Land value / adjustment

[Terrel L. Shields]

Assuming comps range from 5-50 acres, how much do you adjust each comparable per acre?

normally, I adjust land value dollar for dollar. If my comps are $109,000, $183,000 and $58,000 and my subject from the 3 land sales I do, suggests it is $100,000 then I adjust -9,000, -83,000, and +$42,000. Land does not depreciate. It does change value according to its size, composition, and location. Depreciation only applies to improvements.

 

[ZZGAMAZZ]

Agreed w/most here - I like my comparables to generally reflect the subject's characteristics. That said, the acreage bookends will obviously 'grow' as the subject site gets larger. If I have a 2 acre site, I might go 1-5 for comps (5 being over 100% difference from the subject). If I have a 20 acre site, however, I'd probably only go 10-30 (which is only 50% of the subject's size each way). Regardless, I solve for all other variables (isolating the site size adjustment), and perform sensitivity analysis to determine the appropriate adjustment factor. Of course, if there are other influences on site value (external influences), I'd try to adjust for those before isolating the site adjustment itself.

Often times the size of a vacant parcel reflects the min lot size of that zoning designation. (About 5 years ago GregB mentioned his delight when an analysis of actual vacant land sales reported in the Cost Approach revealed a total value almost identical to results of his SCA.)