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Extraction Method

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Making note to pull and read. Interested in seeing
 
It is amazing how not hard this is to do. I confess to not really understanding all the advantages to doing cost approach during my fee work era. Now I do it all the time. Very nice.
 
No lot or land sales' in my area are common, especially in LA and Orange Counties where cities are almost fully developed, so I am forced usually to use the extraction method. Estimating the site value is not a big issue but extracting lot size adjustments on the comparables can get sticky because often there is no measurable differences seen in the sales on city sized lots until the variance exceeds say 5,000 Sq.Ft. or more and I make no adjustments. On others I make lot size adjustments where variance is 1,000 sq.Ft. or more. BELOW are a few of the comments I use to explain what i did or did not do.

SAMPLE:

The Subject's market area is almost completely built out, therefore the Extraction Method, a variant of the Land Residual method, will be used to estimate the Subject's Site value. A nominal price of $zzz per square foot of site area was derived and shown below as the site estimate. Market responses to lot size and site utility are a function of the consideration of the property as a whole.

In the sales comparison approach the Lot size variance is considered where variance is 1,000 Sq.Ft. or more. (Note: In this particular neighborhood market analysis was inconsistent for buyer action in land value- Therefore A reasonable adjustment of $ Per Sq.Ft. is taken for variance OR there was no measurable difference between the 7,000 to 9,000 Sq.Ft. lots and therefore the appraiser considered the size differences but was unable to extract an-adjustment that could be adequately supported, so he elected to not make any lot size adjustments but did consider the superior utility of the larger sizes in his finale reconciliation.
 
"often there is no measurable differences seen in the sales on city sized lots until the variance exceeds say 5,000 Sq.Ft. or more "

The break points for where we would need to start making adjustments will vary from one situation to the next, but the point that a 6000sf lot may sell for exactly the same as a 9000sf lot in some locations but not in others is a thing.

This is why I never use a size-based unit of comparison when appraising vacant residential lots. They're marketed and sold as a single unit (using the sale price as the unit of comparison, same as an SFR), not on the basis of price/sf; then you make adjustments for the size as a feature to that unit. Multi-family land is similar except that you're valuing for price/unit instead of using the sale price itself.

Conversely, land zoned for most other uses does sell based on price/sf or price/ac.
 
"often there is no measurable differences seen in the sales on city sized lots until the variance exceeds say 5,000 Sq.Ft. or more "

The break points for where we would need to start making adjustments will vary from one situation to the next, but the point that a 6000sf lot may sell for exactly the same as a 9000sf lot in some locations but not in others is a thing.

This is why I never use a size-based unit of comparison when appraising vacant residential lots. They're marketed and sold as a single unit (using the sale price as the unit of comparison, same as an SFR), not on the basis of price/sf; then you make adjustments for the size as a feature to that unit. Multi-family land is similar except that you're valuing for price/unit instead of using the sale price itself.

Conversely, land zoned for most other uses does sell based on price/sf or price/ac.
Agree and each has to be done case to case- The problem with UAD is it tends to want consistency and that's not always possible.
 
thats a lot of extra work, lol
 
Does this sketch seem about right?


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It didn't take very long. 15 - 20 minutes.
 
The only problem with extraction is that if you didn't do an appraisal of each comparable site then you will not be able to identify the particulars of the various depreciation issues. Topography and utility, external issues with superior or inferior demand for a variety of issues etc etc. I suggest once again that in most cases except nearly identical sites and new improvements are just self assuaging flagellation that have little market basis outside this narrow window of new construction of very similar homes, but appeases the "reviewers" of the report unless totally fubared. I wish Santora was still around....
 
If you work an area enough, for long enough, you should have good idea of at least the range of site value. This little demonstration, in the report, takes care of the GSE/Gov. Agency requirement for replication by the client and does exactly what you posted ("but appeases the "reviewers" of the report unless totally fubared. "

"I wish Santora was still around.... "

I still have every missive he has ever written to me (and some copied from the forum) regarding the CA. I miss his snarkiness as well as his intellect.

He wasn't a big advocate for the CA in residential assignments of patent (his term) properties.
 
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