Sensitivity Analysis For GLA

[George Hatch]

Okay, so we're not going to blow off the site sales

Anyways I am just sharing my observations from this Glendale case study. You might take away something from what I said or you might not. I am already aware that it is basically consensus that site sales are the best way to develop site values.

I read your characterization of "I am already aware that it's basically consensus" as being less than a ringing endorsement.

If your assignment is to value the site on Stevens (which is literally THE all-time high sale for such a lot in all of Glendale) how would you go about valuing it higher than its sale price?

Bear in mind the point that site has additional improvements to it that most other sites of that type don't have.

 

[Joe Flacco]

I want to know what you're going to do when your assignment is valuing one of those lots, and not an existing SFR

It would certainly be strange for a reviewer or client to receive the site value appraisal that reflects what i am saying is going on in the market.

 

[Joe Flacco]

Okay, so we're not going to blow off the site sales


I read your characterization of "I am already aware that it's basically consensus" as being less than a ringing endorsement.

If your assignment is to value the site on Stevens (which is literally THE historical high sale for such a lot in all of Glendale) how would you go about valuing it higher than its sale price?

The phenomenon i am describing would not be presented well I'm a land form for sure. Maybe even get sent to the licensing board for being so strange. What I am saying is that the anticipated depreciation to the complete new home is being priced into the lot. Same as with that POS 45 degree lot pricing in the anticipated depreciation from whatever they build on that lot.

It doesn't change that what I am describing is what is happening. It is not that the improvement is contributing more than it should. It is that the lot sales are adjusting for anticipated depreciation.

 

[George Hatch]

It would certainly be strange for a reviewer or client to receive the site value appraisal that reflects what i am saying is going on in the market.

I think it's safe to say that there is no overlap between the types of clients and reviewers we deal with.

Fun fact: I've actually performed more land appraisals this year than SFR appraisals. Not counting the point that the reason it was me performing the assignment on a couple of those SFRs and not some AMC appraiser was because the property included site valuation issues that most of the SFR appraisers can't or don't want to deal with.

 

[Joe Flacco]

I think it's safe to say that there is no overlap between the types of clients and reviewers we deal with.

Fun fact: I've actually performed more land appraisals this year than SFR appraisals. Not counting the point that the reason it was me performing the assignment on a couple of those SFRs and not some AMC appraiser was because the property included site valuation issues that most of the SFR appraisers can't or don't want to deal with.

Good for you George.

 

[George Hatch]

The phenomenon i am describing would not be presented well I'm a land form for sure. Maybe even get sent to the licensing board for being so strange. What I am saying is that the anticipated depreciation to the complete new home is being priced into the lot. Same as with that POS 45 degree lot pricing in the anticipated depreciation from whatever they build on that lot.

It doesn't change that what I am describing is what is happening. It is not that the improvement is contributing more than it should. It is that the lot sales are adjusting for anticipated depreciation.

I think what you might be grasping for is the difference in the potential lot utility. Which is the value being measured when we value vacant lots. I never approach a land valuation based solely on gross lot area. Lot utility is always the thing

Do you think the existing homes on the odd side of the street (level lots) sell for noticeably more than the existing homes on the even side (terraced)?

If you had an assignment for an existing home on a level lot vs one on a terraced lot in your own market, what kinds of adjustments would you expect to have to make to account for the difference in lot utility?

 

[Joe Flacco]

I (obviously) disagree with 100% of this post.

Do you think the existing homes on the odd side of the street (level lots) sell for noticeably more than the lots on the even side (terraced)?

If you had an assignment for an existing home on a level lot vs one on a terraced lot in your own market, what kinds of adjustments would you expect?

What about the lot sale of 1436 Ethel Street for $500,000? It's a flat 8,000 SF regular shaped lot backing to that flood thing. It is a little bit "closer in" than the POS lot. The buyer of that POS 45 degree lot is not anticipating issues with the completed property?

I am pretty sure that I am not the first appraiser to ever bring up for discussion that anticipated depreciation is priced into sale price of lots.

 

[Joe Flacco]

It is like that lot on Stevens trading for $430k and the adjacent lot fronting New York Ave trading for $330k. That adjacent lot trades for $330k because the developer is anticipating a lower sale price when new home is built.

 

[Joe Flacco]

Developers are not retards.

 

[George Hatch]

Remember when I told you that I had reviewed every listing for land in Glendale going back to 2006? Did you think I was bluffing? do you think that you can somehow find something that I would have missed? Do you think I was unaware of the Willalee sale OR this site sale on Ethel?

That site sold with approved plans (which accrue to the costs of construction), which in Glendale and their design approval process is worth a lot of time and money. Why do you think I keep qualifying the sale on Stevens as being that highest sale of a lot without plans?