This argument holds no water. If that were true then no one would buy homes in new subdivisions with vacant lots next to them.
If you don't believe this, then you will have to come up with an alternative explanation as to why these lots refuse to be split off and developed. George's theory is that everyone is dumb, what's yours?
Second, it's not the construction but the uncertainty, which includes more than just construction. What if some derelict builder takes four years to finish the job, leaves trash everywhere, uses sketchy employees, and puts up an ugly monstrosity that blocks out your sun? And it's not just the vacant lot, but the challenge of selling both parcels at the same time, that is the appraisal problem at hand.
I was just talking to the wife, who knows nothing about appraisal. Mentioned that some guy online thinks it would be more profitable to sell off the front lot on that Garfield house. She laughed and said who the hell would ever do that? The idea is indeed ridiculous. A developer snaps up the front lot after a few days, now what is the agent supposed to say to prospective buyers of the main house? What buyer is going to jump into that hornet nest rather than move on and look at the next house?
In George's scenario where he claims the buyer paid $89,000 for the vacant lot, he's trying to tell you that the young family who bought the house put $17k down and paid an extra $400 every month over a property with comparable site utility but could not be split off. And then just sat on it. Laughable.
Even if the seller got a good offer, they probably wouldn't risk taking it. Maybe if the seller wasn't planning to leave for a while, they would sell off the front lot first and then wait to sell the house later once some predictability was restored to the situation. Risky though, and definitely not your typically motivated seller, also doesn't jibe with our effective dates. Maybe an owner/builder would buy the entire property, again not your typically motivated buyer. And if they did, they wouldn't have to bid full price, just a little more than the other buyers. That's what I mean when I say "undervalued"- given the highest and best use of
one component of the subject property, it's possible that a buyer would offer more for the subject property, and possible that a seller would accept more for the subject property, but not the typical buyer and seller in our definition of value, because it's in their best interest to maintain control over the lot rather than maximize profit.
And that's why this thread is split between people who have some personal experience with these situations and those that don't, and why it's so dangerous for an arrogant appraiser to think they can dictate to the market, and dictate to their client, and call everyone dumb instead of listening to what the market is trying to tell them.
