Remnant Parcels of Land

[SPSDOT]

I have been requested to appraise a parcel of land that had been purchased by the Department of Transportation. Construction plans changed, and the entire parcel was not needed, leaving a remnant. The remnant parcel is of insufficient size to be a buildable lot. It seems that the only potential buyer for the remnant parcel would be the adjacent homeowner (there is only one property adjacent). I have enough sales to determine the land value (per acre or per square foot) for a typical vacant lot in the area. I believe that the estimated value for this uneconomic remnant should be discounted to reflect the very limited marketability, use and appeal. The only use would be assemblage with the adjacent property owner.

Sample appraisal reports have been provided to use as an example. In the sample reports, the appraisers used the full market value (per square foot or per acre) of a typical lot in the valuation of the remnant. No discount was made.

Comments, anyone?

 

[Abester]

Yes. Look for some uneconmic remnant sales. Your best source will be to find some new highway projects where parcels were landlocked, etc. and track the sales of those remnants (where the condemning authority did not acquire them as part of the project).

 

[Fred]

uneconomic remnant should be discounted to reflect the very limited marketability, use and appeal. The only use would be assemblage with the adjacent property owner

If you are calling it an uneconomic remnant instead of a remainder then haven't you answered the question? Isn't this, in effect, a total take?

On the second question, it seems to me that assemblage is not a use. Selling land is not using land in my understanding of things. What the parcel is worth to one and only one unique buyer is not (fair) market value.

 

[Ted Martin]

Sounds like a total take to me if the design engineers can't provide legal access to the subject(direct entrance or frontage road).

 

[PropertyEconomics]

It has been my experience that the condemning authority has some magic hocus pocus they often apply to the land after they know the market value. I have done a few of these and have always been asked to provide the market value without a discount to which they then applied multiple discounts to sell it to the adjoining property owner.
You may ask if they have this policy or exactly how they have treated similar parcels in the past.

They may in fact be the best source for you to find similar sales.

Good luck.

 

[Mike Boyd]

The assignment should call for an appraisal of the property that would benefit by adding this remnant. Find similar homes with various lot sizes to use as comps. The indicated values of the comps should show what that remnant is worth.

 

[Webbed Feet]

The assignment should call for an appraisal of the property that would benefit by adding this remnant. Find similar homes with various lot sizes to use as comps. The indicated values of the comps should show what that remnant is worth.

Mr. Boyd,

For a sale determination to the one buyer I don't doubt what you say as a seller trying to justify a price to the buyer. The study would be a negociation tool only. Because the fact remains, this is a study of value in use, not market value. If this one buyer refuses to buy, there is no apparent market for the land.

Webbed.

 

[Webbed Feet]

<snip> The only use would be assemblage with the adjacent property owner.

<snip>


Comments, anyone?

SPSDOT,

If that were true, and I were hired by the adjacent property owner..... I would immediately point out to this person that there is no "market value" of this parcel because the adjacent property owner is the only market!

So since we have skirted around the little fact that any typical definition of "market value" would have no meaning to the only buyer. What "market" is this offering going to be exposed to? The only value left is "value in use" to this one and only buyer.

Webbed.

 

[Fred]

SPSDOT,So since we have skirted around the little fact that any typical definition of "market value"

"We" didn't skirt. I put it in post 3.

The assignment should call for an appraisal of the property that would benefit by adding this remnant.

And what would that tell you? Party A owns the property being taken. How would the value of what A is losing be explained by the possible increase in value to Party B's property?

 

[Webbed Feet]

"We" didn't skirt. I put it in post 3.

Mr. Santora,

You're just too much of an individual to include in any "we" statement!

Webbed.