Site Adjustments

[Tom D]

New construction in the area costs the same to build where ever it's put. The major difference in sale prices is the value of the ground. The reason for smaller lots is it being to costly to do bigger lots.

There was a builder who determinded people wanted bigger homes. To keep the price down he put them on small lots. Sold like hot cakes, but you had a closer view of your side neighbor at that price.

And by looking at lot sales, do you see big lots going for less per sq ft than normal area lots. That's your $ adjustment. Condition is much easier to prove than 40 acres verses a 1 acre lot.

 

[Mark K]

I was taught to do about half what the per acre value of land is, as the first 5 acres is the most valuable. So a $3000 adjustment when land is selling for ~$6000/acre.

That is SO WRONG its hard to believe that anyone still does things like that. I don't doubt that 3

0-40 years ago this was pretty standard for some old appraisers but it has no basis in reality; cannot be supported in the market. That ranks right up (maybe down) with the $500 1/2 bath adjustment or the $1,000 fireplace...doesn't matter value range of house.

Common sense tells me the site adjustment should roughly be the difference between the site value for each property. So if the subdivision site is worth $30k and my subject site is valued at $287k, shouldn't the site adjustment equal roughly $257,000? If i make a $6000/acre site adjustment then the subdivision comps' adjusted value is in line with my other sales.

Make it make sense.

This method makes sense. It makes for large adjustments sometimes but that is often unavoidable.


Don't know which county you're in but here in Hendricks Co., one of the few things the Assessor gets close to right is the land valuation, unless its ag land and that's another story. 5 ac. site...assessor will call the first 1 acre say $60,000 and the other 4 acres of surplus land at $10k, +/-, or something similar, depending on the land. You could approach yours in the same fashion...comps and subject...1 acre at $xyz/acre and then adjust the other acres at their values. Something akin to this method. May not be perfect but is certainly better than the approach advocated by your office mates.

Not uncommon here. My uncle's old farm just sold for $1.2 million. Trust me, the builder will doze the house and currently is dismantling some old hay barns. The house is livable but old and not worth fixing up when the developer - buyer intends to build executive estates on it.

In this area, the old house would be surveyed off and sold for $200K or so if its livable. The balance of the land would sell for $20-$40K/acre, maybe more for res. development land, $12K/ac. for ag land. They get an extra $100K or more this way.

 

[sputnam]

I have gone around and around this with appraisers in my office for years.

New construction on 40 acres in the country. I have comps on acreage but am also including new builds in rural subdivisions. The site adjustment:

I was taught to do about half what the per acre value of land is, as the first 5 acres is the most valuable. So a $3000 adjustment when land is selling for ~$6000/acre. For my current appraisal that leaves my subdivision comps showing way low. Common sense tells me the site adjustment should roughly be the difference between the site value for each property. So if the subdivision site is worth $30k and my subject site is valued at $287k, shouldn't the site adjustment equal roughly $257,000? If i make a $6000/acre site adjustment then the subdivision comps' adjusted value is in line with my other sales.

Make it make sense.

It makes sense... but, it's not the correct way to do it. Use of a Rule of Thumb is a form of bias.. .it's called.. um, heuristic bias. The correct way to do it.... every time... it to analyze market data.