Highest & Best Use for oversized waterfront lot

[JTRock]

I'm appraising a waterfront property on a 48,000 sf lot. According to the homeowner, they purchased the property in 2006 for 855,000. Most lots in the area are about 7,000-10,000sf. When the homeowner bought the property there was a duplex and another single family structure on the lot. Since then, the owner has torn down the single family structure and turned the duplex into a single family dwelling. He put about $150,000 into the structure he now lives in. It is a 1,850sf 3 bd 2 bth with all the upgrades. I believe they purchased the land at this price in hopes of future development as up to 2 more homes could be built on this lot. I am having a tough time finding comparable sales due to the oversized lot and the small size of the structure. The lot sales I have found are all smaller with the largest being 32,000 sf on the water. It sold for 375k. I really don't believe this property is worth around a million unless it is being developed on which it is not at this time. I'm trying to figure out how to proceed since it's highest and best use would be for more than one structure. Thanks

 

[KenRossman]

What's the intended use?

 

[Jim Onderisin]

Ring the bell and give the man a ceegar! He has got his self a tough one!

I wish I could be of more help to you. This is just a tough assignment. Obviously, site size and zoning are key features to the value problem. I'd probably range up and down the coast and back in time looking for similar properties. That's about the best I can offer.

 

[JTRock]

Well there really isnt anything similar. There is no zoning and the intended use currently is for a single family dwelling. Most people would consider it for development but the owner is not developing on it at this time. I think that is why they think it is worth so much but that would only become speculative and is separate from its current use. I believe it to be worth a lot less in its current use than it would be if it was going to be developed on.

 

[KenRossman]

What is the intended use of the appraisal?

I.E.: Mortgage origination or matrimonial or pre-listing or ???

 

[Scott Lanz]

Well there really isnt anything similar. There is no zoning and the intended use currently is for a single family dwelling. Most people would consider it for development but the owner is not developing on it at this time. I think that is why they think it is worth so much but that would only become speculative and is separate from its current use. I believe it to be worth a lot less in its current use than it would be if it was going to be developed on.

I would suggest thinking about that statement.

I saw you stated there is no zoning, is that correct?

Also, you need to post the amount of lake frontage and minimum amount of frontage allowed by the zoning along with the minimum lot size (if there is zoning).

It boils down to this, you either have a very large lot, or you have multiple lots. Before you can value the subject, you have to answer this question. Then I can help you.

Scott J. Lanz

 

[JTRock]

It is a very large lot that could be subdivided if developed upon. There is no zoning in this area.

 

[Scott Lanz]

Based on what you provided:

1. Owners intent is to subdivide in the future
2. Zoning allows for subdivision (or lack of zoning)
3. Your value statements indicate a higher value for subdivision

Your question on how to proceed seems clear to me, it's a potential subdivision valuation.

If you owned this property and wanted to sell, what value would you be looking for?

(Statements are made without knowledge of the required definition of value or intended use known)

Scott J. Lanz