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Please Provide An Opinion Of Site Value

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BODEPHUS

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Jul 18, 2013
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Texas
Hey AF-
Seeing a lot of this type of revision request and don't really like completing it without adding some type of comment to it since I do not develop the Cost Approach.. Does anyone have any good commentary to place in a report for this?
We already have GREAT Cost Approach comments when it is not needed and developed..

Any thoughts?
 

The Warrior Monk

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Providing an estimate of the site value and providing a Cost Approach are separate matters. Requesting an estimate of site value for an improved property is simply a matter of the terms of engagement. It is also a separate opinion of value, and should be considered when accepting the assignment.

The Cost Approach may or may not be an assignment condition. If a Cost Approach is determined to be a necessary approach, then it must be developed in a market value assignment. If not, then it is simply an assignment condition.
 

BODEPHUS

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Certified Residential Appraiser
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Texas
Hey David-
Thank you for the response.. just really seeking some good commentary for it was all.
 

Terrel L. Shields

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Arkansas
without adding some type of comment to it since I do not develop the Cost Approach..
You always need the CA commentary in every report. You have two choices. The approach was not APPLICABLE, basically meaning the property was vacant land, or the approach was not APPLIED because it was not necessary for a credible opinion and is not an approach normally weighed heavily in the property type.

Site value is determined by land sales. A list of similar sales suggests a range of value, and below is a list that I determined sale X is the most similar and therefore is my opinion of the site value.

As said, land value is a separate issue. You could provide a list of bare lot sales or even listings and say this the value, or you could adjust it like in the improved grid. You need an idea of the land value as it is the key adjustment (in my opinion). Land is valued as if vacant and available for its highest and best use. Therefore, land price is fixed, and an defect in the land/improvement tends to accrue to the improvements. So a commercial lot of $100,000 is still $100,000 even if only a house is there. Say residential lots in the area are only $50,000. The house and lot combo is worth X dollars. With land value fixed, then the house is affected by functional obsolescence if incorrectly sited. No functional obsolescence is due to the location on a normal residential lot.

If you have few land sales, then be sure to keep all that you can find. I know Tx is non-disclosure but I would scour the MLS for land sales AND tear downs. A tear down is a tear down. It is telling you that the market thinks the LOT is worth all the sale price and the building is worth zero. Trust the market. (sale 1 is actually 28 lots sold in bulk)

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Peter LeQuire

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Retired Appraiser
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Tennessee
I don't know about other jurisdictions, but the TREAC requires that a reported site value must be supported by recognized methodology, data and a summary of the analysis used. Below is a portion of the TREAC's findings for two complaints:

":Cost Approach A cost approach was conducted utilizing a site value of $15,000. Support for the site value conclusion is limited to a statement indicating that site value was placed on an overview of land sales and in direct correlation with tax assessor’s records. The appraisal work file did not include a land sale analysis."

and from another TREAC action on a complaint,

"A cost approach was conducted utilizing a site value of $15,000. Support for the site value conclusion is limited to a statement indicating that site value was based on similar lot sales. The appraisal work file did not include a land sale analysis."

When a client requires a site value, I'll typically recite a summary of whatever sales information may be available and pertinent, and treat that information the same way I do the improved sales in the SC approach (though admittedly much more tersely). At least in Nashvegs, the Commission is also looking for a reconciliation statement for site value analyses.
 

residentialguy

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Minnesota
Cost approach aside...How does one really complete the SCA without support for land value?
 

Terrel L. Shields

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Certified General Appraiser
State
Arkansas
You need an idea of the land value as it is the key adjustment (in my opinion).
How does one really complete the SCA without support for land value?
My exact concern. Simply giving all sales similar land values, smacks of valuing the land "in use" without involving the real problem of determining functional and external obsolescences.
 

Peter LeQuire

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Retired Appraiser
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Tennessee
"All" is too broad a brush. No client I've ever had required a site value for the appraisal of a single condominium unit. Beyond that, there are some subdivisions/neighborhood/markets in which there are developments so similar that there is no discernible site value difference and the development of a site value is immaterial to the development of a credible sales comparison approach. That providing a site value is a common, GSE-driven requirement, the presence of a site value does not necessarily make every appraisal more credible than an appraisal without such.
 
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