Obtaining a market value for a feature unlike any other

[PropertyEconomics]

John

I am not following your line of thought - can you walk through it with me a little more please.

Homestead,

Adjust your small sale upward for square footage (197 sqft @ $75/sf) or $14,775. $560,000 + $14,775 = $574,775 Adjusted Value of Sale A. (Use the appropriate square footage adjustment you have determined applicable in your market).

Sale A $574,775 divided by Sale B Sales Price $545,000 = Adjustment or approximately 5%. The water feature would then be concluded to have a 5% upward effect on value or roughly $30,000 in this pair.

Again the question I would have is, would this lot have sold for $30,000 more or 5% more (I would use the percentage rather than the dollar amount) than lots around it because it backed to the water feature on this golf course.

 

[Mike Boyd]

I can't recall making an adjustment for a water view on a golf course lake when comparing to golf course frontage, in general. Without significant market data to the contrary, I would think twice.

 

[PropertyEconomics]

I can't recall making an adjustment for a water view on a golf course lake when comparing to golf course frontage, in general. Without significant market data to the contrary, I would think twice.

It is an interesting question Mr Boyd. This lot, apparently, has both a golf course view and backs to a water feature. I personally would think that the two features would have greater value than just the one, but then again, I dont have the data or the anlaysis to show it.

 

[John Hassler]

John

I am not following your line of thought - can you walk through it with me a little more please.

What PE said in Post 21 (although you could also subtract the GLA adjustment from Sale B). I agree with PE in that one matched pair is not definitive proof however it heck of a lot better than no support at all.

 

[Homestead]

In response to some of the thoughts in this thread -

to J Grant in Post #18
The water feature is an extensive one with waterfall/lake/fountain/foliage and I do think that there is extra value in it than just the golf course view.

I also did try to go back to when it was originally purchased in 2005 and that did not help at all. It was a developer sale - there was one other home, identical model, backed to the golf course but not the water feature, sold on the exact same day as the Subject, but for $300,000 more than the Subject. I know some would then say that the water feature was a negative aspect, but without having the ability to go back to the developer (records are all in some dead trunk somewhere) to find out why there was such a price difference, I can not determine why the difference. So I did try that method.

TO Serena in post #19 -
There are no other houses that back to this water feature so I can not go back in time and extrapolate any information from the market.

To PE in post #21 -

I like this approach - however, the Subject is in a resort community and my matched pairs are not - how would I go about finding the appropriate adj to apply for the difference between a resort community and a standard residential community? Can I take the average price per SF for the standard res community and caompare it to the average price per SF for the resort community and apply the % diff to the $30,000?

The thought is that yes, the $30,000 makes sense for the standard res community but not for the resort community where everything is substantially higher.

 

[J Grant]

well, it is subjective, the contributory value of view to the entire home, not what the lot would have sold for as vacant...imo, unless the waterfall is a negative? (noisy?) unless it is a negative, use a similar adjustment as you would for any homes in area with similar value with a desireable feature...view or extra land, whatever contributory value "extras" seem to have. I usually keep such adjustments conservative unless I see evidence that buyers really are paying more...there comes a point where the buyers would just as soon not pay any more , esp in a resort community where they might use it only a few months a year.

 

[PropertyEconomics]

In response to some of the thoughts in this thread -

to J Grant in Post #18
The water feature is an extensive one with waterfall/lake/fountain/foliage and I do think that there is extra value in it than just the golf course view.

I also did try to go back to when it was originally purchased in 2005 and that did not help at all. It was a developer sale - there was one other home, identical model, backed to the golf course but not the water feature, sold on the exact same day as the Subject, but for $300,000 more than the Subject. I know some would then say that the water feature was a negative aspect, but without having the ability to go back to the developer (records are all in some dead trunk somewhere) to find out why there was such a price difference, I can not determine why the difference. So I did try that method.

TO Serena in post #19 -
There are no other houses that back to this water feature so I can not go back in time and extrapolate any information from the market.

To PE in post #21 -

I like this approach - however, the Subject is in a resort community and my matched pairs are not - how would I go about finding the appropriate adj to apply for the difference between a resort community and a standard residential community? Can I take the average price per SF for the standard res community and caompare it to the average price per SF for the resort community and apply the % diff to the $30,000?

The thought is that yes, the $30,000 makes sense for the standard res community but not for the resort community where everything is substantially higher.

Why not use the 5% to the values of the homes in the resort? As has been noted, typically, percentages apply rather uniformly with prices being the biggest difference. Since you have sales in your resort community, simply apply the 5% as an upward adjustment.
I hope others agree.

 

[Homestead]

J Grant

Good point on whether or not the buyers would pay more or not if they only use it a few months a year, however, they absolutely will use it as a selling point for renting out the house.