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Selecting comps for 5 acre hypothetical condition

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Chris Smith

Thread Starter
Freshman Member
Joined
Feb 15, 2002
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

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
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

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
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

Thread Starter
Freshman Member
Joined
Feb 15, 2002
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
 
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