Selecting comps for 5 acre hypothetical condition

[Chris Smith]

Hello all. Should I select only comps that are 5 acres or use comps that are approximately the same size of the subject's actual acreage size and then comment on the hypothetical value on the remaing acreage of the
comps. I have already turned down two assignments of this nature due
to lack of knowledge but have done reasearch and am ready to tackle
such assignment. It seems to me if I was appraising improvements
with only 5 acres then I should use comps with only five acres.
Thank for any replys. Tommy Smith - Oklahoma

 

[Elliott]

Chris,
This is how I do it on 5 acre valuations.
Of course pick the most comparable
properties....

The subject is assumed to be limited to 5 Acres

If a comparable is 20 acres....it gets a superior
adjust for its extra 15 acres (even if the subject is
really 20 acres).

If a comparable is 5 acres....no adjustment.

I've never had any real problems with this logic from
underwriters....of course it brings the subject property in lower
than its 'real' market value.

elliott

 

[Richard Carlsen]

This is a hypothetical appraisal considering only the front (usually) 5 acres of subject at the specific request of the client. (Say that in your report. Don’t take responsibility for considering only 5 acres!) And if they don’t tell you which 5 acres and give you a legal description, put “No legal provided” in the report.

We do a lot of these up here in the North Country. The powers that be don't seem to understand that acreage is a real plus in a low-density market. And unless they specifically tell me which 5 to use, I state that it is the front five acres unless there is a great deal of road frontage and then I make it a square or whatever is needed. The one thing that I do is make sure that the 5 hypothetical acres that include the improvements are the most valuable 5 acres I can find.

The reason I do this is that in reality right now, we are seeing 5-acre parcels sell for 65 to 75% of what a 10-acre parcel sells for. The front 5 acres is the most valuable of a 10 acre parcel and I want to make sure that the homeowner who is taking a cut in his site size, gets everything he/she deserves in value.

 

[Chris Smith]

Thank you, Elliot and Richard for your replies. I understand your logic
in this instance. Acreages in my area are similar to your % with 5ac vs
10ac. I will also try to get some input from an appraiser I once worked
with. Tommy Smith - Oklahoma