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Land Appraisal

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Joe Gomberg

Sophomore Member
Joined
Jul 8, 2003
I have a lot in the downtown area. Currently in an area which might be converted to commercial in the next, oh say, 7-10 years. It is currently surrounded by residential homes on all sides. My question is really about the age of the comps. I have very limited data, so the comps I do have are dated as way back as Jan 1, 2002. The area is an older established area, like most downtown residential areas, so there are not very many vacant lots that have sold or available. If I'm able to use these sales I do not think a time adjustment is warranted. How far back can I go and what hurdles will this possibly cause once reviewed by an UW?
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Use what you got in the neighborhood, and search for a more recent "in fill" lot sale from an other older or mid-aged neighborhood. If a location adjustment is needed, do so...... but you know the UW is going to want some kind of a sale that is within a year. These type jobs require more research than typical.
I do not think a time adjustment is warranted.
and of course you will have to 'splain this to the UW in extra comments on an addendum.
 

Joe Gomberg

Sophomore Member
Joined
Jul 8, 2003
Thank you, that does help some. I do have a great comp which is less than 3 months old which I can also place weight on... its my other two that are dated. Back to researchin... :eyecrazy:
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Try not to get too excited about not having land sales within the magic 6-month window. In urban areas where there are only occasional sales of vacant or redevelopable sites, I often go back as far as 2 years for site sales if I can't find adequate recent data. IMO, the location aspects of a comparable site sale are often more relevant to the current value than the date of sale as long as its in the same economic cycle. Obviously, newer data with similar locations are usually given more weight than the dated sales. One thing you'll find is that different market segments have different buyers and sellers, different motivations, and very different exposure times. These different property types move to different beats, even within the same neighborhood. What may be a dated saledate for one property type might be reasonable for another. Sometimes you just have to do what you have to do, and use what you have.
 

Joe Gomberg

Sophomore Member
Joined
Jul 8, 2003
I have the same view point when it comes to location of property, especially when dealing in major metroplexes where crossing a freeway lands you in a completely different area in the same neighborhood as you stated. My biggest concern was not being outside of traditional guidelines but being inside of acceptable guidelines. Thanks for your response! :D
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
My biggest concern was not being outside of traditional guidelines but being inside of acceptable guidelines.

Just remember that they are guidelines....... not rock solid rules. Departure IS permitted when you must.
The market is the market, can't make it up...... no mater how bad a UW wants it to conform.
 

Walter Kirk

Senior Member
Joined
Jun 24, 2003
Professional Status
Licensed Appraiser
State
New Jersey
Joe,

1 1/2 year old lot sales are not old. Lot sales are normally rare. If you think that you will have to convince a clueless underwriter with more recent sales use sales from other areas as 4,5 & 6 and give them no weight.
 

Patrick Egger

Sophomore Member
Joined
May 29, 2003
Professional Status
Certified General Appraiser
State
Nevada
One key here is not just the comps, old or new, but also the demand for land. If you have older land sales, what did the buyer's do with them (build, hold,) and why? Doing the report with older sales is fine.

Are the there any listings (current, expired) also another indicator. You do want to make sure that you have established that there is a market for the land and tie your VO to that.
 

wade3333

Senior Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Georgia
In my area there is no problem going back 2 years on lots and land if necessary. Just explain, explain, explain.
 

Joe Gomberg

Sophomore Member
Joined
Jul 8, 2003
so far my addendum reads;

The sales selected were judged to be the best available discovered through market studies and investigations. No other sales were found that would have required fewer adjustments. Market activity of property similar to the subject in the neighborhood is limited. Older sales were utilized due to the limited market data at the time of this appraisal and the dudes from the forum who told me what to say.

:beer:

Have a good weekend!! :mrgreen:
 
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