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Vacant Lake Lot Appraisal

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tedflanders

Sophomore Member
Joined
May 29, 2003
So what do you make adjustments on? I know that site size, lake frontage feet would be a few. Do you adjust for topography? View? How about a steep drop off to the lake, like 96 stairs to get down to the lake itself? How much would you adjust for on something like that? Any input would be appreciated. Thanks!
 

Steve Wyrick

Member
Joined
Aug 15, 2003
Professional Status
Certified General Appraiser
State
California
Ted,

This is going to be a rather extensive post. First due to the questions you are asking, I am assuming that you are very new in the business, if I am wrong I apologize.

I think the first thing you have to do is ask yourself are you competent enough to do this appraisal, USPAP competency rule. Based on your question I think you have determined that and are attempting to become competent by asking the questions.

Lets start with the property inspection you have some of the basics, size and topography and location on lake, view but not enough infomation to describe reader for specifics. What about zoning? What is the topograghy, you have said it is 96 steps down a steep embakement to the lake is there a beach of just water? Is the rest of the property level, hilly, mountian side, is there a site to build any improvements on? Is the site accessible by public, private road or an easement or only accessed by the lake front. Flora located on the property does it have any commerical use? Is their a potable water source either present or that can be reasonably and economically developed? Can a septic system be placed on the property? How accessible is electrical and phone connections? Bottom line here is what is the highest and best use for the subject property, a homesite or is it just holding the rest of the world together? What are the uses of the surrounding properties?


Additionally in my part of the world, location on the water directly full frontage, or off the water with unobstructive view or further off of the water with a partial view are important items for adjustments. For example in an area I a familiar with lakefront parcels with ability to dock a boat have the highest value, lots located one parcel off of the lake but within easy walking distance or with no boating facility can be 25% less in value, lots 2 parcels off of the lake with good relatively unobstructed view of the lake are another 25% off and finally lots located with very limited lake view, usually from one corner of the homesite on the 2nd floor and located 3 to 4 parcels up in the woods are another 25% off. So location is a very important factor.

All of the items described above can be subject to an adjustment between your subject and the sales. Adjustments are based on "Matched Pairs". If you don't understand the term it simply means two sales that are the same in all respects except for one feature when compared side by side, the difference in value can be attributed to the one feature that is different. These rarely happen, but there are sales that maybe close enough for you to get some sense the adjustments range for each of the items you have discovered in the inspecition process. Adjustments many times for experienced appraisers are known in general because we have done enough appraisals and comparables and know our area to know what is reasonable. Additionally many appraisers with certian adjusments. frequently check there knowledge against the market with match pairs to see if there should be any change in their feelings about a certian adjustment. The proper determination and use of adjustment is one of the primary reason why trainee appraisers are required to work 2,000 hours with a mentor.

I would like to be more specific with my advice to you but you just don't have enough information in your post for specific advice.

The only advice I can give you is to describe what I did when I faced a somewhat similar situation (only with a home on it) many years ago. I talked with every realtor on the lake to learn the market area and to find comps. I got every property sale located directly on the lake frontage and for 3 parcels back from the lakefront parcel all around the lake over the prior 12 months. Some 20+ sales. I then looked at each sale and where possible talked with the buyers of each of these sales. After griding and match pairing these 20 sales I was able to find 3 that were somewhat similar and required the least adjusments based on match pairs. It was difficult and time consuming appraisal and even though I charged double by going fee due to the complexity of the subject I lost money. But, I had developed a competency I did not previously have and a base of information for future appraisals in the area. Because of this one appraisal I got 8 more appraisals at double my rate which made up for much of the initial work.

I have made some broad assumptions based on your information, if my assumptions are wrong then I am sorry but very little specifics in your post.

Good luck and if you want more advice, well give all of us more specific information.
 

tedflanders

Sophomore Member
Joined
May 29, 2003
Thanks for your reply. I dont have any more specifics, it was an "in general" question. The house on the lake with 96 steps has a 6' beech area, the rest is reeds and unusable. Isnt the "cliff" dropoff to the lake one adjustment and the poor shoreline a different adjustment? I dont understand why you need to know what the beach is like to make an adjustment on the "cliff"?
I do have a "supervisor" but he is an "A" hole and answers questions like this with "I dont have time right now". YES, I am looking for another supervisor and actually am making a deal with a new supervisor right now. The new guy is as as offended as I am about the practices and lack of training of my current supervisor.
Thanks for taking the time to answer my questions.
 

Bobby Bucks

Elite Member
Joined
Jan 27, 2002
Professional Status
Real Estate Agent or Broker
State
North Dakota
Steve brought up some good points. Also keep in mind if it’s water property, FEMA might be lurking.
Is the lake manmade within a river system with dams upstream and down? You mentioned a cliff, so maybe flood zone
won’t be an issue. If the site is in a floodplain, in all likelihood before building, it will need a current
elevation certificate and possibly new cross sections shot by a surveyor to satisfy the most recent
FEMA rules. Local planning will have to be satisfied for any future building permits and they might not be a slam dunk. There might possibly be a previous building permit that predates the most recent FEMA update which could be grandfathered by local the building dept. New elevation certificates can get very expensive because FEMA is in the business of restricting growth in flood
plain areas..... If this is the case, the elevation of the comparable sales will be very important. Also consider the degree of view, if it’s on a peninsula there might be a view from every
room in a proposed dwelling.
 

tedflanders

Sophomore Member
Joined
May 29, 2003
Wow.......lot more to it than I thought! I have one coming up, lake home on a peninsula. He must have 1000' of lake shore, great view from 3 sides. My boss said I cant give him credit for all 1000' feet of lakeshore because "it isnt all useable lake shore." I told him it was all sand and he told me it didnt matter, he didnt use it all. ???????? Ummmmm........ok.
 

Steve Wyrick

Member
Joined
Aug 15, 2003
Professional Status
Certified General Appraiser
State
California
Bobby

Excellent points. My post was getting long and I did not want to overwhelm Ted. Based on his next post, this does not seem to be an appraisal for a newbie to be doing. Especially with the house that he has now mentioned, a very complex appraisal it appears.
 

tedflanders

Sophomore Member
Joined
May 29, 2003
I disagree with "definetely not an appraisal for a newbee to be doing". I will be doing both of these appraisals, with a supervisor with 12 years of appraisal experience. I was trying to collect information so that I didnt seem like a total moron when we inspect the property. If I NEVER do a tough appraisal, I will never do a tough appraisal and give money away to the other appraisers in the area, and continue to struggle finding "cookie cutter" appraisals. There arent many of those in the rural areas that I work in. Thanks for the information, I have learned a lot from your posts and do appreciate it.

Ted
 
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