not broken up into two or more parcels). No sales of parcels with an extra well and an extra septic exist. Loan officer (and owner) think I came in too low and mentioned the extra well and septic. I said there is no market evidence to support a higher value due to the extra well and septic. I said even though it costs more to have two of each, the typical buyer only needs one well and one septic. Any opinions?

 

[hastalavista]

I'd say this is an H&BU problem (what isn't?).

I'm assuming that the well and septic systems (two each) are located such that it would be possible to split the parcel and create two buildable lots, each with its ready-to-go septic and well system?

If so, then the question is:
If the lots can be legally split, are they worth more separately (each with its own system and ready to go) than as a single parcel (taking into consideration the costs for the split)?
If yes, then the subject's value should reflect that.

If the answer is no, and such lots are developed with a single residence that only requires a single well/septic system, then the second system is super adequate for the highest and best use.
As such, it may have little if any value.

But it sounds like the H&BU question should be addressed definitively:
A. Can the lot be split and if so, would it be worth more separately than as a single unit?
B. Are 23-acre parcels like the subject's developed with two residential improvements such that they need two well/septic systems?
Yes to the above, the second system may be worth something.
No to the above, the second system may not be worth anything.

 

[Terrel L. Shields]

As if, the well and septic not in use would be a surplus but you might find any number of sales where someone constructed an extra septic and/or well to site "the mother in law Manf. home" on... so they do exist. ID ing them is another matter. I would suggest the value would not be enhanced greatly but I have seen a number of small parcels where a manf. home was taken off or repo'd that sell for a premium because they already have a functioning septic and well...

 

[Mike Garrett RAA]

Let me explain it this way. Forget you are an appraiser. You are now a buyer and are planning on buying this property. Would an extra well and septic system be of value to you? IN MY MARKET it would have some value...how much? I don't know but I bet I could find some sales to support an adjustment.

 

[Meandering]

Make them provide you with recent test that say the well and septic are in workable order, and that states the capacity of each, along with a "does not need any repairs report, including a test if the water is potable. Else, if they are not ready to be operated, they add nothing to the property.

How old are these well and septic? And why are they there? Did a former house burn down or a trailer was hauled off?. If someone wants value for these things, make them get written statements to age and capacity and condition of them.

That'll pipe 'em down.


.

 

[Michigan CG]

Cost of NEW well = $5-10k.

Cost of NEW septic = $7,500-$20,000

Contributory value = ?

They wanted an appraisal of one parcel and that is what they got. Now they want the value of the superadequacy of the additional well and septic?

From the beginning it was a Highest and Best Use issue.

 

[Restrain]

You have 23 acres. A second home, mfg home, etc can be put on the site. Also the well can be used for irrigation of the site. Easily argued that it has a contributory value. I agree that you should put on your real estate agent/buyer hat on this one. Just because you can't find a sale with such amenity does not indicate it does not have value.

 

[Mile High Trout]

Can such a system be used as a backup, or is this specifically for another build site?

If it has conversion or fail safe equipment going on, that could extend the REL.

You don't need market evidence to prove a-typical valuation influence, positive or negative.

But it helps.

 

[tmon43]

As was mentioned elsewhere, the second well could be used for irrigation. The second septic system could also be utilized as a grey water system for dish and laundry soap, while the first system could be used for brown water. Alternately depending on location the second well and septic could also represent a potential manufactured home site meaning possible income to the property owner. Get verification that the systems are operable and then look for comps. Another good way to extract an adjustment is to consider mobile home sites vs vacant land sales. Regardless the additional well and septic system would add value in my rural area.

 

[VolcanoLvr]

"The second septic system could also be utilized as a grey water system for dish and laundry soap, while the first system could be used for brown water."

This is not practical if there is an existing dwelling on-site. And depending on the location of the primary tanks, probably would not be practical for any construction if they are widely spaced (which I presume is likely).

But I agree with the others..........there is a 'value' to the extra utilities, assuming, like Marion says, they are workable according to local jurisdiction health department regulations. Probably need to contact well drillers and septic installers to get costs ... don't just rely on the numbers indicated in the previous post.

I just inspected a newly constructed home that has two wells on the property. When I asked the listing RE Agent about them, the first well was dug about 300' deep and bad water was found ... which possibly can be used for irrigation depending on mineral & chemical content. Second well was installed shallower and has potable water, which is connected to the home. (I'm not going to value the 2nd well due to water quality issues.)