Use of assumptions

[PushinValue]

Hello,

I have an assignment to appraiser 2 vacant lots.

There is a FEMA flood zone that runs through the middle of each lot (highlighted and the lot to the right- see below)


There are a number of unknowns associated with each property:

Does the site perc due to flood zone?
Unknown costs associated with prepping the site to be buildable within the flood zone?
Can sewer and or public water be connected if possible?
Is there enough space to meet setbacks for a home? Possibly, although size of the home may be limited to smaller that what is typical for this lot/neighborhood.


My thought was to contact planning, building, and utility departments (all provide vague responses with nothing being certain). Spell out the response from each department and use assumptions about each aspect.

Use of assumptions clearly will impact assignment results.


This gets me thinking... If I am making assumptions all of these unknowns are now "knowns", my opinion of value may be higher than the true value of the property (most likely the market will price in a discount for lots with so many variables/unknowns).




Do you use the assumptions and provide a value? State all of the information known/data collected and appraise without assumptions? I need some feedback.


Intended use is to establish a list price or as an option for one of the owners to buy the other out... Client will be ok with any conditions/assumptions recommended. They simply want to know what the properties will bring on the open market.

 

[Dublin ohio]

There is a FEMA flood zone that runs through the middle of each lot (highlighted and the lot to the right- see below)

Which flood zone is it and what is the source of the flooding

Unknown costs associated with prepping the site to be buildable within the flood zone?

That is problematic depending on local and Federal regs. I would think you being in CA that they would have detailed requirements. I know they do around here. Besides raising the level of the site above the flood zone or building improvements on an elevated foundation or other supporting structure to put them above flood levels, what else is possible and raising the level of the site brings into consideration of changing the drainage pattern outside of the impacted site

Is there enough space to meet setbacks for a home? Possibly, although size of the home may be limited to smaller that what is typical for this lot/neighborhood.

Zoning would dictate the above

 

[PushinValue]

The dashed line is a seasonal creek that runs through the middle of the lot. I am aware of the zoning setbacks, although how can I determine if there is enough room? Do I make some rough measurements from the lot line to the creek? Client does not want to pay for a survey...

 

[Dublin ohio]

The dashed line is a seasonal creek that runs through the middle of the lot. I am aware of the zoning setbacks, although how can I determine if there is enough room? Do I make some rough measurements from the lot line to the creek? Client does not want to pay for a survey...

Doesn't you area have GIS with overlays. They usually have a measuring tool. It isn't 100% accurate. But it might be close enough, if it is too close to call, how else could you determine much of anything that is feasible without a survey and elevation data. You just can't assume everything away

 

[ZZGAMAZZ]

I kinda lucked out recently when one of several vacant lots I appraised for a retro DOD assignment had a creek running through it...because mucho due diligence revealed a County zoning standard--but I forget which department told me-that supercedes the FEMA flood zoning...with No Improvements allowed. [I actually prayed to never again receive an assignment for vacant land on treacherous, dusty, bumpy, rocky, dangerous, steep, scary dirt roads, without street signs or any hope that occupants of mobile homes with 8 pickup trucks parked in front wouldn't follow me into the [theoretical] swamp land, flashbacks to my youth in WV when quicksand was a daily fear because of Tarzan shows on TV. ] Never will understand why anybody would want to live in a rural neighborhood, although in Riverside County, CA, strict wilderness exists within a couple miles of major interstate highways. In fact, an area named Reche Canyon, about 3 miles from the intersection of two major interstate highways, has signs posted all along the road cautioning drivers to beware of wild donkeys...

 

[Mark K]

Never will understand why anybody would want to live in a rural neighborhood...

A lot of people wonder why anyone would want to live in the city or the cookie cutter suburban neighborhoods.

But, to the OP, lots of questions. Is the lot buildable. If its well and septic is there an adequate water supply (do you drill a well to find out) and, as mentioned, does the soil perk? Here, only a soil scientist or civil engineer is allowed to do these tests to the tune of about $2K. Is this a 100 yr. or 500 yr. flood zone? Or maybe a floodway? Different rules for development in each. These questions in addition to those in the original post are what makes appraising bare land often more difficult than appraising a house.

You need to either get answers (or have the owner get the answers) to these questions or assume them away with the assumptions stated in very large letters, preferably in more than just one place in the report. Assume its buildable and that its suitable for well/septic, and move on.

 

[George Hatch]

That overlay looks to be showing a seasonal stream, not necessarily a floodway. Your first step is to get to the the flood zone map and the next step is to look up the topography. Depending on the topo a floodway could be very wide or very narrow.

My guess is that whatever county this GIS is in has a whole bunch of layers you can look at to answer your questions. If you can't figure it out then make a phone call to the jurisdiction to get some help from someone there who does know. Do that first before you get into making unnecessary assumptions about what is/isn't knowable.

You can't value something you don't have a reasonable understanding of. Not just for your subject but also for the comparables.

 

[Tom D]

A lot of people wonder why anyone would want to live in the city or the cookie cutter suburban neighborhoods.

As an appraiser, thank God i live in a big urban city where every row home looks like every other row home. And i get paid as much as you suburban people. And you got your issues, but the wobblers here are only neighborhood specific. I got it too easy. Barely have to look at anything.

 

[Mark K]

As an appraiser, thank God i live in a big urban city where every row home looks like every other row home. And i get paid as much as you suburban people. And you got your issues, but the wobblers here are only neighborhood specific. I got it too easy. Barely have to look at anything.

I've appraised quite a bit in the city when I was doing mtg work, probably a few thousand. Agree, it is simple, almost to the point of tedious. Like working on an assembly line. Easy work but you couldn't pay me to live there.

 

[Tom4value]

Assumptions can only be utilized if they are reasonably possible (physically, legally). Therefore, if you KNOW that it is not possible, you cannot make that assumption. Your's is a a little more tricky. For sewer connection, an interview with the water & sewer department is necessary. You said you did that but got a "vague but possible" so that is ok as long as you explain that. Perc test in my opinion would need to be done as we cannot even give a possible yes or no. The last one, possible to build a house that is too small for the market, now you have a HBU issue.

I would at least require a perc test first. If not possible to obtain one, back out of the assignment.