Value of lot reduced by detention basin?

[Mikaman]

I'm not an appraiser. I'm seriously thinking of buying a building lot that includes a "dry" detention basin, so I'm trying to determine how this affects the value of the lot.

Some details: the lot is 1.9 acres (including the detention basin). The detention basin covers about 1/2 acre, so the remaining usable area of the lot is about 1.4 acres. This is the last lot left in a small development (13 homes total), in a very desireable neighborhood. It is wooded (100-year old oak, ash, and wild cherry) and is at the end of the cul-de-sac. It is a nice shape, about 250' wide and 400' deep (irregular). It is level.

The most recent comparable sale was a lot in the same development, 1.22 acres and sold for $155,000 in September of 2009. That lot has similar trees, level, but rather narrow & deep (about 150' road frontage and 400' deep). It is on a busier street than the cul-de-sac. Another lot, virtually identical to this comp, sold in 2005 for $150,000.

All the other lots in this development were sold in 2002-03-04, and went for between $100,000 and $135,000. All those were right around 1.0 acres. Around here, lot prices increased about 10% a year from year 2000 until the recession in 2008. Prices have dropped 15-20% since the peak in 2007/2008. (I have lived in this area for 30 years and it has always been much less volatile than hot spots like California, Boston, Florida, Las Vegas, etc)

I have spoken to the township engineer, and confirmed that this is a DEtention basin, NOT a REtention pond. It is designed to be dry almost all the time. In a heavy rain, it is designed to "detain" water temporarily for 12 to 24 hours (not "retain" water all the time). After a heavy rainfall, it should be dry again in 24 hours.

I have spoken to four of the neighboring residents, and all four confirm that they have almost never seen any water in the basin. The only time anyone really remembers seeing water, was during Hurricane Ivan several years ago. The basin was empty again within a couple days (Ivan dropped 4 - 5" of rain here). In fact, the neighborhood kids frequently use the basin as a ball field for football, soccer, etc and the mom's tell me the kids don't get muddy.

In this particular township, detention basins are always owned by individual property owners -- they may not be sold or owned by a Homweowner's Association, they must be individually owned. This means that I will be personally responsible for maintaining the basin, which means I must keep it mowed and repair any soil erosion that occurs. In the seven years since this development opened, none of the neighbors can recall any repairs.

There are no rivers, streams, or creeks nearby. The detention basin drains back into the storm sewer system (underground). If the drain would become clogged, there is an emergency spillway on the detention basin, which is directed away from the lot I am considering, to an area of lower elevation.

Sooo ... how do I factor the detention basin into the market value of this lot? Should I simply value the lot as if it were 1.4 acres instead of 1.9? Or should the value be further reduced? Why or why not?

Also, related but different question ... is the value of a 1.4 acre lot 40% more than a 1.0 acre lot?

Also -- in general is a lot at the end of a cul-de-sac more valuable, or less valuable, than a lot along the side of the same street?

Any advice appreciated!

 

[CANative]

Why not pay a local appraiser to answer these questions?

 

[Mikaman]

Why not try to get an idea of value myself before I pay someone else to do a formal appraisal? I've done numerous real estate transactions, most involved appraisals, so I know what an appraiser can do. But I came here for an initial opinion, since I thought this was a place for the public to get some help from appraisers.

Look, this can't be rocket science. Maybe I gave too much info in my inquiry. It's a pretty simple question:

1) Does a detention basin reduce the value of a building lot?
2) Is there a rule of thumb I can use to get a rough estimate of the reduction in value due to the detention basin?

That's all I really need to know for now.

 

[Webbed Feet]

Any advice appreciated!

Many appraisers say the Appraisal Institute has the best classes on real estate appraising. Many like NAIFA. There are currently many on-line courses you could take. But be careful. Most all of us here had to have at least 2,000 hours of experience before we were allowed to so much as sit for a test to get our licenses or certifications. Even then, I think most of us agree it was another five or more years after that before we really became knowledgeable enough about our work so we weren't a danger to ourselves.

Good luck to you on your challenge!

 

[hastalavista]

1) Does a detention basin reduce the value of a building lot?

It depends.

2) Is there a rule of thumb I can use to get a rough estimate of the reduction in value due to the detention basin?

No.

You asked two general questions. I'm confident my two answers are among the best possible for those general questions.
Like it or not, anything more specific will require some subject-specific research and analysis. The ideal person to do this would be a local appraiser or real estate expert. The next ideal person to do this would be a non-local appraiser or real estate expert with access to local data and local market participants.

Good luck.

 

[Mztk1]

1) Sometimes. Sometimes not. And some other times it can increase value.
2) Since this assumes the answer to the first question is "Yes", it need not be answered.

Land can be the most difficult of all assignments. No one on this board is so good that they can answer your *seemingly* simple question to your satisfaction. What the value of a dry pond is in Unknown, PA is simply unknowable from our desks in Cyberville, USA.

Since you are buying it, I'd assume for your own personal use, then it might be best to consider how much it is worth, or not worth to you personally. It sounds like for your it would be a hassle and you'd like a discount. So if you can't get the discount you'd want, then why buy it?

 

[Restrain]

Consider it Flood Land, and a nuisance, and see if you can get the seller down on this basis. From what you are saying, it sounds like it's worth what you want to pay and what the seller wants to sell it for...and somewhere in between.

 

[Terrel L. Shields]

I have dealt with a lot of these kinds of retention ponds. They are a requirement to slow the flow of water off the streets and lots. They are neither fish nor fowl and I can safely say that in my market I have never found one to have a value negative or positive. They simply are a requirement of the county and the cities, like curbs and gutters, underground electrical service, dual roads for fire safety, and minimum street widths. The developer typically loses one or possibly two lots to these ponds. Yes, they pose a hazard potentially but so does sitting in the street playing with a razorblade.

 

[Webbed Feet]

Why not try to get an idea of value myself before I pay someone else to do a formal appraisal?

From the standards real estate appraisers should all be adhering to, there is no such thing as an informal appraisal. An "Appraisal" is our opinion of value, not a paper report that describes how we arrived at that opinion. The later, is the report of the appraisal (opinion.)

I've done numerous real estate transactions, most involved appraisals, so I know what an appraiser can do. But I came here for an initial opinion, since I thought this was a place for the public to get some help from appraisers.

We used to constantly have this same problem with mortgage brokers. Again, see my answer above. By our standards there are no such things as "Intial Opinions," "Rough Opinions," "Pencil Check Opinions," "Ball Park Opinions," "Rule of Thumb Opinions," or any other label the public wants to express to us as a precursor that they think alters the word "Opinion" into something "not a real estate appraisal."

We can try and provide some help. But we can't, or shouldn't, lead even an unidentified internet poster into thinking we are omnipotent entities that know "values" for the entire country, for all general questions asking for directions of value to be expressed, for every and all situations that the public can toss at us.

Look, this can't be rocket science. Maybe I gave too much info in my inquiry. It's a pretty simple question:

Appraising real estate is far more complicated than that. Any certain item that may have caused a value increase in 2005, could cause a value loss today in 2010, all due to economic market changes. Any certain item that causes an up tick in Florida, could cause a down tick in Oregon.

That's all I really need to know for now.

I am not meaning this to be condescending at all. What I want you to know is the images I get when members of the public, that I know fail to comprehend the real complexity of a situation involving real estate, present questions to me with expectations that the answer is in my book of value adjustments I keep on my shelf. What I see before me would be the same as a six year old child telling me that all they want is for me to tell them how to take a car key and start the engine... and that's all they need to know for now. Our ethics, a really good appraiser's ethics, will not allow you or any other member of the public to be set up to crash and burn that way.

If this issue concerns you to the point you do not wish to make a low ball offer you would be comfortable with if accepted, regardless of any affect the issue may have on market value of the real estate, then don't make an offer or hire a good local real estate appraiser.

 

[Thomas Fiehler]

I am looking at one out my back window. Only positive is that there will be no one building behind us. Just the basin and then a nursery.