Interim Use How far can it be taken

[redfish]

Request to complete an assignment on a site that is improved with a single family home. The home is in need of repairs but not beyond it's physical life. The site zoning has been changed to a commerical/research park zoning. Sites on the street improved withi similar improvements have been purchased and razed indicating that the improvements are beyond thier economic life.

HBU analysis indicated that the HBU is commerical/vacant. The client is requesting an "as-is" value based on the interim use. Anyway you slice it the best comparables for the property are the vacant razed sites.

When is "interim use value" developing a misleading report?

 

[PropertyEconomics]

It would seem to me your best sales are those of single family residential that were improved at the time of sale which have since been razed. That is exactly what is identical to what you have and would reflect the "as is" value of your subject.

 

[Pittsburgh Pete]

Sounds like you have land value minus demolition costs--that is the highest and best use "as is" or, more appropriately "as improved"!

 

[Lee Lansford]

Request to complete an assignment on a site that is improved with a single family home. The home is in need of repairs but not beyond it's physical life. The site zoning has been changed to a commerical/research park zoning. Sites on the street improved withi similar improvements have been purchased and razed indicating that the improvements are beyond thier economic life.

HBU analysis indicated that the HBU is commerical/vacant. The client is requesting an "as-is" value based on the interim use. Anyway you slice it the best comparables for the property are the vacant razed sites.

When is "interim use value" developing a misleading report?

The interim use may be but a few months if the trend is rapid (and so obvious).

The value opinion is market value, yes?

The client--a MB, yes? I suspect that if you estimate the remaining economic life as but a few months, that should "seal the deal".

 

[redfish]

Then on to the Lisc. level question. Should a CG be utilized for this report as it would entail a commerical/industrial market analysis. Sales with similar zoning and uses would have to be utilized to report a crediable value opinion.

 

[PropertyEconomics]

Sounds like you have land value minus demolition costs--that is the highest and best use "as is" or, more appropriately "as improved"!

Pete .. maybe and maybe not. It depends on how the market has treated the other properties in the area. I have seen numerous situations like this where the buyer paid the going rate for land and assumed the demolition costs as part of the deal. Knowing the market and analyzing the sales is the only way to know for sure what the value of this property is. I continue to believe those properties which sold with houses in the immediate area but on which the use was changed after purchase are the best sales as they will tell you how the market participants reacted to the improvements.

 

[Michigan CG]

Interim Use
The temporary use to which a site or improved property is put until it is ready to be put to its future highest and best use.

Then on to the Lisc. level question. Should a CG be utilized for this report as it would entail a commerical/industrial market analysis. Sales with similar zoning and uses would have to be utilized to report a crediable value opinion.

Depends on the property IMO.

You have my number?

 

[redfish]

Interim Use
The temporary use to which a site or improved property is put until it is ready to be put to its future highest and best use.



Depends on the property IMO.

You have my number?

Thanks Tim, I have already passed on the assignment. To close to the holidays to mess around with this assignment.

 

[Mountain Man]

Have a few of those in my area... homes used as an office for palm reader, insurance sales, trucking company office, used boat sales center, etc. They are leased until the land values increase a wee bit more, the DOT expands the highway, and the market turns around. Most last 2-5 years before being D-9'd.

 

[Stephen J. Vertin MAI]

HBU analysis indicated that the HBU is commerical/vacant. The client is requesting an "as-is" value based on the interim use.

Even though this issue is moot (since the deal is dead), the market not the client dictates the highest and best use.