Richard Carlsen
Elite Member
- Joined
- Jan 15, 2002
- Professional Status
- Licensed Appraiser
- State
- Michigan
Steve;
In answer to your question,
the answer is no. We have a fee schedule for vacant land that is entirely different that SF dwellings. In addition, my land appraisals are Complete Appraisals with Summary Reporting.
Again, it comes back to the fact that what we do must not confusing to the client. Most of the land appraisals we do are private appraisals as there is very little financing of vacant land. Therefore, the client is not sophisticated in reading appraisals and the photos would add nothing to their overall understanding of the report. In fact, with this type of client, it would really be best just to give a letter with a value. The report in itself can be a little overwhelming and much more than what they want.
I have a sale of a 30 acre parcel report to write right now that consists of 3 ten acre contiguous parcels with the eastern most parcel having water front on a small private lake. I talked to the lender and this loan, like most lending on vacant land, will be a portfolio loan. The best approach to appraising this property will be as an assemblage valuing the 2 ten acre off-water parcels and then valuing the 1 ten acre parcel with waterfront. These values will be brought together for a final opinion of value. On vacant 10 acre parcels in this market, I typically use 4 or 5 sales since they are scattered about the area. If I were going to take comp photos of 10 acre parcels and have the photos represent the comps properly, I would need at least two photos per comp. Can you imagine the report with say 4 comps per site and 2 photos per comp for a total of 24 pictures of vacant land for the client to look at? What would the client see by all of these pictures? The volume of the report alone would be confusing to the client. Plus there is the problem of going on land that I do not have permission to go on, etc.
No, I do not think that there is real justification for comp photos on vacant land. BTW, my fee for this assemblage report will be the same as for a URAR but a simple vacant lot in a sub (under 1 acre) starts at $150.
Once again I go back to the fact that, to the best of my knowledge, the secondary market does not buy loans on vacant land. Therefore, the secondary market guidelines do not apply to vacant land appraisals. If a lender tries to cite the secondary market guidelines as justification for comp photos, I think they are misunderstanding the process. One of the things that we as appraisers often do is translate those same secondary guidelines into all of the appraisals we do. We tend to forget that in doing a private valuation or other non-secondary market sale appraisal, we are free to do what we please in reaching an opinion of value as long as it makes sense and we explain it well. I've done some very large acreage parcels (+1000 acres) where I've used sales back 4 years as they were all that we had to hang our hat on. This spring I did a 200 acre vacant parcel with 6000 feet of prime trout river flowing through it. I used sales back 2 years and one that was 85 miles away. It is all we had. These of course, would easily exceed the secondary market guidelines, if they had been destined for the secondary market. They were not so I was not bound by the secondary market guidelines.
In answer to your question,
the answer is no. We have a fee schedule for vacant land that is entirely different that SF dwellings. In addition, my land appraisals are Complete Appraisals with Summary Reporting.
Again, it comes back to the fact that what we do must not confusing to the client. Most of the land appraisals we do are private appraisals as there is very little financing of vacant land. Therefore, the client is not sophisticated in reading appraisals and the photos would add nothing to their overall understanding of the report. In fact, with this type of client, it would really be best just to give a letter with a value. The report in itself can be a little overwhelming and much more than what they want.
I have a sale of a 30 acre parcel report to write right now that consists of 3 ten acre contiguous parcels with the eastern most parcel having water front on a small private lake. I talked to the lender and this loan, like most lending on vacant land, will be a portfolio loan. The best approach to appraising this property will be as an assemblage valuing the 2 ten acre off-water parcels and then valuing the 1 ten acre parcel with waterfront. These values will be brought together for a final opinion of value. On vacant 10 acre parcels in this market, I typically use 4 or 5 sales since they are scattered about the area. If I were going to take comp photos of 10 acre parcels and have the photos represent the comps properly, I would need at least two photos per comp. Can you imagine the report with say 4 comps per site and 2 photos per comp for a total of 24 pictures of vacant land for the client to look at? What would the client see by all of these pictures? The volume of the report alone would be confusing to the client. Plus there is the problem of going on land that I do not have permission to go on, etc.
No, I do not think that there is real justification for comp photos on vacant land. BTW, my fee for this assemblage report will be the same as for a URAR but a simple vacant lot in a sub (under 1 acre) starts at $150.
Once again I go back to the fact that, to the best of my knowledge, the secondary market does not buy loans on vacant land. Therefore, the secondary market guidelines do not apply to vacant land appraisals. If a lender tries to cite the secondary market guidelines as justification for comp photos, I think they are misunderstanding the process. One of the things that we as appraisers often do is translate those same secondary guidelines into all of the appraisals we do. We tend to forget that in doing a private valuation or other non-secondary market sale appraisal, we are free to do what we please in reaching an opinion of value as long as it makes sense and we explain it well. I've done some very large acreage parcels (+1000 acres) where I've used sales back 4 years as they were all that we had to hang our hat on. This spring I did a 200 acre vacant parcel with 6000 feet of prime trout river flowing through it. I used sales back 2 years and one that was 85 miles away. It is all we had. These of course, would easily exceed the secondary market guidelines, if they had been destined for the secondary market. They were not so I was not bound by the secondary market guidelines.