Site Adjustments

[Terrel L. Shields]

My mentor used appraised land value as an indicator

Get a new mentor if you are saying the land value from the assessor. Farmland is not normally assessed at market value in most states. And land values may be very dated in the assessors data base.

 

[Tom Woolford]

Make the adjustments you are confident about first, then make the site adjustment that brings the adjusted range down as small as possible. If the comps with larger site have adjusted below the comps with smaller site, then you went too far.

I think I would resist that approach. Differences in site have to be adjusted for first, or other calculated adjustments (GLA, garages, pools etc) are all going to be erroneous. Of course, if an appraiser is just using the list their mentor gave them 5 years ago, or guessing, it doesn't make much difference one way or another.

 

[CANative]

^ "sensitivity analysis"

 

[Terrel L. Shields]

I think I would resist that approach. Differences in site have to be adjusted for first,

totally agree. The land is worth what it is worth... any defect in the improvement and land is allocated to the improvements. "Site" improvements, well, that is more difficult to extract but I'd try to adjust for those first and get to the improvements contribution.

 

[bnmappraisal]

Then I calculate price per acre

What's an acre? jk

My market doesn't have many sites over 43,560 sf

But many of the site values can be 6 digits

 

[Terrel L. Shields]

My market doesn't have many sites over 43,560 sf

citified living... few of my subjects are not on at least 5 acres. Today's project was 40 acres...

 

[Dublin ohio]

My market doesn't have many sites over 43,560 sf

Once I leave "suburbia". Almost everything is in acres.

 

[Michigan CG]

I have a different perspective on this.

I live in a mostly rural area but we have subdivisions where there are land sales but they are not common. We have a couple subdivisions where the developer does not sell lots and they have in their contracts that the land is worth $50,000 (multiple subdivisions). If those lots are worth $50,000 I am the Pope. Other subdivisions do sell lots and the sales run from $25,000 to $40,000 with a very few at $50,000 which are in very superior neighborhoods.

The developers try to convince the buyers that the house is worth $X and in that cost is the lot value of $50,000. They are buying a home and don't care what the developer says the lot is worth. Sales tell a different story.

I was provided with a land appraisal by a lender who had a pretty smart CA and he didn't buy the appraisal for a lot that had adjustments that had no support. I remember the $2/SF adjustment for land area that was applied to all of the sales. He didn't consider location or neighborhood but did adjust randomly for things that were on his "list". The adjusted values had a wider value than the unadjusted sales prices.

Sometimes a site is worth $x to $x and there is no rationale as to why the 0.25-acre site sold for more than the 0.33-acre site.

Too many "appraisers" make adjustments that have absolutely no support (the list?). The $2/SF adjustment is the most common one I see in my market and it is not even remotely supported.

 

[CANative]

Agree with the appraiser from Michigan.

Buyers don't make adjustments for the site in their heads. Residential buyers look first at the location. Then they consider the house. Then they consider the amenities. The site area is way down the list.

I don't make adjustments for small variations. If my subject is on a 5,000 sf lot and I have no choice (lack of otherwise similar sales) and a comp is on a 30,000 sf lot, I'll start considering adjustments. But may or may not make an adjustment. It depends on the location.

Markets are imperfect. A lot depends on the negotiation skills of the buyer, the motivation of the seller, how much the buyer wants that house in that location, and what is available at the time they are looking, etc., etc.

This is all about the reconciliation of the data analyzed. If it's a land sale assignment, they'll get 3 gridded comps and maybe a listing or two. They'll also get a spreadsheet of ALL sales and listings I looked at. Come up with a range and then write an appropriate reconciliation.

It's enough to get the job done and if anyone has a problem with it they'll have to stay up late for a few nights to support their criticism.

 

[andrew81]

What's an acre? jk

My market doesn't have many sites over 43,560 sf

But many of the site values can be 6 digits

lots sell for 6 digits here too $3000.00