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Residential appraisal with lot that is dividable

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Jim Hild

Thread Starter
Freshman Member
Joined
Nov 26, 2003
Professional Status
Certified General Appraiser
State
Minnesota
I am doing a residential appraisal on an improved property that has 3+ acres. This is in an area where 15,000 SF sites are the norm. The city zoning department indicates that one lot could be split off from the site. (It has not been split nor does the owner have plans to split off a lot).

The value of the site as currently improved is higher than the value of the site as if vacant and available for other uses. Therefore, the highest and best used as improved is the present use, right?

Then how do I handle the potential extra lot ? Do I consider the extra land as excess land even though it has a potential extra value if separated.


Thanks

Jim
 

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
This is why residential appraisers always need to stop and think twice about Highest and Best Use and stop just checking a box.

It's your job to establish the HBU and appraise it accordingly.

I'll bet there is a high number of appraisers out there who appraise in areas undergoing big time revitalization and they never think that the highest and best use may be something other than 'as improved'.
 

dobie

Senior Member
Joined
Oct 26, 2003
Professional Status
Certified Residential Appraiser
State
New Jersey
I am doing a residential appraisal on an improved property that has 3+ acres. This is in an area where 15,000 SF sites are the norm. The city zoning department indicates that one lot could be split off from the site. (It has not been split nor does the owner have plans to split off a lot).

The value of the site as currently improved is higher than the value of the site as if vacant and available for other uses. Therefore, the highest and best used as improved is the present use, right?

Then how do I handle the potential extra lot ? Do I consider the extra land as excess land even though it has a potential extra value if separated.


Thanks

Jim

Jim,

I assume that this would require an application for a formal subdivision which may or may not be approved, correct? What the zoning department says informally doesn't really mean squat. Since you cannot predict what the planning dept or whichever department reviews subdivisions would do I think you should treat as excess land.

I have heard of appraisers making exceptions where they could demonstrate through numerous examples of similarly sized sites that were routinely approved for subdivision but simply because the site is large enough does not mean that it meets all the other requirements whatever they may be. There could be issues that your are not aware of.
 

Jim Hild

Thread Starter
Freshman Member
Joined
Nov 26, 2003
Professional Status
Certified General Appraiser
State
Minnesota
Jim,

I assume that this would require an application for a formal subdivision which may or may not be approved, correct? What the zoning department says informally doesn't really mean squat. Since you cannot predict what the planning dept or whichever department reviews subdivisions would do I think you should treat as excess land.

I have heard of appraisers making exceptions where they could demonstrate through numerous examples of similarly sized sites that were routinely approved for subdivision but simply because the site is large enough does not mean that it meets all the other requirements whatever they may be. There could be issues that your are not aware of.

You are correct. I never thought of it that way.
 

David Wimpelberg

Moderator
Staff member
Moderator
Joined
Mar 30, 2005
Professional Status
Certified General Appraiser
State
New York
Jim,

I assume that this would require an application for a formal subdivision which may or may not be approved, correct? What the zoning department says informally doesn't really mean squat. Since you cannot predict what the planning dept or whichever department reviews subdivisions would do I think you should treat as excess land.

If two conforming lots can be created, and there are no other issues (wetlands, encroachments, easements, etc.), then there is a low probability that a subdivision would be denied; i.e., there is no basis for denying the subdivision. That being the case, the subdivisibility of the lot has to be taken into account. Market participants typically do not pay the same price for subdivisible and nonsubdivisible lots, and the appraiser would have to consider that in the valuation.

The problem becomes more complex if a variance is required. In that case, the probably for denial is always possible, though it is less likely in some cases than others.
 
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