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Thorny value question

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Atlanta CG

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Senior Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Fee-owned 3 acre parcel with home. Adjacent are 2 vacant parcels he leases from the power compay to gain access to a reseroir/small lake. No visual view from the home to the lake. Leases run for several years at minimal $ but can be revoked at any time per power company if they decide to do something with the land. Owner says $$$ because he is on the lake. I say I am only valuing the fee simple interest and that is not on the lake. This is not like Corps of Engineer land that surround some of our lakes where no-one owns the lake frontage but owners have natural rights to cross to get to the lake. The leases obviously create value but absent from any info from the lender (they are clueless) I presume I am to value the fee simple only.
What say anyone?
 

Mr Rex

Elite Member
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Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
I think you are correct. The bundle of rights that the Fee Simple ownership includes, does not include the leased property and access to the lake.
 

Mike Kennedy

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Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Leases run for several years at minimal $ but can be revoked at any time per power company if they decide to do something with the land.

and most likely are not AUTO-transferrable.

primary OWNED lot appraisal ONLY. I second Rex.
 

The Argus

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Feb 15, 2005
Professional Status
Certified Residential Appraiser
State
Colorado
Sounds like you have it right.
 

Don Clark

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Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Sounds like what I ran across recently in an appraisal I reviewed. The appraiser said it was "Water View". It was 3 blocks from the nearest water, none could be seen from even the second floor(I did an appraisal on the same property), nor from any direction. But, the appraiser made a $5,000 adjustmentb for view.

You are correct. Based on the information you have provided.
 

Terrel L. Shields

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Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Agreed. There is no additional value to the leasehold either if it is revokable without recourse. If the lease was 20 or 99 years or something and the lender wanted it valued, then yes, it has a value. But a leasehold with no guaranteed remaining term isn't much of a lease.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
I would venture to guess the leased land has minimal value due to the revocation clause at any time by the lessor ... you are correct in valuing only the house and the three acre parcel ... the rest is a garden spot with no guaranteed rights of harvest ... :unsure:.
 
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