Value Added For Small Addition To Site Area

[NachoPerito]

How does the example posted for the question relate to the premise of the poll and if this is based on a residential lot, why is this in the commercial thread?

It doesn't. I was just curious if any appraisers have one of those licenses. I got a request the other day and I could only name one person in my region that has one of those licenses that is a commercial appraiser. I would like to get one, but you have to mentor under someone who has one, so most of the time, not feasible.

 

[NachoPerito]

How does the example posted for the question relate to the premise of the poll and if this is based on a residential lot, why is this in the commercial thread?

It doesn't. I was just curious if any appraisers have one of those licenses. I got a request the other day and I could only name one person in my region that has one of those licenses that is a commercial appraiser. I would like to get one, but you have to mentor under someone who has one, so most of the time, not feasible.

A simple unit value (price per sf) IF highest and best use remains unchanged. Indirect damages may apply to improvement proximity but if the overall utility of the land is not affected, a unit value based on confirmed vacant land sales is applied.

Sorry just to clarify, So if all this is true and other land sales are selling at $6.00 per SF then you would apply damages for property lost at $6.00/SF?

 

[hastalavista]

I agree when the site is commercial. Having a larger site, but no more functionality doesn't add value. For residential I have seen an increase in value for larger sites. One analysis I did was looking at 5-acre and 10-acre sites over time without potential for subdivision. My evidence showed that 10-acre sites were selling for higher prices than 5-acre sites. This would show me that there are incremental increases in value for a larger lot. The increase may not be substantial and certainly would be hard to test for a difference when looking at paired sales.

Aren't you describing "surplus land"?
Because in your original example, the site area difference has no impact on the ideal improvement for each site (they are the same).
The only question is the incremental contributory value for the additional 1,000sf. I'd say that is dependent to a large degree on the site configuration.
A square site of 10,000 sf. vs. a square lot of 11,000sf; the difference in the length of the sides is less than 5-feet. You pick-up an additional 2.5' on the side setbacks. So maybe I have 12.5' rather than 10'. Is that a big deal (it might be if I had 4' and now had 6')?
A 10,000sf rectangular site with a width of 80' has a depth of 125'. To get to 11,000sf, the depth increases to 138'. If that additional 13' depth is in the front yard, it may add to the curb appeal of the improvement or change the driveway configuration (i.e., circular). If that additional 13' of depth is added to the rear of the lot, how valuable is that as yard space?

 

[NachoPerito]

Aren't you describing "surplus land"?

Technically I am talking about surplus land although I have never used that term when describing a single-family homesite. I use it all the time for commercial properties though.

In regards to your other comments, yes you are correct that it really does depend on how that land is added and that can be very subjective and hard to prove, I am looking for more of a starting point for a typical situation. You have to start somewhere

 

[JTip]

Sorry just to clarify, So if all this is true and other land sales are selling at $6.00 per SF then you would apply damages for property lost at $6.00/SF?

Perhaps. Remember, you have a complex question with many variables. One of those factors, H&BU, for example is a driving factor. I'll give you a recent acquisition:

45,000 sf residential (H&BU) located in a rural location. We (DOT) took 2,000 sf off the frontage (400' x 5'). Now local municipality requires one acre for on-site septic (no public sewer available), so, in theory, the owner was left with a lot with that could not be improved as residential @ 43,000 sf. Instead of trying to extract a loss (before/after), we confirmed that the township would allow a variance due to hardship and adequate area for setbacks. So in this situation, your $6.00 sf would apply.

On your 5 acre/10 acre values, of course the 10 acre would sell for more BUT the unit value would be less due to economy of scale.

The question is insanely difficult with no simple answer to prove your point......

 

[NachoPerito]

Perhaps. Remember, you have a complex question with many variables. One of those factors, H&BU, for example is a driving factor. I'll give you a recent acquisition:

45,000 sf residential (H&BU) located in a rural location. We (DOT) took 2,000 sf off the frontage (400' x 5'). Now local municipality requires one acre for on-site septic (no public sewer available), so, in theory, the owner was left with a lot with that could not be improved as residential @ 43,000 sf. Instead of trying to extract a loss (before/after), we confirmed that the township would allow a variance due to hardship and adequate area for setbacks. So in this situation, your $6.00 sf would apply.

On your 5 acre/10 acre values, of course the 10 acre would sell for more BUT the unit value would be less due to economy of scale.

The question is insanely difficult with no simple answer to prove your point......

Thank you, that is helpful. My point with the 10 acre versus 5 acre sale was just showing that people pay more for larger sites. There are some arguments that people don't pay even $1 more for a large site because it can't be proven. But I would show that if someone is willing to pay more for a 10ac site compared to a 5ac site and only gain privacy then someone will pay more for an 11,000-sq-ft site versus a 10,000-sq-ft site (with caveats). The next question would be how much more, which can be debated. But so far, I have had people say that value should be given at 100% for damages ($6.00/SF in the example above) and I have other people saying that 0% should be given because there is no value difference between 10,000 sq ft and 11,000 sq ft.

 

[Meandering]

Thank you, that is helpful. My point with the 10 acre versus 5 acre sale was just showing that people pay more for larger sites. There are some arguments that people don't pay even $1 more for a large site because it can't be proven. But I would show that if someone is willing to pay more for a 10ac site compared to a 5ac site and only gain privacy then someone will pay more for an 11,000-sq-ft site versus a 10,000-sq-ft site (with caveats). The next question would be how much more, which can be debated. But so far, I have had people say that value should be given at 100% for damages ($6.00/SF in the example above) and I have other people saying that 0% should be given because there is no value difference between 10,000 sq ft and 11,000 sq ft.

Break it out on a per acre, or per SF price. But, that's not added value to the property, it's simply a per sf price for land, which, should be impacted by economy of scale, in that, the larger the entire parcel, the smaller a per sf, or per acre price, should be, and visa versa.

What the state pays for a taking, is an increment of a whole, or a value specific to the piece they take, not necessarily a diminution or enhancement to the entire property, which is what the original question was:

I have gotten a couple of these assignments and wondering your opinion on added value or methods.

Let's say I am asked to determine the difference in value between a 10,000 square foot single-family home site and an 11,000 square foot site. Let's say as a 10,000 square foot site the value is $100,000. We are talking land value difference only.

Let's assume there is no value to the landscaping and it doesn't functionally change the site in any way (doesn't enable the owner to building a larger home, subdivide, or improve access or view). The additional area gives the subject property more recreational space, but nothing else.

How have you supported a land value difference?

Thanks in advance. And I just threw a random poll in there for curiosity.
-Nacho

So you need to define your assignment.

Are you valuing 1,000 sf of land,

or are you looking for the value of an entire lot that is just 1,000 sf bigger than other lots in the neighborhood?

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[hastalavista]

In regards to your other comments, yes you are correct that it really does depend on how that land is added and that can be very subjective and hard to prove, I am looking for more of a starting point for a typical situation. You have to start somewhere

I hear you. Interestingly enough, I look at it nearly from the opposite position:
Trying to find a basic starting point (a formula or method) to analyze such small differences as you describe is very subjective and hard to prove. Easier (IMO) to analyze what, if any, value impact such a small difference has once one first identifies how the difference directly/meaningfully impacts the properties being compared to begin with.

Good luck!

 

[Terrel L. Shields]

delete

 

[Meandering]

I,000 sf of land is similar to looking for a value difference between a 1,200 sf home and a 1,250 sf home, with all else being equal.

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