Importance of zoning for comps

[GoBears]

Although our land has a home on it, due to its age (94 years), an appraiser felt it more appropriate do get land only comps. The land is zoned R2.

His comps include these: R315, P35, P18 and R32.

Can someone explain what these mean?

And more importantly, when selecting land comps, should zoning be a factor?

I've been under the impression that R2 is more desirable than R1. If two identical properties are adjacent to each other, and one is zoned R1 and the other R2, would the R2 land command a higher price?

I appreciate the help, thank you.

 

[Bill_FL]

Tony, all zoning is local. We do not know where you are, or the local zoning code where you are. We cant help you if we do not know those things. the important part about zoning, is that they allow for similar use at the property's highest and best use.

 

[The Warrior Monk]

Zoning may or may not affect value. Like Bill said, not enough info was given.

Is your property subdivisible?

 

[George Hatch]

The way most cities are laid out you would not likely run into very many examples where two adjacent properties in a residential neighborhood had different zoning. It's more likely they are in different neighborhoods and those neighborhoods probably aren't that similar to each other.

Ideally, an appraiser would use land comps that have the same zoning if enough such sales are available. If not, as is often the case in urban and suburban areas, the appraiser might be compelled to work with a less desirable set of sales data that includes less similar properties.

The reason the different types of zoning tend to contribute to different values is due to their different potential. As far as single lots go, a typical buyer is usually buying a parcel in order to build something. Depending on how the zoning code is laid out and exactly what your reference to "R2" really means, your site might be suitable for developing 2 units (regardless of lot size), or it could be density based (such as allowing 2 units/acre). For that matter, it could be that the minimum lot size is 2 acres for a single unit. Without access to the zoning code summary of what R2 means there's some room for misunderstanding from our end, and you probably won't get the definitive answer you're looking for.

In your market, if 2-unit construction is not in demand right now it's possible that the typical buyer would purchase the site for building a new single family residence and ignore the higher density allowed by the zoning. If so, the best comparables might be other lots with similar potential, i.e., other lots suitable for single family dwelling development. That might include a lot of different zoning types - or not.

It's also possible that R2 lots are not worth as much as R1 lots because of prevailing neighborhood conditions or other factors. In short, there's so much to know abou land in terms of apprasing it that it's impossible to give you a definitive answer to your question without knowing all these other factors.

 

[GoBears]

Sorry guys, it was late, and I forgot...

Moutain View, CA - zoned R2 (less than 10k sq-ft).

Comps used by the appraiser: R315, P35, P18 and R32 (20k-250k sq-ft).

Would comps like these be more or less relevant: R1, R3-1, R17L and R18L (7K-20k sq-ft)?

It would seem like the later ones might be more of interest, but again, maybe with the way they are zoned, this makes them less appealing or approriate, thus my question.

If there is a glossary of sorts that breaks-down what these identifiers mean, I might be able to help myself here...

Thanks guys.

George, I just saw your reply after I posted...

Great info!

This old home (again 94+) is in a court with all other dwellings being townhouses, about 10-20 years old. At one time, the land for the whole court, and quite a ways beyond belonged to this old home. This might better explain the R2, but I'm not sure...

 

[Em Tee]

Tony:

Here's the zoning for Mountain View:

http://www.ci.mtnview.ca.us/city_ha...gulations_and_guidelines/zoning_ordinance.asp

 

[hastalavista]

Tony-

Your question is so subject-specific, you can not get a precise answer in this venue.

In general, similarity of zoning would be a critical factor in selecting appropriate land comparables.
However, there could be exceptions:
1. A property is zoned R2, but the lot size allows for only one-unit. In such a case, it may be more appropriate to utilize similar sized properties (R1, PD, Etc) that are located in a similar area as the subject vs. limiting the selection to similar zoned properties.
2. A property may have a unique influence or aspect that is considered significant in its valuation that would warrant consideration being given to most similar-type locations vs. zoning. Say, for example, a 94-year old home that is exists on a cul-de-sac where, surrounding the subject, newer townhouse-style PD zoned homes have been built. Maybe the zoning doesn't allow the property to be improved as a townhouse project (which would be a higher density, I assume). Then, if it can only be developed as a detached SFR (its highest and best use), perhaps the best matches to the land value is to find similar type properties that are similar type areas where they do not conform to the immediate surrounds (as in my example), but would need to be developed similar to the subject.

So, there can be many possibilities here.
What is of more concern to me is that you, as apparently a "user" of the appraisal, cannot understand the "rationale" it used to develop its opinion. You either need to get the report explained to you by the author (if you are entitled to that), or hire someone local to review the appraisal and explain it to you.

By the way, let me publicly say that I am located in your general area, but I would not accept this assignment (not due to competency issues, but due to the fact I've already given advice here).

Good luck!

 

[GoBears]

Mary, thanks for that link! I got a ton of good info from it. For the "R's" I found this:

R1 Single-family residential district
R2 One- and two-family residential district
R3 Multiple-family residential district
R4 High-density multiple-family residential district

Yet, on some Mountain View properties I see R17L or R18L. I didn't see a reference for "17" or "18".

Denis, your information, once again, is very helpful and thought-provoking.

Since land value is being used, let's assume that an ideal comp is found (same lot size, zoning, location, etc), but it's a lot only, ready and waiting for an improvemnt. With land being the appeal, a property with a structure on it would then be a negative, I would think. Should the cost to properly remove the structure be factored-in to appraisal? I were in the market for land to contruct something, I certainly wouldn't pay the same price for a property if I had the expense of time and money to just get it ready to build...

Is this a consideration or factored-in when ascertaining value?

I ask this, and all questions for two reasons. This deals with a transaction for which I have an interest, also because I am pursuing an appraisal education.

Thank you.

 

[George Hatch]

It's a good question and you basically answered it yourself. Yes, there is sometimes a discount necessary to account for the cost of removal, although that usually doesn't amount to a whole lot. The house might be movable or salvagable, so there might be some cash in the bones to offest the demo/haul-off costs.

Hopefully the decision to value the property as land was based on a well developed opinion that the property was actually worth more as a redevelopable lot than as an existing home. From your description of the situation it doesn't sound like the sales chosen were as comparable as what we would normally seek, but sometimes that's just how it works out.

 

[GoBears]

And disposal costs, especially if there is asbestos...

FWIW, another appraiser that was secured used comps with homes on them; and came to a very similar value. Interesting...

This forum is awesome!