Value for well & septic system on vacant land?

[Michael Shane]

I need some help on this one. A rural 5 acre parcel of land remains after the seller recently removed an older manufactured home (built 1993) off the site. The seller wants value, on my vacant land appraisal, for the existing private well and septic field. Should I give value for these older improvements?

 

[The Bob]

I need some help on this one. A rural 5 acre parcel of land remains after the seller recently removed an older manufactured home (built 1993) off the site. The seller wants value, on my vacant land appraisal, for the existing private well and septic field. Should I give value for these older improvements?

I've seen a couple of sales like this and IMO the market did not recognize any value. Wells and septic systems fail. A prudent buyer would assume he is going to have to replace both. Also, what if the new buyer wants to build in a different area of the 5 acres?

 

[EddieB]

Yes, if they are functioning and adequate for current standards. And you should be able to find support from the market. Think about the costs of installing a well, septic, site prep, driveway, etc over a vacant wooded lot.

 

[Peter LeQuire]

I need some help on this one. A rural 5 acre parcel of land remains after the seller recently removed an older manufactured home (built 1993) off the site. The seller wants value, on my vacant land appraisal, for the existing private well and septic field. Should I give value for these older improvements?

The presence of the well and septic system needs to be addressed in your appraisal. I would try to determine whether they had been permitted and whether there was any indication that they were not functional.

Ideally, you would be able to find a sale or a couple of sales of sold tracts that were similarly improved (the old "just find some similar sales that sold recently" bromide). You can search as wide an area as you have information for and as far back in time as you need to to try to find a sale with similar improvements to pair with a contemporaneous sale that did not to establish whether there is a value bump that might attached to the well and septic. Such sales wouldn't have to be similar in size to the property you're appraising, as the value contribution of the well and septic wouldn't necessarily depend on the size of the site.

The seller's thought process is that the buyer doesn't have to install the well and septic (or driveway?) and will probably assert that the value would be the cost of installing them: that may or may not be the case. My experience has been that buyers of small tracts with those systems in place generally pay more than the prices being paid for tracts without them.

 

[Terrel L. Shields]

In my area, I have kept a list of similar site sales and find on average, they do bring more per acre when the site is already "prepped" but it always "depends". When the well and septic are near the road and the owner does not want the house near the road, they often abandon same. Some have told me they don't trust the septic and want a new system, but did want the well.

 

[Michigan CG]

The answer to the question is, it depends. In my county in Michigan there is a lot more value in a school district than the well or septic. The septic, if it is abandoned from an older home may not meet current code or it may be located in the wrong place or it may be just old and tired. How do you know the condition of the septic.

Same with wells, where is it on the site, how old is it, how deep is it? Do you have sulfur water in your part of Michigan? Sulfur water well is mostly useless on a five-acre site.

It is going to take some homework of finding sales and confirming them in order to see if there is any value. This is not an easy answer. I know my county well enough that I can say yes it adds value or no it doesn't add value and sometimes the school district or other locational factor overrides the existing site improvements.

 

[Mike Garrett RAA]

Everyone knows the correct answer is, ahhh...uhmmmmmm, whatever the market says.

The cost of a new well and septic system IN MY MARKET, can run any where from, say, $8,000 to $15,000 for a typical installation. So, what would the market say an existing, working, well and septic system is worth? Most of the time I find something between $5,000 to $10,000. Remember the market recognized value and cost are not the same.

 

[Elliott]

I just looked at two acreage parcels on the same road. One sold for $30K and one for $90K. Guess which one had an existing septic, water line, and previously had a manufactured home on the site?

 

[Mr Rex]

I have found that an existing well and septic add from $0 to 50% of the cost of a new well and septic. It depends on the level of market activity, the number of similar vacant sites without existing wells and septics, and as always, location, location, location. If its just past BFE, it doesn't add a dime to the value.

 

[Rlong]

I agree with Mike and Rex, although Mike Is from mu part of the country in similar markets. For whatever reason there is almost always a couple of these to be had out here. Now I am seeing them following the Forest Fires an Floods.

Also I usually search two years for land, improved building sites.

Bob in CO