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Vacant Residential Lot - All Comps in neighborhood have improvements

Jaketnt

Thread Starter
Freshman Member
Joined
Nov 7, 2008
Professional Status
Certified Residential Appraiser
State
California
Hello,
(If there is a past thread that answers my questions, please feel free to share it with me!)
  • I'm appraising 0.72-Acre vacant lot zoned R-1.0 for a private party.
  • The subject subdivision and most of the neighborhood are pretty much fully developed with homes ranging from $750K to $3.0M, $1.5M median SP, 3/4 Acre typical lot size
  • I found four MLS sales (R-1.0 zoning) listed as land sales in the neighborhood $760K-$980K, lots ranging from 0.67-1.15 Ac , however they all sold with improvements: 1950s and 1960s ranch-style homes with basements and attached garage
  • These homes were in livable condition, and buyers have the option of renovating the existing homes or tearing down to build custom homes (typically new homes being built are in the $1.5M-$2.5M ballpark), the later seems to be the preferred option.
  • There are no vacant lots in the neighborhood, unless I go to another subdivision approx 2 miles E, which has plenty of vacant lot sales ($700K-800K for 3/4 acre lots approx.)
  • How would you go about adjusting the comparables with the current existing improvements?
  • What about demolition, or any other things to consider?
  • water/sewer taps, utilities in place (subject has none) ?
Thank you!
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Hello,
(If there is a past thread that answers my questions, please feel free to share it with me!)
  • I'm appraising 0.72-Acre vacant lot zoned R-1.0 for a private party.
  • The subject subdivision and most of the neighborhood are pretty much fully developed with homes ranging from $750K to $3.0M, $1.5M median SP, 3/4 Acre typical lot size
  • I found four MLS sales (R-1.0 zoning) listed as land sales in the neighborhood $760K-$980K, lots ranging from 0.67-1.15 Ac , however they all sold with improvements: 1950s and 1960s ranch-style homes with basements and attached garage
  • These homes were in livable condition, and buyers have the option of renovating the existing homes or tearing down to build custom homes (typically new homes being built are in the $1.5M-$2.5M ballpark), the later seems to be the preferred option.
  • There are no vacant lots in the neighborhood, unless I go to another subdivision approx 2 miles E, which has plenty of vacant lot sales ($700K-800K for 3/4 acre lots approx.)
  • How would you go about adjusting the comparables with the current existing improvements?
  • What about demolition, or any other things to consider?
  • water/sewer taps, utilities in place (subject has none) ?
Thank you!
See if when you drive pas these sold comps the houses have been torn down or renovated ...the reality of your market is there is virtually no other vacant building lots, therefore buyers who want to build new or extensively renovate are turning to older, livable, but obsolete for their market existing homes and either demolishing them or using the base to extensively renovate/remodel.

There are people who advice add the cost of demolition in, but the buyer purchasing these existing homes as tear downs buy knowing they will have to pay for demolition, so imo the price includes that. Exp;aom there are no vacant lots found and therefore the competition for buyers wishing to build spec builders etc are lots with depreciated homes that, even though livable, are seen as "tear downs" by the buyers. We have that in my market, very common in "hot " areas near beach or a downtown...

FWIW, in my market, lots with tear down homes often sell in shorter DOM and for a bit mre $ than vacant lots, perhaps because sewer/eclectic is already there or in some cases they can finance as a SFR..
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Hello,
(If there is a past thread that answers my questions, please feel free to share it with me!)
  • I'm appraising 0.72-Acre vacant lot zoned R-1.0 for a private party.
  • The subject subdivision and most of the neighborhood are pretty much fully developed with homes ranging from $750K to $3.0M, $1.5M median SP, 3/4 Acre typical lot size
  • I found four MLS sales (R-1.0 zoning) listed as land sales in the neighborhood $760K-$980K, lots ranging from 0.67-1.15 Ac , however they all sold with improvements: 1950s and 1960s ranch-style homes with basements and attached garage
  • These homes were in livable condition, and buyers have the option of renovating the existing homes or tearing down to build custom homes (typically new homes being built are in the $1.5M-$2.5M ballpark), the later seems to be the preferred option.
  • There are no vacant lots in the neighborhood, unless I go to another subdivision approx 2 miles E, which has plenty of vacant lot sales ($700K-800K for 3/4 acre lots approx.)
  • How would you go about adjusting the comparables with the current existing improvements?
  • What about demolition, or any other things to consider?
  • water/sewer taps, utilities in place (subject has none) ?
Thank you!
All of the above. The market segment for land sales will have different geographic boundaries than the market segment for houses, so don't get caught up in either an overly narrow geogrpahic or date of sale parameters. You may have to adjust for location and other factors but in the meantime you gotta start somewhere.

Be mindful of usable lot area issues if there is topography on these various sites. Paved access and proximity to utilities is also an issue.

Lastly, look through the actives and the expired/withdrawns going back a couple years because sometimes these close later on. I often find closed sales among the expireds and withdrawns.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
listed as land sales in the neighborhood $760K-$980K, lots ranging from 0.67-1.15 Ac , however they all sold with improvements:
The market appears to be saying they are tear downs or major renovations...and seems consistent with the
s plenty of vacant lot sales ($700K-800K for 3/4 acre lots approx.)
So strikes me you have support for the land value, and as for the improved ones, I has spent 30 years trying to find real clear cut evidence that someone buying something for the land really discounts the cost to tear down. I just looked at a 103 ranch with well advertised house, no discussion of it being a tear down, and the assessor said it was in "excellent" condition (which was clearly not right, but it didn't look hopeless either.) I drove by...It's gone. Only an old barn in tatters remains and I suspect that track hoe in the yard means that barn will go away too.
 
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