How Do You Go About Adjusting For Difference In Water Frontage? Thanks

[Mike Garrett RAA]

Not a problem...in my market.

 

[Amy Perkins]

You will really need to go back in time to compare them. Ocean front has zones of value, the highest being the closest to the water, usually. You will have to be sensitive to what the market was before. There are no hard and fast rules, but I would expect them to fluxuate more in value with the market. They would be a higher land value, so higher risk. It really depends like anything in this business. Match pair the data and learn the market. One might expect that they would drop faster in a downturn and increase faster in an up market. You will never know for sure until you do the research.

 

[residentialguy]

Lake frontage is not something you want to try to learn by yourself. Everyone here has given excellent advice...and you need to consider all of those points. Get with another appraiser that specializes in lake frontage in that area...one who knows the lake and charges a high premium.

I often start out advising the client on how this is not going to be like a cookie cutter inland appraisal. Here's an example

This introduction to the Sales Comparison Approach is to alert the reader to the fact that this is an appraisal of a complex lake front property. The subject is on a gently sloping 1.2 acre lot on the East Upper Lake of Lake Minnetonka and has approximately 137' of high demand sandy level lake shore grade, rated as "A-" quality and "clear" clarity, 50' deep water for full recreational use. The nature of the subject or the subject’s market and lake of similar sales is such that the techniques, guidelines, and conventions typically employed in residential appraisal practice are not adequate to produce a reliable opinion of market value within the traditional guidelines. The market places great value on the land for lake shore properties and is there are many variances of the lake that can increase or diminish a property's value. The quality of the lake, it's lakeshore and location of the property on the lake are key factors. Lakeshore properties are a unique property and typically only homes on lakeshore can be used as comparables, thus sales are very limited due to the lower amount of homes on lakeshore, verses the surrounding non-lake shore properties.

 

[Tawfik Ahdab]

Look, factors such as physical site size topography, type of frontage ( ocean , river, lake, creek, etc), frontage feet, navigabIility of the water body, frontage depth, contour, drainage, net usable versus gross site size, location above and or below the waterline, quality or type of site access, site utility and water accessibility, view level as potentiallly versus actually realized, obstruction of land or of plants to the water, presence of or potential for a dock, depth of water at the end of the dock, and overall recreational potential of the waterfront site as measured by the reactions of market participants are all factors that may or may not be value influencing depending on your location. This is precisely why complex properties are complex. They require someone with solid expertise in a local market area to render the proper analysis and to establish equivalences or differences in site values as the most fundamental of all adjustments as well as to mark the way for the very selection of comparables.

This is what real appraisal is about and why it's a delight to be challenged by the appraisal problem

 

[residentialguy]

This is precisely why complex properties are complex. They require someone with solid expertise in a local market area to render the proper analysis and to establish equivalences or differences in site values as the most fundamental of all adjustments as well as to mark the way for the very selection of comparables.

Exactly...hence my suggestion that OP not tackle this alone, rather gets an appraiser that is competent in this type of complex property to learn from. OP is not competent and should turn this down if he/she can't get a mentor to work with...in fact it is a requirement to be competent prior to accepting the job, if this is for FNMA.

 

[Michigander]

All of what we are saying is that there is no rule of thumb and that price per front foot may be a nice assessors technique but often doesn't work in the real world. Please read the article I wrote that I posted and re-read what Twafik and res guy wrote above.

Please local experts for help if you are ready in this assignment, but do you remember if this is for Fannie Mae you need to have the competency before excepting the assignment. Unfortunately most AMCs that I have run into do not understand that like appraisal is complex by its very nature

 

[Mike Garrett RAA]

I would like to move to Cherokee Village in Arkansas and have been looking at properties with lake frontage. Also fished on Grand Lake of the Cherokees a few times and observed many lake front residences. What I have observed is:

1. Water levels go up and down...Better be sure the improvements are high enough above the lake levels so it doesn't end up flooded.

2. Bank should be steep enough to insure your dock will be deep enough year around. Nothing worse that your boat being left high and dry.

3. There shouldn't be public access to your water front. Nothing worse than a bunch of beer drinking fat ladies lounging on your property.

4. A lake front property on one lake might be worth a few thousand dollars and on another lake might be worth millions.

5. God bless appraisers who are skilled at valuing such properties.

 

[residentialguy]

3. There shouldn't be public access to your water front. Nothing worse than a bunch of beer drinking fat ladies lounging on your property.

I like your post, Mike...however, high demand lakes of any significant size will have public access, unless it is a small private lake. Fully recreational lakes will have public access. That's what makes them popular and in high demand. Just put out a sign: "No fat chicks allowed!"

 

[Bobby Bucks]

3. There shouldn't be public access to your water front. Nothing worse than a bunch of beer drinking fat ladies lounging on your property.

While I don’t disagree with that statement, there could be instances where this would be beneficial. In drought stricken areas with low lake levels, it could possibly create a Bay of Fundy effect. I suppose it all depends on the size of the lake and the size of the chicks, it might take a Realtor open house with a Golden Corral style buffet to get credible results where one could support an adjustment. :- )