How to value unbuildable lot (no sewer/septic)?

[NC Values]

I am currently enrolled in a R2 real estate appraisal class and our instructor asked us how to value a residential lot zoned R20 that does not perk and sewer is currently not available. The lot is in an established neighborhood near a major thorough-fare and septic line, but there are no immediate plans by the county to extend sewer into this neighborhood. Lot is .48 acre and equivalent lots with sewer or perk site are valued at approx $26K. Tax value for the lot is $2500.

The only approach I can think of is to make a WAG (wild *** guess) as to probability and timeframe when sewer might me extended and then calculate the present value based on these assumptions. (Please be aware we have not yet covered present/future value in our coursework).

How do you establish value for a lot that is currently not a buildable site. Also, how do you determine the value for a lot that has little or no chance of becoming a buildable site? It still has some value, perhaps to adjoining property owners, but this is a obviously a limited market.

This is my first posting, thanks for your help. :?:

 

[Pamela Crowley (Florida)]

Lots and lots and lots of research!

The all time best would be if you could find another site without available sewer that also could not perk for a septic system that recently sold, probably to a neighbor. Otherwise, you'll need to find properties that sold with larger lots in the subject area, both vacant sites and if necessary, via extraction from developed properties, determine what the adjustment would be for the difference in site sizes.

That difference is then applied to the subject property. IE: what is the value of it if the neighbor were to buy it just to have some excess land? This is assuming As Is right now.

(Geeeez, I hope my terminology is correct!)

 

[Restrain]

The question is who could use it. If you can't build on it in the forseeable future, then is has minimal use to you. The only potential users would be the adjoining property owners who would utilize the site as excess property. And as excess property, the value would be less than the primary site. Also, you would have a limited number of buyers, that is, two, one on each side.

What you might do is look at site values for typical sites and then site values for oversized sites and make the comparison. Then I would reduce the value even further. The reason is that the oversized lot would be exposed to the total market, while the actual number of potential purchasers for your lot is significantly less than the total market.

Roger

 

[wyecoyote]

Courtney,

As Pamela says lots and lots and lots and then more research. The biggest thing to remeber with septic systems is you could have one designed by an engineer. I belive they are called mound systems. There is a county here that I grew up in that is notorius for non perk. Most houses have engineered septic systems. $10 to $30K to have installed.

Ryan

 

[rtubbs]

My first question would be: what does R20 mean?

 

[Bemis Pownall]

Your cheating.
Alot of us took similar classes and did it the hard way,

We researched it.

Research it.
Due diligence.

Good Luck

 

[Mountain Man]

If you are appraising it.....Lots of research. Maybe get some help from someone who does condemnation appraisals for partial takes.

 

[Richard Carlsen]

Sounds like some of the conservancy land we do up here where the easement given to the conservancy makes the land non-buildable.

Find some vacant wet land, excess lots or half lots that have sold to neighbors, etc. that were obviously being sold for non-building purposes. You may also find that you will have to go out a ways in distance and that you may be hanging your hat on one or two comps only.

But hey, that's what they pay us appraisers the big bucks for, right?

Good luck.

BTW, don't forget Highest and Best Use in figuring out what kind of comps to use.

 

[Willie]

It's H& B use is for assembleage w' adjacent land owner. Usually they will give something to have the extra land, but expect a big discount over a buildable lot.

 

[Phil Rice]

Think outside the box

1) What options are available to deal with the septic? Technology may be able to solve the septic problem.

2) What can you do with a chunk of ground with no septic?

A parking lot -- maybe the local car dealer would be willing to buy some additional storage space.

Small corn/tomato/??? farm

Landfill (ie, charge people to dump their trash)

Cell phone tower



don't limit yourself to selling to a neighbor unless there really is no other choice.