Land value and value opinion are the same - UW questioning

[J Grant]

True, it has no functional or external depreciation. I'm a little gun shy on using those. I had an UW the other day who challenged my use of functional obsolescence in a similar situation. "How do you know there is FO? How did you calculate the FO?" If someone can help me with language to justify a functional or external obsolescence I would be very appreciative.

It is not about the language, it i why you conclude a funct or ext obs of X$ - only you know why you did that and if you know why, then you should be able to desire your reasoning, and the data and observed market activity it is based on-

 

[Dublin ohio]

Those are the comps that best match the condition and characteristic of the subject property. There aren't any that are higher priced in the same condition within a reasonable distance. In this area developers are buying up lots and replacing the homes with 4-8 unit detached townhomes. So $225k for a 20,000 sf lot is a bargain for them.

#1 comp has a lot of 14k sf. I adjusted other lots at $2.5/sf so most got a bump of around $30k.

So I assume the rest of the comps have smaller site sizes. What can be done with those sites. Is anyone buying and redeveloping the properties on smaller sites. If not IMHO your problem lies within the sca.

 

[Steve Pendleton]

I agree I can't and don't want to be deceptive in order to get the loan through. Not my job. The comps are not tear downs. They are, like the subject, a little old and have a few issues, but they are still viable, even comfortable. Most of the issues with this house are cosmetic. Flooring, countertops, that sort of thing. If it were not for developer interest in this area, an occupant-owner would be a likely buyer. I have thought about HBU. I think there's an equal argument for it to be vacant transitional or single-family residential. A developer might pay a little more for the land than an occupant-owner, but that's just speculation.

 

[Steve Pendleton]

So I assume the rest of the comps have smaller site sizes. What can be done with those sites. Is anyone buying and redeveloping the properties on smaller sites. If not IMHO your problem lies within the sca.

Lot sizes for the comps are 14k, 7k, 7k, 7k, and 9k. Lots as small as 5k are being redeveloped. The cost of the lot just has to be in line with overall construction costs and projected sales price.

 

[J Grant]

I agree I can't and don't want to be deceptive in order to get the loan through. Not my job. The comps are not tear downs. They are, like the subject, a little old and have a few issues, but they are still viable, even comfortable. Most of the issues with this house are cosmetic. Flooring, countertops, that sort of thing. If it were not for developer interest in this area, an occupant-owner would be a likely buyer. I have thought about HBU. I think there's an equal argument for it to be vacant transitional or single-family residential. A developer might pay a little more for the land than an occupant-owner, but that's just speculation.

Well then, you are contradicting yourself !!!
If the comps for the subject are not tear-downs, and people continue to live in them, then they contribute more to the land value than 5k!!
This means the land vacant is worth less than you stated-.


HBU as exists with potential for future development -if the owner-occupants upgrade and /or stay in the house, vs if all or most asre sold to tear down then HBU is as vacant

What sales were you calling comps that got torn down for townhouses? Are there vacant lots sold in the area for a land value?

 

[Dublin ohio]

Lot sizes for the comps are 14k, 7k, 7k, 7k, and 9k. Lots as small as 5k are being redeveloped. The cost of the lot just has to be in line with overall construction costs and projected sales price.

Do you have land sales for the smaller sites.

 

[J Grant]

Lot sizes for the comps are 14k, 7k, 7k, 7k, and 9k. Lots as small as 5k are being redeveloped. The cost of the lot just has to be in line with overall construction costs and projected sales price.

Lot sizes for the comps are 14k, 7k, 7k, 7k, and 9k. Lots as small as 5k are being redeveloped. The cost of the lot just has to be in line with overall construction costs and projected sales price.

Now you give is info that the subject lot is 20,000, but the lot sizes of the comps you used are 14,000, 7000, 9000 sf - the subject is on a lot that is dividable for subdivisions and valuable -
did you find any sales on a 20,000 sf lot range - 18,000=24,000 sf lot?
A comp is a similar sale, not just any old sale - and while a house on a 7000 sf lot can be a comp, it would need a huge lot size adjustment and there should have been, if possible, comps on lots near the subject lot size -

do any exist? did you look for them? The comp on the 14,000 sf lot is the closest in lot size to the subject subject...what did it sell for vs the ocmps on smaller lots?

 

[J Grant]

Do you have land sales for the smaller sites.

and more importantly, land sales for the subject big lot of 20,000 that now we learn can be divided into smaller lots - oy veh...

 

[Mark K]

Perfectly good, livable dwellings are torn down everyday when the vacant land value equals or exceeds the value of the site with the dwelling. This is very common. People live in dwellings that have no contributory value all the time. Sooner or later, the dwelling is razed.

If you graph it out and the point where the line for land value exceeds the value with the dwelling, the house becomes bulldozer bait.

This is a transitional property and it appears that the improvements have a very short remaining economic life. Be honest with your client and let them decide if they want to make a loan on the subject. They will probably reject the loan; not your problem.

 

[Dublin ohio]

Have already set the effective age to 30 years

Which translates to a rel of approx. 30 years. Which doesn't make sense. Rel takes into consideration more than physical depreciation