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Reporting a per acre price on land appraisals

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Chad Calhoun

Freshman Member
Joined
Jul 31, 2005
Professional Status
Certified Residential Appraiser
State
Arizona
Hi,

I have a question for the group. I am wondering how many appraisers report the comparable sales price per acre rather than the full sales price on a land appraisal? (i.e., the sale price is reported as $5,000 for a 10 acre parcel which closed for $50,000). I personally adjust the comps against the full sales price, but I have seen others adjusting on a per acre basis and then taking the reconciled adjusted per acre sale price and applying it to the subject's total lot size to determine value. Shouldn't the actual full sales price be reported where the form says "Sales Price?" Is this just a work decision and as long as the methodology and development is disclosed it's fine?

One concern is whether this may exclude consideration for excess land. Wouldn't a 5 acre parcel be more per acre versus a 40 acre parcel? Don't you have to divide the difference for items like utilities into the total acreage which makes this report more difficult to understand?

Thanks,
Chad
 

C. Kevin Bokoske MAI

Junior Member
Joined
Jan 30, 2002
Professional Status
Certified General Appraiser
State
Florida
In some assignments, the appraiser will not know the exact acreage, and the acreage will only be determined by a survey, and the survey will only be ordered if there is going to be a transfer, and the transfer depends on the value-per-acre (or value-per s/f). So you need that first!

Kevin
 

Michigan CG

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Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
When the land has income potential I always adjust using price per acre and sometimes per square foot.

Additionally when you have bare land you have to have some sort of measurement/comparison to go by. I have never adjusted using the total area.

Wouldn't a 5 acre parcel be more per acre versus a 40 acre parcel?

Not always, I can rent out the 40 acres to a farmer.
 

Chad Calhoun

Freshman Member
Joined
Jul 31, 2005
Professional Status
Certified Residential Appraiser
State
Arizona
Thanks Kevin. For clarification, my question applies to known acreage reported by reliable sources such recorded surveys.
 

Chad Calhoun

Freshman Member
Joined
Jul 31, 2005
Professional Status
Certified Residential Appraiser
State
Arizona
Timothy,

These are specific to HBU as SFR and non-agricultural uses. I should have stated that.

Thanks,
Chad
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
The sales price of each comp is listed at the top of a grid and under that there will be a price per acre which is just the math (price/acre).

I will then adjust the comps to the subject for difference in lot size, zoning, improvements, views, topography, access, excess or surplus land, etc, etc.

The adjusted sales prices are market value indicators for the subject and math can be applied (adjusted sales price/acre) for a per acre unit. I can then apply that to the subject's acreage for a reconciled MV opinion.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
A 5 ac. tract likely has a different HBU. If not, a Size adjustment is justified. However, caution as using a 5 ac. parcel vs a 40 or larger really really asks the question. Is the buyer of a 5 ac. tract the same as the 40 acre tract and the answer is generally no...
 

Chad Calhoun

Freshman Member
Joined
Jul 31, 2005
Professional Status
Certified Residential Appraiser
State
Arizona
Greg, I agree with your methodology. What I'm seeing is the sales price and price per acre being swaped. Is this an acceptable residential practice?
 

Michigan CG

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Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
....where the form says....

Can someone tell me what the form is called. I have never seen one. I assume that would be in my ala mode?

Learn something new every day.
 

Bama Bayou

Senior Member
Joined
Oct 19, 2006
Professional Status
Certified General Appraiser
State
Alabama
Whether or not I adjust by the unit (Acre, Sqft, etc) depends upon the property and the market. You will usually adjust on a per acre basis when comparing say, a fifty acre tract with a 100 acre tract. I would use lump sum adjustments with comparing a residential lot to similar lots. It may also be appropriate to make unit adjustments with a lump sum adjustment (cost to fill, grub, view, ect) it just depends on the situation. The point is to get the value correct while allowing the reader of your report to understand it.
 
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