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(No) Value in Exchange

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ZZGAMAZZ

Thread Starter
Senior Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
I've been getting help in the Newbee Forum concerning HBU of a vacant parcel, and wish to move the topic here for wider exposure...

If an HBU analysis reveals that the current market reaction does not support improvement--legally permissible constraints about a lot too small to be developed without a variance, complete absence of local market activity within the prior 12 months for this type of parcel, etc.--interim use would be to leave vacant until the market changes.

Because there is no market for this parcel, there are no comparables, so the SCA wouldn't render results. Because it's vacant, the CA wouldn't be appropriate (unless allocation was used to determine the residential land value of improved properties?). It's not income-producing so the IA doesn't appear to be applicable.

If there is no market for the subject, is it worth nothing? I'm getting closer to the solution regarding HBU but valuation is elusive.

I'm amenable to being told that if I don't know the answer I should start to climb the USPAP competency ladder.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Everything has value and this parcel does as well. While it may take more work to calculate the value .. saying a parcel of real estate has no value is a very gross error in my mind.
 

ZZGAMAZZ

Thread Starter
Senior Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
Prop:

1) I knew I would eventually hook up with you in 2008 although I was starting to worry. In retrospect thanks for the tough love in 2007.

2) I threw in the possibility of using allocation based upon a reference you made to allocation in a thread a few months ago, concerning an entirely different topic related to the CA.

3) Can you throw me a small scrap to get me back on path towards determining the value...anything at all would be helpful.

Thank you.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
It seems to me Gama that the issue is one that perhaps you havent looked back far enough for sales. If you have no sales of other lots allocation will not work for you. It could be viewed as an assemblage (plottage) parcel and I would think there would be a purchaser at some price. Always remember everything has value. Some here will argue that it could be negative.... those are extreme cases and I dont gather from your post that is what you have.
Id search farther back .. I have done reports where I used sales 10 years old in an area ... with the most recent being 3 years ... the consistency among the sales was impressive ... if nothing moves value typically doesnt move either.
I hate to say this but so many times one must think out of the box and go beyond what is typically accepted. Its about doing a good job not meeting requirements meant for standard properties.
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
Vacant land with out value? What kind of value?

Market value is what we appraisers typically encounter as the problem to be solved. That requires that market sales exist, albeit maybe not recently.

You have not told us if the land in question is in an established neighborhood or is it way out in the boondocks. This would dictate the methods that might apply besides market sales of unimproved land.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
The value may be what it is worth to the neighbors to assemble into their existing parcel(s).
 

Doug Trites

Junior Member
Joined
Oct 17, 2007
Professional Status
Certified Residential Appraiser
State
Michigan
The value may be what it is worth to the neighbors to assemble into their existing parcel(s).

I agree that this may be the only way to value the lot, if it is unbuildable by itself. The only buyers would be the neighbors. Or the neighborhood for a common play ground area, veggie farm ETC
 

moh malekpour

Elite Member
Joined
May 25, 2002
Professional Status
Certified Residential Appraiser
State
California
As an appraiser, you should never say there is no market for a parcel of land. There is alway a market for anything if you provide a right value and adequate market exposure for it. Just check out the EBAY and see that people are willing to buy things that you have never thought there would be any value for them.
 

David Wimpelberg

Moderator
Staff member
Moderator
Joined
Mar 30, 2005
Professional Status
Certified General Appraiser
State
New York
If an HBU analysis reveals that the current market reaction does not support improvement--legally permissible constraints about a lot too small to be developed without a variance, complete absence of local market activity within the prior 12 months for this type of parcel, etc.--interim use would be to leave vacant until the market changes.

One thing to keep in mind that just because a vacant property is nonconforming in some aspect and will require a variance doesn't mean that the variance will be difficult to obtain.

That situation is extremely common in the Town I live in. Large sections of the Town are zone for minimum lot sizes of 40,000 sq.ft., but large areas exist where the typical lot is much smaller. The lots were legal at the time they were created, and single and separate when the code changed. the variance is still required, but unless there is some other issue (environmental, moratorium, etc.), the variance is always granted.

It is possible that the lot should be left vacant at this time; your market data will tell you that. An issue like that becomes extremely important when doing subdivision analyses, where absorption rates are extremely important. In some areas, the absorption rate might be close to zero for a few years out.
 

lmichels

Sophomore Member
Joined
Feb 15, 2007
Professional Status
Certified Residential Appraiser
State
Washington
Oddly enough, I did an appraisal about 6 months ago on a similar parcel. Subdivision was originally platted and annexed into the city as 5,000-8,000sf lots. Builder went under, city services were never extended to the the lots, and city gave up the property back to the county. County says you have to have at least 2 acres to build. The property had value only to people who owned the neighboring lots, or speculators planning to approach the people who had neighboring lots. Total value estimate was around $500 to $1000 for the general public (speculators), or up to $2,000 for the neighbors, depending on whether the neighbor had acquired enough surrounding lots to be close to the 2 acre min.

Everything has value, but not always very much. I found most of my data for lots in the development from the county assessor's auctions, and data going back several years.
 
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