How to Calculate Site Adjustment

[baelok]

Hi all,

I've referenced this site in the past but never posted so here I go....

I am doing an appraisal in an area of town with really high site values. I was able to find 3 good "lot" sales in MLS so I have a pretty good idea of what the land sells for per square foot ($24). If I use the actual amount, the adjusted value would be higher than someone would actually pay.

My question: How does one calculate a reasonable adjustment amount for the site?

Thanks!

 

[Metamorphic]

You're missing something.

The $24 dollar value represents the value of a whole, build-able parcel with what ever lot development it has (grading and utilities), divided by the size. So each one of those $24 squares carries with it the value of not just the space. But the value of the space PLUS the value of a build-able lot, PLUS the value of the site improvements.

When you're adjusting between two properties you're trying to accommodate the difference in size, but with that difference in size you dont get ability to build another house or a second set of lot improvements.

So obviously you need to look at some fraction of that $24 value.

Additionally, for a lot of buyers extra lot is not a big deal. Then need to spend $24/sf for the first 8000 feet then need for the McMansion, but a 9000 foot lot is not any more attractive to them...its just more lawn to mow. So that's another reason why fractional difference in lot size are not value at the same rate as a whole buildable lot; its only a subset of the buying public that cares about that surplus land.

 

[VegasWayne]

The $24.00/sq.ft. value would be useful for the opinion of site value in the cost approach, but has little to do with the market reaction to lot size of the comparable properties. The standard methods of determining adjustments (matched-pair, regression) would be better suited to determine the amount of the adjustment.

 

[baelok]

Thanks for your quick reply!

It's nice hearing confirmation from peers of what I've been doing and some points I've not thought of before. :new_llying:

All the best...

 

[Lee Lansford]

Hi all,

I've referenced this site in the past but never posted so here I go....

I am doing an appraisal in an area of town with really high site values. I was able to find 3 good "lot" sales in MLS so I have a pretty good idea of what the land sells for per square foot ($24). If I use the actual amount, the adjusted value would be higher than someone would actually pay.

My question: How does one calculate a reasonable adjustment amount for the site?

Thanks!

$$/SF is one consideration. Have you consider $$/Front Foot?

 

[Truett Neathery]

Right-o, Meta: In the springtime I wish my 2.3 acres was .3 ac.! Seriously, though, are there comparables that have similar access, views, utilities, etc.? Maybe the square footage adjustment should be "None". Bigger is better for some things, not for everything.

 

[Metamorphic]

I wish my .3 had a gardner...every day.

 

[residentialguy]

Hey Meta,

How did you come up with your id name? Are you a Geologist/petrologist?

 

[Metamorphic]

Hey Meta,

How did you come up with your id name? Are you a Geologist/petrologist?

Geologist...Environmental Consulting for 15 years.

 

[residentialguy]

Cool...you rock! :icon_mrgreen: