Vacant land appraisal, not so vacant?

[Appraisal Santa Fe]

Hi all,
I'm doing a vacant land appraisal and I get there only to find a big modern workshop on the property with two garages and a bathroom. I have a message in to the client about it but how should I approach it if they want to include the building?

Thanks for any thoughts.

Richard

 

[Pamela Crowley (Florida)]

Is this a commercial use property?

 

[Appraisal Santa Fe]

No, its residential

 

[PropertyEconomics]

If its for lending, its very doubtful you can appraise it as a vacant parcel of land, becuase 1) its not vacant and 2) appraising under the hypothetical condition it were vacant does not typically meet lending guidelines.

If it is for other purposes, ie an estate, land value dispute, etc. then you could appraise the land under the hypothetical condition that the improvements dont exist. Others here will tell you, and in fact FAQ's will suggest to you that you can appraise the land component ignoring the improvements, however, I caution you to do so at your own risk as it is my personal opinion the answer to the FAQ is wrong. Should they ask you to do that without use of a hypothetical condition, i would strongly suggest you call a few of the appraiser memebers of the board and ask them the question before completing the report in this manner.

I would search for similarly improved properties or you could allocate value to both land an improvements if you have sales which included similar improvements in which you can extract their contributory worth.

I would think this a bit of a difficult assignment and you need a lot of clarification from your client before continuing on with your anlysis.

Best of luck to you.

 

[Appraisal Santa Fe]

Thanks PropertyEconomics. I think you are right on many counts here. I've emailed the client for clarification and explained that this becomes very complex due to the structure.

RC

 

[c w d]

Everything PE said. I'll just restate the obvious.

If there are structures then it's not vacant. Just for trivia: Vacant no improvements it's a lot. Vacant with improvements it's a site. If the client wants a vacant land appraisal then HC is the way to do it.

I do have a question about whether its commercial or residential. There are no livable structures or quarters, correct? But, there is a workshop, correct? Are we sure it's not being used for a commercial enterprise? If everyone says there isn't anything going on, that it's residential but you see evidence of commercial business being conducted then you need to consider it such. Evidence might be in the form of a cash register, parking lot, traffic in and out of the building, waiting area separated from the work area, open/close signs, hours of operations sign etc, etc, etc.

Perhaps the request for a vacant land appraisal and the presence of a workshop is more client code speak for ignore the workshop?

 

[Appraisal Santa Fe]

The workshop was a "surprise". (Dont you just love surprises?)
Its used for a construction company and has machinery inside and tools and such.
Two garages and a bathroom. Owner tells me its a "garage" for the house
he wants to build on the property. This thing is getting fishier all the time.
I spoke to the client and they want an appraisal as is, so.
Now it's not a vacant land appraisal, what form would I use?
I want to dump the job though as there are 0 comparables with a shop or garage only on the lot, its either a vacant lot or with improvements i.e. single family. The area is zoned residential, NOT commercial so that is a problem for the owner again.. (more surprises?)
Any thoughts?

RC

 

[Caterina Platt]

You may have to go back in time, or search the land sales with the remarks for 'shop', 'barn', 'garage', but I'm thinking you might find at least one example. I run across them on a daily basis until I actually need one.

You can still use the land form, but obviously there will be improvements like well, septic, shop, etc. on the optional lines at the bottom of the grid.

Too bad they're not ready to build. Construction loan, subject to would be easier.

 

[Charles Knutson]

How about a Vacant Land appraisal, with a line item adjustment for the improvements?

That's probably as close as you are going to get to an accurate value, and the most straightforward way to write it up on a summary form.

 

[PropertyEconomics]

I still think you can do matched pair analysis among improved properties, comparing those with shops agasint those without in order to find the contributory value of the shop. Adding that to the value of the underlying land will give you a credible report. It is going to take some work though.