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Land Values By Extraction

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Valueseeker

Junior Member
Joined
May 19, 2016
Professional Status
Certified Residential Appraiser
State
Massachusetts
Ok so on a 1004 pg 3, I will often see something along the lines of

Site value estimated from current land sales, previous new construction appraisals, and local builders.

When I actually look in MLS for sales of land, there are none (this is for a certain town). Reading the comments on this forum, it sounds like many arent a fan of land value by extraction, but I don't see where some appraisers are getting their land values (local assessors office maybe?) when they are not on MLS. Instead, wouldnt it make more sense to extract (or allocate - I know a different method) and at least have some math to support what value you believe a site to be?

For example: If I believe the land of a home in a town is about 100K. Often I wont see sales within the last 3 years for a similar site. All the vacant land is bought up. So (hypothetically), the assessor data may show around 100K (assessed) value and maybe (hypothetically) there are some dated sales to support around that figure, would it be harmless to just use extraction on top?

Ive been using the extraction formula or landvaluecalc.com formula to just further support (when I can). I totally get that how accurate can it be on an older home, but wouldnt it be something better than nothing?

Overkill / overthinking it all? I just dont like the idea of saying the land is an estimate based on current sales when in fact there are no current sales.
 

Noreen

Senior Member
Joined
Feb 5, 2011
Professional Status
Certified Residential Appraiser
State
New Hampshire
Ok so on a 1004 pg 3, I will often see something along the lines of

Site value estimated from current land sales, previous new construction appraisals, and local builders.

When I actually look in MLS for sales of land, there are none (this is for a certain town). Reading the comments on this forum, it sounds like many arent a fan of land value by extraction, but I don't see where some appraisers are getting their land values (local assessors office maybe?) when they are not on MLS. Instead, wouldnt it make more sense to extract (or allocate - I know a different method) and at least have some math to support what value you believe a site to be?

For example: If I believe the land of a home in a town is about 100K. Often I wont see sales within the last 3 years for a similar site. All the vacant land is bought up. So (hypothetically), the assessor data may show around 100K (assessed) value and maybe (hypothetically) there are some dated sales to support around that figure, would it be harmless to just use extraction on top?

Ive been using the extraction formula or landvaluecalc.com formula to just further support (when I can). I totally get that how accurate can it be on an older home, but wouldnt it be something better than nothing?

Overkill / overthinking it all? I just dont like the idea of saying the land is an estimate based on current sales when in fact there are no current sales.

Please do not get locked into believing that MLS data is the "be all, end all" , run Banker & Tradesman as well ( better data). Many lots are sold directly from title holder to buyer due to supply & demand. There are towns that have little to no raw lots available for purchase ( one reason you are seeing so many "knock down, reconstruction" transfers) For example, the last time I was in Acton, Brian told me that there were no raw land sites available/left in town, so knock down reconstruction would be the way to go... Good Luck.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
Listen to Noreen.

Those knockdowns, would be the ones appraisers say have "negative value" :rof:

But it's easy to see that people buy them, with positiive value $$$s, knock them down and build new.
 

Gobears81

Senior Member
Joined
Nov 7, 2013
Professional Status
Certified General Appraiser
State
Illinois
Please do not get locked into believing that MLS data is the "be all, end all" , run Banker & Tradesman as well ( better data). Many lots are sold directly from title holder to buyer due to supply & demand. There are towns that have little to no raw lots available for purchase ( one reason you are seeing so many "knock down, reconstruction" transfers) For example, the last time I was in Acton, Brian told me that there were no raw land sites available/left in town, so knock down reconstruction would be the way to go... Good Luck.
OP- you aren't overthinking it at all. But Noreen is right. There's a lot of in-town residential land sales that don't show up on MLS. The majority of sales in many cases. But extraction is a good method-particularly when the improvements have little contributory value.
 

Valueseeker

Junior Member
Joined
May 19, 2016
Professional Status
Certified Residential Appraiser
State
Massachusetts
Thanks guys. The extraction method hasn't had any kickback and it's easy to do honestly. @Noreen and you guys, is the value add worth paying the monthly for B&T? That's kinda what I meant by assessor data. I know there's (some/few/little(?)) sales that go outside MLS. Is it worth the purchase?
 

Valueseeker

Junior Member
Joined
May 19, 2016
Professional Status
Certified Residential Appraiser
State
Massachusetts
B&T // Banker and Tradesman.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
OK, googled that, yes likely good source. I used to subscribe to a credit bureau report, and county by county compiled source that cost about $50/mo.
 
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