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Land Value In Developed Area?

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vazira

Freshman Member
Joined
Apr 30, 2007
Professional Status
Licensed Appraiser
State
California
Due to the lack of sales of similar lots of similar development the use of the land value of the report. Lot value obtained through extraction with the considerations of valued added by improvements. Developers will typically target homes with high deferred maintenance and or under developed properties in SFR areas.

It is not sufficient to only state the method used to determine the site value. The client requirement is for you to summarize the data used to support the site value indicated. Please summarize the land sales used to develop the site value opinion. Include the specific addresses, sale price, sale date and any relevant characteristic?

Any good methods to meet lender requirements? Thanks,
Note: Its understood that we can not be as good as you ;>)
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Any good methods to meet lender requirements? Thanks,
Note: Its understood that we can not be as good as you ;>)
(my bold)

You may be better than me.

But you cited extraction as the methodology used to determine the site valuation.
So, summarize that data you used in the extraction technique in order to support the conclusion. That is what the client is requesting and what the client is requesting is consistent with the GSE forms (I'm assuming this is for a GSE-type appraisal).

The question is (and it may sound snarky, but I don't intend it to be): Do you know how to do a site-value-by-extraction? Many appraisers cite it but of those many, many cannot complete one and summarize it to meet the expectations of "showing the work" to support the site value.

I happen to teach a cost approach class for CE. If you have never actually done one, you are not alone (and it is not that hard to learn). But once learned, you can do it in any built-up market and use it to support your opinion of the site value.
 

BRCJR

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Sep 20, 2005
Professional Status
Licensed Appraiser
State
Virginia

reviewbe

Sophomore Member
Joined
Oct 4, 2016
Professional Status
Certified General Appraiser
State
California
Agree with both above. Some call it abstraction, some extraction, often it is a distraction. And many don't know how to do it, thinking that backing into the land value using the SCA estimate in a kind of reverse cost approach is extraction. It isn't!!

You might check out the 14th edition, AI-Appraisal of Real Estate, p 368-369. And learn to use excel or similar software. I used to keep a spreadsheet template for just this very thing, using the comp sales to estimate the subject land value. Can be subjective, but there is a lower burden of proof on the land value estimate. And remember that actual land sales are usually better than the alternative techniques.
 

Artemis Fowl

Senior Member
Joined
Mar 16, 2004
Professional Status
Certified Residential Appraiser
State
Michigan
Extraction for land values on each of the comps and other considered sales is a great "test of reasonableness" for other stuff too. Doesn't take long to do and not terribly difficult to summarize.

Doing residuals on a bunch of properties as I type this...well, ok I'm avoiding doing them by posting on the forum at 4:40 on a Friday. Been at it for 2 days and getting loopy. Understand this is for thousands of parcels and mass appraisal. For a single property appraisal...just need accrued depreciation for considered sales, summarize and done :)
 

DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
Does anybody use the assessor's data to develop a % for land and % for improvement? IRS uses that method for real estate depreciation.

:shrug:
 

Walter Kirk

Senior Member
Joined
Jun 24, 2003
Professional Status
Licensed Appraiser
State
New Jersey
Does anybody use the assessor's data to develop a % for land and % for improvement? IRS uses that method for real estate depreciation.

:shrug:
Assessors data may be useful however in many instances those data are derived from computer programs and may or may not be exact. I always look at the assessors data but I do my own work to develop a ratio.
 

bnmappraisal

Elite Member
Gold Supporting Member
Joined
Nov 9, 2011
Professional Status
Certified Residential Appraiser
State
Florida
.just need accrued depreciation for considered sales, summarize and done
But as Denis states
Do you know how to do a site-value-by-extraction? Many appraisers cite it but of those many, many cannot complete one and summarize it to meet the expectations of "showing the work" to support the site value.
I haven't done extraction myself in quite some time. If I were to use this method, I'll be honest, it'd take a minute to get back to it. So I agree with Denis's comment; many "cite it" but I doubt many actually are actually doing it, let alone doing it properly
 

bnmappraisal

Elite Member
Gold Supporting Member
Joined
Nov 9, 2011
Professional Status
Certified Residential Appraiser
State
Florida
It is not sufficient to only state the method used to determine the site value. The client requirement is for you to summarize the data used to support the site value indicated.
I don't blame clients for wanting some "proof" of your site value.

That being said, I have some clients who are ok when I just comment that site value is based on vacant land sales, others would like those sales listed. Either way, I have those sales in my workfile, but for the ones that require it, I add that info directly into the report. Each client/assignment has their own condition(s) and so we have to make sure we fulfill these conditions.

If you state extraction and they require a summary to support, then I feel you need to abide by the request.
Just my $0.02
 

bnmappraisal

Elite Member
Gold Supporting Member
Joined
Nov 9, 2011
Professional Status
Certified Residential Appraiser
State
Florida
Any good methods to meet lender requirements? Thanks,
Have you searched back in time for vacant lot sales? I'm in a pretty densely populated/built up area. "Do you want to buy vacant land? Buy a house and tear it down!" is a local RE joke. Some neighborhoods here are more built up than others, in which case I sometimes search back in time and make any appropriate "adjustment"/reconciliation regarding site value. Just another thought
 
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