Not confident in view adjustment

[juck224]

Hello all, I am working on a complex assignment, particularly due to the view of this property. This property is located in an association on the most desirable lake in this county. The property itself and the area are not unique or challening; I have completed many in this area both waterfront and non-waterfront. What makes this report complex and having me second guess myself a bit is the view adjustment. This property is located at a certain portion of the lake that abuts a small beach area and provides direct, unobstructed and expansive water views without having waterfrontage itself. This view appears to have been a larger driver in the list price and contract price, and I dug up data and looked at 100s of comps to find a reasonable view adjustment. After finding 6 comparable sales within 0.25 miles and in the same association, I found exactly 1 similar non-waterfront home with the same expansive unobstructed water view. However, after employing sensitivity analysis and bracketing this adjustment, it came out way larger than expected and with the adjustment applied the value actually reaches the contract price. I suppose I am struggling because the adjustment is so large (25% of the final opinion of value) that it seems unreasonable in my head. I never have been and never will be that appraiser that just hits a contract price, but in this case seeing it made me dig so deep for data that I ended up supporting it; and although I seem to have good comparables and good support, this large adjustment, along with the high line, net, and gross adjustments across the board on the comparables has me very nervous about hitting send on this assignment. I suppose I am just asking for any advice or if anyone else has felt this way and what they have done about it? Thanks all

 

[Trihard]

If the data says the view adjustment is 25% then the view adjustment is 25%.

 

[glenn walker]

You noted without water frontage my thoughts are have you focused on the Separate View adjustments without include overall site and location adjustments? It may have the best view on a clear day when suns not shining on the water but is it the betted site-size utility access to water etc ? I rarely think in terms of view only and often include view and location into one combined adjustment so duplicate adjustment aren't being made. Buyers rarely purchase just a view but the site location and view as a package. Also in some areas in winter the views no good for half the year.

Anyway just a thought about total sites and locations versus just the view. Frankly 25% gives me stomach pain thinking about defending it on it's own.

As a past reviewer I would target water front values versus just view and overall size and utility. Just some thoughts to consider.

 

[juck224]

You noted without water frontage my thoughts are have you focused on the Separate View adjustments without include overall site and location adjustments? It may have the best view on a clear day when suns not shining on the water but is it the betted site-size utility access to water etc ? I rarely think in terms of view only and often include view and location into one combined adjustment so duplicate adjustment aren't being made. Buyers rarely purchase just a view but the site location and view as a package. Also in some areas in winter the views no good for half the year.

Anyway just a thought about total sites and locations versus just the view. Frankly 25% gives me stomach pain thinking about defending it on it's own.

As a past reviewer I would target water front values versus just view and overall size and utility. Just some thoughts to consider.

Yes this was along the lines of my thinking, was it the location across from the neighborhood park and the view combined? Regardless I have one comp on this same side of the lake, it is offset slightly further back but has an elevated site with direct, unobstructed views and is the comp that brackets the adjustment, so supporting it as much else than a view (as other comps without this view have similar site utility) seems non-defensible in this case. As of right now I seem to have one good comp for support, and after expanding all parameters (other lake market segments, older sales up to 5 years, etc) I simply cannot find another similar sale with this feature. 25% view adjustment certainly makes my stomach churn as well, but wt the same time I feel like I have 1 strong piece of data to support it but not much else unfortunately. I’m going to sleep on this one because I’m really torn, if the data tells me that’s what it is, that’s what it is. But, it really sucks how limited the data is in this case, and I generally agree that most people don’t buy for a view alone, which only makes this more complex. Ugggh

 

[CGinMN]

What lake and price point? A lake like Geneva where there is more scarcity but a lot of wealth could have a big premium for view. A minor lake I wouldn’t expect to see this much for view, but maybe.

Does the subject have a prior sale? If not can you look at lot prices? I would interview the agents involved in the similar view sales and ask them, maybe you will uncover something else that impacts your analysis. I agree that it might not just be exclusively a view premium, but other locational factors built in.

 

[Surf Cat]

This view appears to have been a larger driver in the list price and contract price,

Is the subject's contract price above all the gross sales prices of your comparables?

 

[juck224]

Is the subject's contract price above all the gross sales prices of your comparables?

Nope, the sale with the similar view has downward net adjustments.

 

[Joe Flacco]

Sometimes adjustments are large. There is nothing wrong with a 25% adjustment if that is what the data shows.

 

[Surf Cat]

Nope, the sale with the similar view has downward net adjustments.

Then I'm in agreement with Glenn and CGinMN. It may be not only the view, but its location within in the development as you describe below.

This property is located at a certain portion of the lake that abuts a small beach area and provides direct, unobstructed and expansive water views without having waterfrontage itself.

Find the agent / brokerage that turns a lot of the sales in the development and get their opinions. They have their fingers on the pulse of that market. Good luck.

 

[KHS445]

Where does your site value, which I would argue is the proper adjustment, fall in the value range between, no view, view, and waterfront? From what you have described, and if beach access is in the immediate vicinity of the subject, sounds closer in value to a waterfront lot than a view lot. Numerically, if a non-view lot is worth 1X, a view lot is worth 1.5X and a waterfront lot worth 2X, is the subject lot worth 1.75X or 1.8X? Maybe, if you have a waterfront sale that is very similar to the subject, with the only real difference being the frontage you should include that sale as an additional sale, with the major adjustment being the water frontage.

For me location and view are really just a subset of site value and one needs to be extremely careful not to make multiple adjustments for what could be considered the same feature. Basically, if you are adjusting for location and view, then your site value should be based on the site being in an average location without a view.