Mixed land use appraisal, selecting comparable sales?

[KJR2008]

Received an assignment for a refinance on a property that according to county tax records is classified as comercial land use with residential improvements. The assignment was declined as this is the first of this kind for me. However I would like some input on the use of comparable sales that are deed restricted as single family residential or does all sales have to have a similar mixed land useage to be considered comparable properties. I drove by the property it appears vacant and was previous used as a law office. The HBU would most likely be comercial.

 

[Michigan CG]

The answer to which sales to use and how to proceed come after you have answered the four tests of Highest and Best Use.

The water is muddy at first, but after you stir it with the answers to the four questions the water becomes very clear.

 

[Calvin the Airedale]

Highest and best use is like a four banded slot machine. The first band is "zoning": what uses are legally permissable. The second band is buyer "demand" for specific land uses. The third band is "surrounding and neighboring land uses": what use of your subject site complements surrounding uses to maximize value? The fourth band is" physically possible". To what uses do the size, shape, topography, soil conditions, etc, of your subject lend themselves?

Each of these categories will point to a specific use or types of use as their best answer. Just like in that slot machine, when all the bands align, JACKPOT! You've hit on the H&BU.

 

[Terrel L. Shields]

Just like in that slot machine, when all the bands align, JACKPOT! You've hit on the H&BU.

been going to Indian Bingo again???

Nice analogy though. Yes, the house WAS residential. Zoning will tell you the allowed uses. If COMMERCIAL demand is low and it can be rented as a dwelling without violating the zoning, then you may also have the issue of an interim utility as a residential property... We have seen some of our residential convert to commercial along certain streets but as the retail office space shortage dried up and a surplus of commercial properties were on the market, we saw some of the "office-residential" properties convert back to living space. My nephew's old office was built similar to a house but originally was an office. after he vacated it, the owner petitioned a change to residential and made it into a house after it did not sell.