Reporting a per acre price on land appraisals

[Chad Calhoun]

Terrel, I think you are right. I know there are many variables to consider with vacant land. The question I'm asking is "Would you reverse the sales price and sales price per acre on the form?" (Timothy, there are several land forms).

 

[Mztk1]

Chad:

To answer your question, No, I wouldn't.

I think determining the price per acre in a market and applying that to your subject's acre is potentially a viable way to determine value, but I don't think it is the sales comparison approach to value. It would be akin to taking the price per square foot of an improved residential lot, making adjustments to it based on the comps, and then multiplying it by the square foot of your subject. Might work, might not, but even if it does, it would be an extra step.

I do my land appraisals based of the sale price of the land, make adjustments for lot size differences, location and view difference, zoning/potential # of lot differences, etc. and the reconcile the adjusted values.

 

[CANative]

Jim... do you have an eazy-peazy, homogenous market with plenty of sales to choose from and lots of conformity?

 

[RSW]

Tim,

a la mode has two land appraisal forms that I know of. There is an old form that was used years ago and now there is ths vacant land y2k form. I have used both of them. I think I like the y2k form best.


Scott

 

[Mztk1]

Greg:

In suburbia, yes, but in rural areas, no.

What I am saying, and it came out garbled when I re-read my post, is that in my sales comparison approach I will consider the sales prices and make adjustments to the varying amenities and then reconcile. Simple enough.

But that doesn't preclude the fact that I will sometimes break things down on a price per acre basis, or in some cases price per allowable unit. When I do that, though, it will be a separate analysis in the addendum used to support the sales comparison approach. I will not omit the sale price of the comparables in the sales comparison approach and put in the price sold per acre and adjust off that, like I think the OP is saying he's seen.

 

[Mike Boyd]

No. You express the value as a whole, not by the acre in a written appraisal report. By comparison, you would not call the value of a house at $25,000 per room, would you. Same with land.

 

[CANative]

I've only done a handful of small lot land appraisals because there are just so few in my area. But there are a lot of large, rural or even remote tracts and that's usually what I end up appraising. The problem is that a lot of time passes between sales of what might be considered reasonably comparable properties. By the time you wrestle with differences in zoning versus lot size versus access, water, power, views, locations, different types of buyers, impossible to track down REALTORS, faulty MLS data, faulty public record data, certificates of compliance (which increase or decrease the potential for lot splits), retired APN's, new APN's, boundary line adjustments before, during and after the transaction and compound all this with the moving target of roller coaster ups and downs in the market over the years which is not the same from area to area, I usually end up with an unreconcilable bottom line.

So I try to solve the problem by discussing the price per acre range from low to high and how the subject property fits into the range (most like the these property, less like those properties, etc). When I'm "comfortable" with a PPA I just apply it the subject's lot size.

 

[Terrel L. Shields]

Since many tracts are subject to future survey and are inprecise as to size, I do estimate the price per unit and report both. However, there is nothing in USPAP to prevent you from reporting the unit price particularly if the client requests it or it is necessary to make it clear and misleading about what is driving the price. Quantity has a quality of its own as Lenin said.

BTW, in appraising mineral rights the unit price is the key since many titles are vague and/or over-deeded property. Its called the Duhig rule...people conveying fractions sometimes have problems adding fractions up...and frequently the actual acreage is not known until a full title search is made back to statehood when possible.

 

[Ray Christ]

When doing vacant land I regularly use the per unit method (acre, square foot, front foot). I find that there are a good number of comps available within reasonable range of the subjects. I believe that under the price there is a box for the per unit value and a place to state the unit. Then the adjustments you make are also per unit to a final per unit conclusion the.

Why not use the per unit idea since I find that most land developers use it when pricing thier lots?

This is similar to the 1025 multi family form where the per room, per unit, per GBA, per GRM are calculated and can be considered in a final value as I see it.

 

[Joker]

I do both, depending upon the assignment.

In my market, people talk about price per acre whether it's farm land or residential land. Around here buyers, sellers, and general conversation usually gets around to what land sells for per acre. An 8.651 acre lot will convey for $47,580.50 because the agreed upon price is $5,500 per acre and a 243.341 acre farm will likely sell for $681,351.80 because the agreed upon price is $2,800 per acre.

Different markets behave differently.