MLS Comp Photos WTF!

[DWiley]

Or you can use the county assessor's values if the comparable land sale values cannot be determined and there are no vacant land sales.

Just when you thought this one might finally die, you get a zinger like that.

If we are going to just use the tax stuff, why do we need comps at all. If its good enough for the site, just go ahead and use it for the whole property. It would save you a ton of time.

:new_all_coholic:

 

[LindaSL]

It was recommended to us in a class by an instructor, sorry for throwing out a zinger! However, it's a starting point to consider. How do YOU find land values on properties in the inner cities where there hasn't been a land sale in years and years? I'd like to know for my own good.

 

[Mike Garrett RAA]

And what about extraction?

 

[Michigan CG]

Or you can use the county assessor's values if the comparable land sale values cannot be determined and there are no vacant land sales.

I know a lot of people do it but that is not acceptable appraisal practice. You may reference the assessor, but you must analyze the data.

Assessed value of land here is at least triple what it would sell for.

 

[CANative]

Linda... Assessor data is one source which can be analyzed in developing indications of value using allocation (for example). Allocation is not the same as extraction. You need to do more work though in the allocation method and can't just rely on bare assessor data.

 

[LindaSL]

Why would an instructor tell us that if it was not acceptable appraisal practice? That is upsetting. Before then I was doing the extraction method but found many times the value was either a negative number, or astronomically larger, and felt I was 'backing' into the site value. I do reference in the cost approach (which isn't even required, but required if you know what I mean) that I use the assessor's records when there are no land sales. Mr. Evans, you recommend I should return to using the extraction method?

 

[CANative]

Try to find some "similarish" lot sales in competing markets and compare the lot sale price to an improved similar lot. This should give you a ratio or percentage of the land value to improvement value. Say 35%. Do this a couple of times.

Examine public records for properties in the subject's neighborhood and see what a typical ratio of land to improvement is based on mass appraisals performed by appraiers employed by the assessor.

Examine any sales you can find of similar properties where the improvements were in poor condition, really old, or of nominal value and extract their depreciated contributory value.

You should be able to come up with a reasonable (supportable) opinion of the ratio between land and improvements. You can apply this ratio to your comps to estimate the site value for the subject.

Make sure you document your work in the report so that the client can replicate your estimates and calculations.

 

[Michigan CG]

Why would an instructor tell us that if it was not acceptable appraisal practice?.........

Because he is not a good instructor?

......Before then I was doing the extraction method but found many times the value was either a negative number, or astronomically larger, and felt I was 'backing' into the site value......

Extraction and allocation are not easy in some cases.....

Extraction
A method of estimating land value in which the depreciated cost of the improvements on the improved property is estimated and deducted from the total sale price to arrive at an estimated sale price for the land; most effective when the improvements contribute little to the total sale price of the property.

Allocation
1. The general process of separating value between the component parts of a property.
2. A method of estimating land value in which sales of improved properties are analyzed to establish a typical ratio of land value to total property value and this ratio is applied to the property being appraised or the comparable sale being analyzed.

Allocation by Abstraction
A method of separating a whole property value into land and improvement components. The appraiser estimates replacement cost, subtracts an appropriate amount for depreciation, and subtracts the remainder from the whole property value to estimate the land value. (IAAO)


Sujest reading pp 248-252 of Appraising Residential Properties 4th Edition by the AI or if you have access to the 12th Edition of The Appraisal of Real Estate pages 335-336 and 339-341 also from the AI.

 

[444nutman]

Why would an instructor tell us that if it was not acceptable appraisal practice? That is upsetting. Before then I was doing the extraction method but found many times the value was either a negative number, or astronomically larger, and felt I was 'backing' into the site value. I do reference in the cost approach (which isn't even required, but required if you know what I mean) that I use the assessor's records when there are no land sales. Mr. Evans, you recommend I should return to using the extraction method?

If you have a negative land value which is normally not possible then you need to consider economic obsolescence. I see so many reports with 40$/sf to $50/sf for cost to build which drives me nuts. The market is selling for less than cost to build, then the difference is your economic obsolescence.

 

[CANative]

The entrepreneurial incentive needed to start a project is greater than the value of the land due to the uncertainty, risk and costs of holding the property until it was profitable to proceed.

On paper it might look like a negative value but it's not because if the price was lowered enough to take the risk the land would sell.

i.e. What Nut Man said.