Reporting a per acre price on land appraisals

[Chad Calhoun]

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]

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]

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]

Thanks Kevin. For clarification, my question applies to known acreage reported by reliable sources such recorded surveys.

 

[Chad Calhoun]

Timothy,

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

Thanks,
Chad

 

[CANative]

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]

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]

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]

....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]

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.