MRM,
Let's go back to the original assignment, which was to value the property in it's "As Is" condition. There are no plans and specs, no current proposals to split or subdivide the lot, or anything else going on from a development standpoint. You have a 20 acre lot and an old house. What you need to determine is whether the property is worth more as a house or as a single piece of land with its present zoning. There isn't any need to go through a full blown subdivision analysis or a myriad of potential specific use analyses because that isn't what you have. With me so far?
First thing to do on this (as you already know) is to find out about the zoning. I don't know about this particular assignment or your area, but one of the most common errors on appraisal reports in general is when appraisers make assumptions about zoning, or when they use the zoning designations that appear in the data services or the MLS. In my area (southern Calif), the zoning as reported for residential properties in the different subscription data services are incorrect at least 20% of the time; and for non-SFR properties the reported zoning is incorrect at least 50% of the time. There is no substitute for actually knowing what the zoning is, and in this case it's going to be one of the most important aspects of the subject property, even if a potential buyer would be thinking of getting it changed. Call and find out if the zoning authority doesn't already have it online. You need to find out the specific category and what it allows. Bear in mind that these allowable uses usually represent the maximums, which can only come to pass if everything else works out. You don't need to be concerned with uses that fall outside those allowed in the zoning category, because even if one developer can pull it off it isn't automatic that everyone could reasonably expect to do the same.
Once you know about the zoning you can categorize the property generally as either residential or non-residential. There are other elements of H&B with which I am sure you are familiar. You can take a short cut before going through all this and run straight to your data to look at comparable sales data involving large parcels and old homes on as large a lot as you can find. I assume that you'll end up with two sets of data rather than one because there probably aren't a lot of properties with both elements. You will need to figure out whether the buyers are paying more for the land value or for the residential use with extra land. We talked about that in the previous posts, and you already know how to do that. If it turns out that the land is where all the value is, then you can go back and run through the other elements of the H&B Use analysis; the physically possible, financially feasible and maximally profitable. If the market data is giving more weight to the residential use then you are already done; you can skip the other elements because the existing use is already there. If it's a combo (typical buyer would retain the house but do a lot split and sell of the excess), then you have to pay a little more attention to what it would take to pull that off.
As for writing up the report, there isn't any need to write the great American novel, although you can if you want. This is (I ASSume) a summary report, so simply summarize your H&B use analysis, probably using a couple paragraphs. If the existing use represents the highest and best use, just say so. If it is an interim use, disclose it and then take your best shot at estimating the remaining economic life (which will be different from the remaining physical life) in the report. If you end up finding this as an SFR with extra land, the only thing I would expand on a bit would be to really summarize the zoning; don't just put in the 1-liner, but throw in a short paragraph or even a copy of the ordinance in the addenda. Most zoning codes I've seen have such summaries in them for each category. If you end up doing it as land, I would expand both zoning and H&B disclosures and really paint the picture (zoning, topo, access, offsite improvements, utilities, demand, etc.). Reason being that land valuation is really all about possibilities and potential uses. With land appraisals, the Highest and Best Use analysis is the most important element.
So there you have it. You'll end up doing a lot more investigation and analyses, but the report only needs a summary sufficient to hit the high points. Needless to say, your client won't be able to recognize all the extra work you had to go through, but that's the way it goes. But cheer up; assignments like these will be the very last to get automated. We can think of these things as career extenders.
George Hatch
