Site Vs. Location

[Bill Baughn]

Cindy is saying the same thing I am saying. If all lots have premiums and the minimum premium is say $5,000 I think the builder should raise the base price of his homes $5,000 so that there are some homes in the development with no premium.

Buyers are as smart as some of us give them credit as being...


Bill Baughn

 

[Mike Garrett RAA]

Bill...I am not really disagreeing with you BECAUSE I don't know your market. I basically did the same thing you did when I bought our new home three years ago. We have a 4,000SF lot with very little yard, but then...I am not the typical buyer either. Demographics show I am way past the "typical age" of a new home buyer. Ask one of your builders for a buyer profile. Most of the really good national builders know their markets and what buyers are looking for and larger lots or "more land" is right up there as a preference. The builder then prices accordingly.

We have two families living on our cul-de-sac that have small children. Used to be we had three. The third family moved away because the lot was too small and they didn't have a big enough back yard for their kids to play in. I have heard this from the other two families with kids also. This subdivision is more suited for an old **** like me!

I would ask the question again...."if all other things were equal, would the typical buyer pay a little more for a larger lot?" REALTORS® must think so. Just look that the listings on MLS and see how many emphasize that point.

 

[Don Miller]

There is no one "typical buyer." We have "empty nester" developments with 4,000 SF lots where the typical buyer is in their late 50's. There are plenty of other developments where the average age is mid 20's.

Sometimes its best to analyze comps in relation to the particular submarket of the subject and comps.

 

[Fred]

Jim,
You are welcome.

Austin,
I know you are thinking what I am thinking.

Bill,
I suppose it is possible for 'more lot, less value.' I just think it's a funny tend line. At some point the lot would be large enough that the seller would have to pay the buyer to take it. On the other hand, I should be able to get quite a price in that neighborhood because my lot is zero SF.

 

[Jim Onderisin]

Jim P.: I'll make individual adjustments for location, site size and view when necessary. Consider two market areas A and B. Assume that in either market area, buyers will pay more for a property with a larger site or a nicer view. However, buyers pay on average $50,000 more for a property in area B than they do in A. I don't think the location adjustment is double-dipping. A buyer will pay more for the location, will pay more for a larger lot, and more for a nicer view.

 

[Willie]

Jim, for what it is worth, on residential appraisals, I never make location or view adjustments. If there is any adjustment for site value, because of location, view, size, shape, I make it on the site section, and discuss it. I don't think there is a wrong answer, so long as you explain what you have done. To me, it makes things much more clear. The base of all real estate appraisals is the site value. If a tornado takes the structure 5 counties over, you still have the site value. Same with the comps. So why further confuse things by breaking out location/view/topo when all you are trying to do, is a land value adjustment.

Maybe it's a man/woman Mars Venus thing.

 

[Mike Garrett RAA]

Guess I have to ask this question too....."if there is no need to make an adjustment for those items, why are they on the grid?"

 

[incognito]

I tend to agree with William:

So why further confuse things by breaking out location/view/topo when all you are trying to do, is a land value adjustment.

There can be SO MANY factors which influence a subject site and a comparable site, that trying to adjust for each can become confusing to the reader AND appraiser.

I have used a "}" sign at the end of my site line and location line in the grid, and made one adjustment (and carefully explained the logic that all site features were adjusted for using one lump adjustment in the report).

However, I reiterate, I strongly believe that it is fundamentelly incorrect to make these adjustments based on the site's VALUE, as has been suggested. The adjustments MUST be made for the sites "contributory value".

I also feel, apparently like Mike, that the lines are there for a reason, and I would tend to keep location a category of its own, exclusive of site/view.

 

[Willie]

Mike, good question. When's the last time you adjusted Fee Simple versus Leasehold on a URAR going to Fannie or VA? Remember it is just a form.

If you can quantify the each componet to site value, and adjust for it accordingly, you are doing better than most, and must have the data to prove it, which, when it's all said and done, you may have to do, in a court of law or before a state commission.

Take a $100,000 site value of a lake point home vs a $50,000 shallow water lake lot. I adjust $50,000 for site. I'm not good enough to quantify lake frontage/ location on the point, deepwater vs shallow, or the better view etc. I just lump it into site, and adjust it, and discuss the rest. In other words comparing Point Lots vs Shallow Water lots, and adjusting for one thing, that is site value of a Point Lot vs a shallow water lot.

To me I feel I can defend my appraisal on solid land value adjustments as opposed to, all the other things which make up site value, which are very difficult to quantify, to me, at least, in most cases.

To do otherwise, you open up a huge can of worms, or a pandoras box, the conclusion of which you have to say, because that is my opinion based on just that, your opinion. In most cases you won't have the proof of site size, location, topo, water availability, sewer availablilty, view, road frontage, etc, because of the many factors, the data becomes convoluted/diluted or undeterminable. This is something you grasp early on, by doing non residential work.

If it's something simple, like corner lot vs non corner lot, go ahead and make location adjustments. It's the same end result as a site adjustment anyway.

 

[moh malekpour]

How can you ignore the lot size adjustments when everything else is equal? A typical lot size in my area for detached SFR is +/_ 6000 sqft but nowadays is getting smaller down to +/- 4000 sqft. If tow houses that have everything the same but one has 2000 sqft lager than the other, the one with larger lot doesn’t have more value? Can’t the owner of larger lot built a swimming pool, a playground for kids, an in law, a little garden on that extra 2000 sqft? Aren’t those extra potential valuable and couldn’t be considered H&BU of extra lot size?

May be land has very little value in your area but here the land value is more than 75% of the property value.
Suppose there are two homes next to each other but one with 60 x 80 lot the other with 60 X 120 lot size, you don’t adjust for the larger lot? Families with kids, pets and social gathering appreciate a little extra lot in the backyard for a BBQ, kids to play or pets running around. These are potential of larger lot size that should be adjusted according to the market like anything else

Location adjustment is for lot location not lot size, so I adjust for both. When I adjust a comp to the subject for its location, I make the location value for these two homes equal. If they are equal in location but one has larger size the other, then the larger one has more value because the possibilities and potential that are in the H&BU of that extra lot size