Site or location adjustment

[Mike McBeth]

a fellow appraiser and I where discussing an assingment he had, which is a home on one acre. The zoning allows for up to three parcels for the one acre. There was a land sale for one acre down the street, but zoning does not allow dividing. Does he use this value for subject site grid, and adjust in the location grid for zoning difference or adjust in the site grid and explain.

 

[Thomas Fiehler]

Since the location is close (down the street) I would adjust for difference under site and explain, explain, explain.

 

[hglenbetts]

Understanding that zoning is unique to each municipality, here's what issues I would need to consider...

Three parcels per acre is the zoning, but there is a house on the parcel already. Are the dimensions of the one acre such that I can create three parcels that meet zoning requirements for front/side size ratio? Will each new lot have the required road frontage? Will the existing improvements have the proper setbacks from the proposed lot lines?

If these things prevent me from splitting the land, then it doesn't matter what the zoning class is.

Next, If I can still split after considering the above, what are the costs to split?? Surveys, new legals, more utilities, do I need to install a road to access the parcels???

Will these costs offset the potential increased value from the split-ability of the one acre?? If so, there is no need for a site adjustment.. (and no good reason to give away the "space" unless you hate mowing.

 

[Mztk1]

In my area if you have a 3 unit per acre location and it is rural or semi-rural it is typically an advantage because it means you can add an inlaw suite even if it can't be subdivided due to frontage and other technicalities.

For subdividing, another tricky issue is well and septic and whether there is room to fit a second septic and well and still meet county/town distance requirements. You might have an acre that allows three houses in my area, but any lot in one of my counties needs at least one acre to get 1 well and 1 septic. If you want two wells and two septics you need 2 acres even if density is 3 units per acre. There is a future value in the lot if public utilities ever come into the area.

If conditions cannot be met and there is no public utilities the lot might as well only allow one unit per acre. If youf friend is in an area that requires well and septic, he'll need to call the county or town and find out what the minimal lot size is for well and septic permitting.

If it has public utilities, at least in my markets, it is a good bet there is added value.

Normally, in these situations, under location I put "Rural/RES-3" and then under the subject have "Rural/RES-1" and look for a market reaction.

I find it easier to do it as a location adjustment because if you adjust under lot size it becomes confusing. Say for instance you have a one acre lot in an RES-1 zone and a one acre lot in an RES-3 zone as comps, you'll be making an adjustment for one acre and not the other...minor and the reader will have to read, but I prefer it to look straight forward. To me, where a house is located in the zoning map is a locational issue.

When I have had lots where I knew exactly how many times it could be divided what I have done was use one of the other lines below and make one "Potential # of Lots", use "Three" for the subject, fill in the comps appropriately, and make adjustments based on market data.

 

[Webbed Feet]

a fellow appraiser and I where discussing an assingment he had, which is a home on one acre. The zoning allows for up to three parcels for the one acre. There was a land sale for one acre down the street, but zoning does not allow dividing. Does he use this value for subject site grid, and adjust in the location grid for zoning difference or adjust in the site grid and explain.

Mr. McBeth,

What he does is he follows the edict in USPAP by calling his client and informing them that he is not competent currently for the assignment, and if the client is ok with that, he then explains how he is going to achieve competency prior to completion. Also, if this is for Fannie, he notes Fannie's handbook says he cannot use this allowed "attainment of competency" under USPAP as Fannie requires competency at the time of assignment or the Lender / Client is to find someone who is.

The above is how one keeps the Oregon board happy.

Webbed.

 

[Jerry Bone Jr]

a fellow appraiser and I where discussing an assignment he had, which is a home on one acre. The zoning allows for up to three parcels for the one acre. There was a land sale for one acre down the street, but zoning does not allow dividing. Does he use this value for subject site grid, and adjust in the location grid for zoning difference or adjust in the site grid and explain.

Apples to Oranges: Sounds to me like the one acre site is not comparable to the dividable one acre site.
What is the H&BU of the subject site, as improved? The zoning allows for three sites, possibly the home is situated on the site in such a way to eliminate division.

 

[Mike Boyd]

Be certain you fully understand what the zoning designation means. For example: an RR-3 might mean a 3 lots per acre but it might also mean 3 living units per acre or a 3 acre minimum lot size. Additionally, the "3" might mean a specific average lot size in a specific neighborhood. Some communities allow parks and common areas to be factored in to the average lot size.

If you are writing about a typical report for a residential lender, the parcel is a HOMESITE irrespective of whether or not it is splittable. In which case, I would not differentiate between the two by making an adjustment. Otherwise, I would make the adjustment under FUNCTIONAL UTILITY rather than location or site. The fact is, the splittable lot provides an opportunity for further development thus giving it increased functionality.

 

[Webbed Feet]

Apples to Oranges: Sounds to me like the one acre site is not comparable to the dividable one acre site.
What is the H&BU of the subject site, as improved? The zoning allows for three sites, possibly the home is situated on the site in such a way to eliminate division.

Mr. Bone Jr.

That is what I thought too. I think it would be extremely poor appraisal practice to be using a nondividable on acre site sale against a dividable one acre site that has two more building sites that can be legally split off it. There is no way to adjust for that lacking the market data one should have had to properly opine the subject site value in the first place. This "fellow appraiser" better be certified. Because without the use of EAs or HCs I bet the H&BU analysis is complex, probably requires the findings of other outside experts, and I would not be surprised to find out there is a T.V. over $250,000 when any one acre site is involved. Therefore, I also would not be surprised to find out the individuals discussing the assignment are all outside of the scope of their practices under Oregon licensing.

If we want to discuss the topic as a hypothetical assignment for learning purposes that is fine. But to discuss it for application in a real assignment without loudly bringing up the above first would be inappropriate. One of the numero uno things licensed appraisers get nailed for in Oregon is being out of scope of their practices.

Mr. McBeth. If the last question in your O.P. is what the two of you were bringing this entire assignment down to, instead of the obtaining of proper sales data or extraction methods for the analysis regarding site value, with a whole lot better problem identification as part of the SOW process..... I only have one answer for your buddy.... Call the Oregon Board before completing that assignment! I rather strongly suspect your buddy needs more help than this forum can provide based on the question you are asking. Especially, as this buddy is not here posting.

Webbed.