Obtaining a market value for a feature unlike any other

[Homestead]

Any thoughts on obtaining a market value for an adjustment on a property that backs to a water feature of a golf course when there are no other homes that back to a water feature anywhere in the market area?

 

[PropertyEconomics]

Any thoughts on obtaining a market value for an adjustment on a property that backs to a water feature of a golf course when there are no other homes that back to a water feature anywhere in the market area?

Homestead .. how about going to other golf course communities, even outside your market, and measureing a value difference as a percentage and then applying that to your market. It has been my experience that while prices may vary greatly from area to area, special feature differences like you describe, are often relatively consistent on a percentage basis.

I wish you well in this assignment.

 

[Homestead]

I am actually looking into that aspect right now - trying to determine a percentage difference for properties backing to some type of water feature.

 

[PropertyEconomics]

I am actually looking into that aspect right now - trying to determine a percentage difference for properties backing to some type of water feature.

Id caution you to make sure its not a water feature on which boats can be used. I would think that different than a golf course feature ... might want to look at carp ponds ... I golf alot and thats what I usually see.
I dont know how long you have .. but I have one sale that I can probably get tomorrow that is exactly as you describe and it too was the only one on the golf course backing to a water feature. Perhaps there is enough information to extract a percentage by comparing it with other homes in the area. Problem is it was the nicest house in the area ... an incredible southern window wall, three stories high looking out over a golf course pond with lots of trees shading the windows. Simply beautiful. Let me know if you have the time for me to see if I can chase it down.

 

[Homestead]

I think I found a solution - tell me if you think this sounds reasonable - I found a property on the same island which backed to a lake on a golf course.

Property which backed to lake and golf course (call it Property A)
- sold 07/16/2007 for $565,000 with $5,000 in concessions (effective sale price $560,000)
- 1,616 SF, 4 bedroom, 2.5 bath, built in 1994
- Effective Price Per SF = $346.53/SF
Property which backed to golf course but not to the lake (call it Property B)
- sold 08/15/2007 for $545,000 with no concessions
- 1,813 SF, 4 bedroom, 2.5 bath, built in 1994
- Effective Price Per SF = $300.61/SF
I then applied the Price Per SF of Property B to Property A to determine how much Property A would effectively have sold for had it not backed to the lake.
1,616 SF X $300.61 = $486,000 (rounded to nearest thousand)
Application of this theory - The difference between when Property A would have sold for if it did not back to the lake and the amount that it did sell for because it backed to the lake would represent the value of backing to the lake.
$560,000 - $486,000 = $74,000 or approximately 13% of its sale price was attributed to the lake feature.

 

[PropertyEconomics]

I think I found a solution - tell me if you think this sounds reasonable - I found a property on the same island which backed to a lake on a golf course.

Property which backed to lake and golf course (call it Property A)
- sold 07/16/2007 for $565,000 with $5,000 in concessions (effective sale price $560,000)
- 1,616 SF, 4 bedroom, 2.5 bath, built in 1994
- Effective Price Per SF = $346.53/SF
Property which backed to golf course but not to the lake (call it Property B)
- sold 08/15/2007 for $545,000 with no concessions
- 1,813 SF, 4 bedroom, 2.5 bath, built in 1994
- Effective Price Per SF = $300.61/SF
I then applied the Price Per SF of Property B to Property A to determine how much Property A would effectively have sold for had it not backed to the lake.
1,616 SF X $300.61 = $486,000 (rounded to nearest thousand)
Application of this theory - The difference between when Property A would have sold for if it did not back to the lake and the amount that it did sell for because it backed to the lake would represent the value of backing to the lake.
$560,000 - $486,000 = $74,000 or approximately 13% of its sale price was attributed to the lake feature.

Shouldnt you hold one of your sales constant and adjust the other to it with the resulting adjusted pricing being the basis for comparision?

Sale A ... Constant
Sale B ... Adjusted for square footage, age, etc compared to Sale A .. everything but location ... with the percentage difference at the end being your indicator?

 

[Homestead]

The only difference between the two was the SF as they were both built the same year and both had 4 bedrooms, 2.5 baths. Effectively they were the same house other than that one was larger - wouldn't that then break down to a price per SF concept?

 

[PropertyEconomics]

The only difference between the two was the SF as they were both built the same year and both had 4 bedrooms, 2.5 baths. Effectively they were the same house other than that one was larger - wouldn't that then break down to a price per SF concept?

Question .. do you think the lot would have sold for $74,000 more were it vacant?

You still must account for the square footage difference between the comparables in order to make the comparision. The resulting adjustment should be much less than $74,000. Im not sure what your square footage adjustment rate is but apply it and then see what the result is.

 

[Lloyd Bonafide]

Around here, a 10 to 15% adjustment for a golf course view vs. a non-view property sounds reasonable, in my opinion.

A 13% adjustment for a golf course view vs. a golf course plus lake view sounds excessive.

If you're basing this adjustment only on the sales of one pair of homes, be prepared to be questioned if a lender is involved.

 

[Homestead]

Lloyd,
I would have to agree that a 13% adj seems high, however, this is a resort property - high-end - and the realtor actually thinks it is worth a whole lot more han even 13%. If you have any other suggestions as to how I can determine a value for this feature without any sales I would be happy to take a look at them.