Land comparables

[Dublin ohio]

something other than, Duh!!

Maybe if you op was something more than "duh". Maybe the response would be otherwise.

 

[J Grant]

I kept watching my email for replies then got locked out of my account so my apologies for not acknowledging replies! My questions related to someone else using an improved lot as a comparable to raw land; they suggested it was a tear down ( not) so though I know the 2 are not comparable I was looking for a rule to point to—something other than, Duh!! Thank you for taking the time to answer.

On what basis did you decide that an improved lot ( where the house has little to no value and is very likely a tear-down) and a raw lot are not comparable? There is no "rule" about it.
If market participant buyers consider them substitute comps for each other than they are - we analyze and report what exists in the market not arbitrary rules that do not exist -

 

[Terrel L. Shields]

My questions related to someone else using an improved lot as a comparable to raw land; they suggested it was a tear down ( not) so though I know the 2 are not comparable I was looking for a rule to point to—something other than, Duh!! Thank you for taking the time to answer.

Extraction is a viable way to value land. I do it on large parcels (200-900 acres). The house is often almost invisible. They are buying the land. And otherwise, say a farm has a single barn on it. It really is usually pretty invisible - really kind of a judgment call. Does it add value or not? The larger the parcel, the less likely it provides much value.

 

[J Grant]

If the comp is a tear down vs unimproved land you will need to adjust for demolition and compare site improvements as well as available utilities (power, water, sewer, etc.)

There is no generic rule about that. That was an assumption out there but it it often wrong in an actual market when a tear-down house lot/land sells for as much or more than unimproved land.

The cost of a tear down is often offset by a graded lot with utilities and sometimes it can be financed vs raw land which is harder or to find bank financing for.

 

[Sadie]

I kept watching my email for replies then got locked out of my account so my apologies for not acknowledging replies! My questions related to someone else using an improved lot as a comparable to raw land; they suggested it was a tear down ( not) so though I know the 2 are not comparable I was looking for a rule to point to—something other than, Duh!! Thank you for taking the time to answer.

Its only a tear down until someones tears it down. Sometimes that teardown is a completely livable house. Sometimes that teardown is rehabbed and re-sold. Its only after the sale that you find these things out. On person's garbage is another person's treasure.

 

[J Grant]

Its only a tear down until someones tears it down. Sometimes that teardown is a completely livable house. Sometimes that teardown is rehabbed and re-sold. Its only after the sale that you find these things out. On person's garbage is another person's treasure.

Nope, a tear down is a house that is very depreciated and usually costs more to fix then tearing it down to build a new one /and/or the land is so valuable combined and a trend to build new, big, etc which makes the old building obsolete.

a tear down means a depreciated, out of date house that will most probably be demolished by the typically motivated buyer and is sold for land value (or very close to it)

 

[George Hatch]

Its only a tear down until someones tears it down. Sometimes that teardown is a completely livable house. Sometimes that teardown is rehabbed and re-sold. Its only after the sale that you find these things out. On person's garbage is another person's treasure.

Sometimes the existing structure can also be used as on the interim basis while working out the preliminaries for new construction. The rents get used to partially offset the holding costs.

 

[shrubberyvaluation]

Its only a tear down until someones tears it down. Sometimes that teardown is a completely livable house. Sometimes that teardown is rehabbed and re-sold. Its only after the sale that you find these things out. On person's garbage is another person's treasure.

Well that is why we look at the typical buyer.

 

[shrubberyvaluation]

If you determine a structure has 0 economic life remaining it could be used also. I have seen $1M+ lots with an old dated house that could be lived in, but has no economic life as a typical buyer doesn't care about the house, they care about the lot.

 

[Sadie]

Nope, a tear down is a house that is very depreciated and usually costs more to fix then tearing it down to build a new one /and/or the land is so valuable combined and a trend to build new, big, etc which makes the old building obsolete.

a tear down means a depreciated, out of date house that will most probably be demolished by the typically motivated buyer and is sold for land value (or very close to it)

Not true, eye of the beholder. I have assumed a tear down will be razed but when I drive by someone is rehabbing the place, or it has been rehabbed. I have assumed what looks like a perfectly good house will continue as a house and then drive by and find the lot has been cleared.