Landlocked tiny parcel

[tonypbwatlanta]

Greetings. Have a good one on the desk now. 40 foot by 50 foot landlocked parcel completly surrounded by property acquired over the years as assemblage into major education complex. No fuctional utility, no access, and unfortunately for me, no comps. Any suggestions on where to look, or how to establish an appropriate discount for the aforementioned defects. I handled the appraisal of an abandoned street segment acquired by the assembler, and it literally borders this "lost" parcel. However, I don't think that I can just say "this is $10 a foot land because the adjacent parcel is $10 a foot land." Across the Fence does not seem to appropriate. Seems more appropriate to find the quantitative discount for the defects noted. HELP! Thanks to all, and have a great Holiday season.

 

[MNRural]

Just thinking out loud...is it possible to create legal access somehow, legally or economically at some cost?

If not, perhaps it only has value to the land abuters.

 

[Lee Lansford]

Greetings. Have a good one on the desk now. 40 foot by 50 foot landlocked parcel completly surrounded by property acquired over the years as assemblage into major education complex. No fuctional utility, no access, and unfortunately for me, no comps. Any suggestions on where to look, or how to establish an appropriate discount for the aforementioned defects. I handled the appraisal of an abandoned street segment acquired by the assembler, and it literally borders this "lost" parcel. However, I don't think that I can just say "this is $10 a foot land because the adjacent parcel is $10 a foot land." Across the Fence does not seem to appropriate. Seems more appropriate to find the quantitative discount for the defects noted. HELP! Thanks to all, and have a great Holiday season.

What definition of value are you working with?

Just out of curiosity, what is to be the Use and User(s) of the appraisal?

If your licensure (trainee) status accompanying your post is correct, what advice has the Supervisior Appraiser offered?

 

[tonypbwatlanta]

Thanks for the replies

Thanks for the replies. The owner of all the abutting property, the educational institution, came across this tiny, forgotten parcel while assembling all the adjacent properties. After a lengthy search an heir to the deceased property owner was located. The educational institution has ordered the appraisal for use in determining an offer amount, or for use by the property owner if they could be persuaded to donate the parcel. I was thinking that absent any comps, perhaps I could show the relationship in the general market area between frontage properties and those with limited access. Perhaps I could use this relationship to formulate the value of the parcel in question; that is, compare the surrounding property value which was established last year by our firm, using this as the frontage value as compared to the diminished value of the more limited access parcel, which would represent our landlocked remnant. Again, any thoughts would be greatly appreciated. I have worked for a number of years with a very prominent educator, MAI, CRE, and have received an incredibly diverse education and exposure to assignments that I would otherwise never have the opportunity to work on. At this point both my mentor and myself are still searching for any comps and are still bouncing all the options for an approach around. Again, thanks for any help and suggestions.

 

[tonypbwatlanta]

And we are looking for FMV, if there is such as thing for this piece, and the IRS requirement is for FMV for donation purposes. Thanks again

 

[Alan Simmons]

“assemblage into major education complex”

Imagine you get a call from [pick your favorite educational institution]. They tell you that you own a 40 x 50 parcel on campus. Any luck and it will be near the stadium. Some alumni would pay good money to have private parking or tailgating spot.

 

[leasedfee]

Tonypbwatlanta,

Colorado's constitution does not allow landlocked parcels; easement access rights can be obtained through court for physically landlocked parcels. How does Georgia handle a landlocked parcel under its constitution, statutes, and case law?

If it cannot obtain access, it doesn't have a H&BU independent of this single surrounding property owner. The "market value" definition falls apart.

You have a monopsony situation.

Now for the hard part:

I'm quoting from my recent report -- but nowhere as severe as your situation (mine was a simpler question of how much the neighbor would pay for the one adjacent city lot of the 5 congruent city lots).

"Plottage value to the neighbor cannot be calculated in a monopsony situation (I'm paraphrased from Gary Taylor MAI teaching AI's 530 Advanced Sales and Cost Course). A monopsony is an "oligopsony limited to one buyer", where an oligopsony is "a market situation in which each of a few buyers exerts a disproportionate influence on the market." (I'm missing my footnote). One buyer has disproportionate bargaining power -- whose plottage premium, if any, will vary greatly based on their highest and best use, financial situation, motivations, and personal goals desires, rather than a fixed calculable market price. This does not negate the possibility that the neighbor may pay only market value for the one lot, because there may be no motivation to pay any premium at all. The one lot then sells for less than contiguous multiple lots.
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You could try a larger-parcel before-after approach, but that is predicated upon a market situation.

You may have to do some type of sensitivity before and after value to calculate how much highest and best use (like additional buildable area) that the monopsonist will gain by acquiring the subject parcel. This could derive a residual land value that the monopsonist might pay.

However, if the institution doesn't want to bargain with the landowner or the landowner is unrealistic, the institution could wait. Wait until the owner is weakened or wait until it can obtain a Treasurer's Deed when the taxes are eventually unpaid? Then value could be small.

In one of the biographies of a skyscraper in NY, the last owners on the block held-out for ridiculous plottage value versus the "as is" improved market value. The skyscraper developer assembling the block offered 2 or 3 times the "as is" market value -- but when they couldn't agree on the sale price, the skyscraper developer built around the last parcel.

Too much depends on the business or estate motivations of the landowner and the adjacent parcel, not market value for the bundle of rights. You are left with an "investment value" to the monopsonist.

You may have some type of crippled "value in use" to the subject landowner because they only get a few twigs from the bundle of rights. . . . . maybe it was on youtube (?), some stubborn guy who owned such a mini-lot refused to sell it to the adjacent or surrounding developer. He got a court order that made it clear that the developer could not trespass on the air-rights without penalties. They couldn't swing a crane boom over the stubborn guy's lot. How much cost in crane time did that take-away from that development's value (how's that for an externality adjustment!)? The stubborn guy showed up everyday and sat and watched with a video camera so that the mocking construction crew did not trespass. It was great fun to watch! The journalist did not answer how the stubborn guy got access to his lot without trespass himself.

Let us know how you finally handle this?!

Tim

 

[Lee Lansford]

...I was thinking that absent any comps, perhaps I could show the relationship in the general market area between frontage properties and those with limited access...

I appreciate that you are aware of the complexities associated with this assignment, but the subject has much less than "limited access" as you tell us it has no access.

From this the purpose of the appraisal is to be "market value"?

Good luck.

 

[PropertyEconomics]

I recently completed an assignment similar to this, athough the property I appraised was of sufficient size to be buildable .. however, it lacked access of any kind. I found two matched pairs of access vs land locked and estimated the loss in value at approximately 75% based upon this analysis.

 

[Ariba]

Colorado's constitution does not allow landlocked parcels; easement access rights can be obtained through court for physically landlocked parcels.

If it is not allowed by Colorado constitution there should not be any landlocked parcels in the first place. Are you sure it is in the Colorado constitution?

Also, if it is, who would determine the access point, what type of access (road, trail, etc) or the cost of the easement?