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Help!! How to adjust for additional lots in light industrial

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Keri

Thread Starter
Freshman Member
Joined
Jan 27, 2002
Professional Status
Certified Residential Appraiser
State
Oklahoma
Okay,

This is the report that will not go away. I wrote on an earlier post that I was having some difficulties with adjusting on this report (subject is SFR in legal non-conforming in a light industrial area). The initial sale consists of a 3 bed, 2 bath house with 5 small lots. NOW the lender has faxed that the legal includes an additional 8 lots. After doing a 4 year search, I was able to find 2 homes in town (residentail zoning) with 1 small lot a piece. Third comp was on 1.5 acres in similar neighborhood as subject, but still zoned residential. Fourth comp is in town, 1 small residential lot. My mentor is out of town or I'd be nagging him. I want to do this the right way, just don't know how at this point. If anyone has suggestions, please let me know. Hate this report. Very very much.

Thanks in advance,
Keri
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
"Kill it before it grows!"

If I understand your post correctly, you now have an assemblage of 13 small lots that are zoned for light industrial. I don't know what your total lot area is, but you are clearly in an assignment that calls for a substantial highest and best use analysis. One that can withstand scrutiny, if you know what I mean. At this point, I would say you have a couple options:

1) Decline the assignment and return the fee. No offense, but this might actually be the more expedient solution for everyone involved. You apparently were not made aware of the extra lots when you accepted the assignment and now you have come to the realization that this was more than you bargained for.

2) Be prepared to demonstrate that the existing use is the highest and best use for the site as improved, thus warranting an SFR appraisal on a large lot. If so, go with your existing comps, add any additional data you can dig up and give it your best shot. Odds are, that will be what any other appraiser would have to do for this assignment.

3) Be prepared to demonstrate the site is worth more as vacant land less the cost of demo, and do a land appraisal. Using comparable land with similar zoning and utility.

4) Be prepared to demonstrate the property is worth more with the existing improvements but in another use, like a contractor yard, and appraise the property as a non-residential use. You will not be using an SFR form for this option (you might be able to but it will look like a mess).

5) Do two appraisals; 1 for the SFR and the lots that it physically occupies, and another land appraisal for the remaining lots. To do this one, you would need to demonstrate the remaining lots are actually separable and saleable either as a smaller assemblage or individually.

No matter which option you end up using, you will have learned something from this assignment and will be a better appraiser for it. I salute you.

George Hatch
 
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