It has been a while since I did a subdivision appraisal, but I have a book on the subject at the office. Based on the term, Net Discount Value, in relation to the appraisal format for doing a subdivision, I would “guess” it means to use the appraisal format to estimate the net return over the absorption period and then discount the net returns to a present value. Language is always a problem with lawyers, lenders, and accountants. Same words mean different things in each profession. They always kill me with terms like: Actual cash value; fair value; actual market value, etc., and if you ask for a written definition for clarification you generally get a dumb look. If you want something to worry about, wait until you have to support the absorption period and discount rate. I am lucky in this market area because most of the subdivisions I appraise are sold at public auction with no absorption period. I have seen class A subdivisions that I thought would sell out in five years sell out in two years, and I have seen class A subdivisions bomb for unknown reasons. One of these subdivisions has 32 lots and in over 20 years has sold less than 12 lots. The sad part is, that subdivision was my idea and I sold the property to the owners for that purpose. I think what happened was that the lots were sold to spec builders and the first house built was a low quality job by a builder that was known for low quality work. Be sure to CYA!
If you think you have problems, the last subdivision I appraised was for another retired appraiser whose son is an MAI-SRA. The son told me the old man lied to me about what he paid for the raw land. Such is life. Never believe anything a developer tells you. Divide his cost by 3 and his projected sale prices by 2 is a good rule of thumb.
