Value of surplus land

[Meandering]

Years ago I did a dead peat moss operation for the state. A very dead metal building and bagging equipment on a large bog. Without checking, if memory serves it was 75 acres of bog and about 2 acres dry that mostly was keeping the bog from the road. I used comps of cliff face right north of 84 in Matamorris. Darn if I know why those people bought the cliff faces, but I was happy to have them as sales.

Limited utility land is probably one of the hardest yet most interesting types of assignments we can have, in my opinion anyway.

Had one that was a dead slate mine. That was bundle of fun too.



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[leasedfee]

Joseph, by definition surplus land does not sell. Surplus land may have value if it can contribute residual land-income. Rarely do we see someone do land valuation by looking at residuals. Instead we see most appraisers use sales comparables to try to get at the residual. You want to add this to the income approach, or add/adjust them to the sales comparison approach; that's correct. Is this appraiser's analysis any good or correct, I'd have to do a Std. 3 to make such a call.

It's more land than needed for the HBU of the improvements and you can't sell it off. What does the future hold for larger lots with the subject's zoning and demographics?

Does the surplus even contribute additional MV?

Ignoring for a second that the subject is a wetland, surplus land is a question of productivity and utility deriving from the property rights. Can the owner enjoy this extra land? Can the building be expanded? Does it support equipment/materials storage, and parking?

As to being a wetlands, does the zone-lot count this extra land acreage towards the buildable FAR calculation? Does it count towards the open space % requirement, if such, making the buildable portion of the site more valuable? As Marion alluded, what is the legality of using the wetland?

Dennis is correct "But the problem (as I see it) is: If one is using sales that sold separately (which implies a H&BU onto itself) to extract allocated $/SF values for land that will not be sold separately (surplus land), how fair is that comparison?

It's not.

This is always problematic. If when valuing the surplus land, its comparable lots have horizontal site improvements (curbs, sidewalks, utilities, etc) you have to be careful not back them out or not use those comps. Being a semi-arid area, I've never run across a wetland in my years of appraisal. Though, my favorite example is an industrial park where the back lots were 1/3rd crossed by a flood plain. They sold for less. The value of the rear flood plain could be extracted as surplus land value by match-pairing it in comparison to a non-flood plane industrial lot across the street.

Also for consideration, the rear portion of a site is worth much less than the frontage, irrespective of a wetland or flood plain. It takes great care to not over or undervalue this rear portion. I've found the 40-30-20-10 rule derived by Assessors one-hundred years ago to be evident/extractable in my market -- somewhere way-back on AF there is an old post about this.

 

[josephdifranco]

Joseph, by definition surplus land does not sell. Surplus land may have value if it can contribute residual land-income. Rarely do we see someone do land valuation by looking at residuals. Instead we see most appraisers use sales comparables to try to get at the residual. You want to add this to the income approach, or add/adjust them to the sales comparison approach; that's correct. Is this appraiser's analysis any good or correct, I'd have to do a Std. 3 to make such a call.



Ignoring for a second that the subject is a wetland, surplus land is a question of productivity and utility deriving from the property rights. Can the owner enjoy this extra land? Can the building be expanded? Does it support equipment/materials storage, and parking?

As to being a wetlands, does the zone-lot count this extra land acreage towards the buildable FAR calculation? Does it count towards the open space % requirement, if such, making the buildable portion of the site more valuable? As Marion alluded, what is the legality of using the wetland?

This is always problematic. If when valuing the surplus land, its comparable lots have horizontal site improvements (curbs, sidewalks, utilities, etc) you have to be careful not back them out or not use those comps. Being a semi-arid area, I've never run across a wetland in my years of appraisal. Though, my favorite example is an industrial park where the back lots were 1/3rd crossed by a flood plain. They sold for less. The value of the rear flood plain could be extracted as surplus land value by match-pairing it in comparison to a non-flood plane industrial lot across the street.

Also for consideration, the rear portion of a site is worth much less than the frontage, irrespective of a wetland or flood plain. It takes great care to not over or undervalue this rear portion. I've found the 40-30-20-10 rule derived by Assessors one-hundred years ago to be evident/extractable in my market -- somewhere way-back on AF there is an old post about this.

Ok, so there are some peers out there using sales comps to value surplus land areas, the method seemed off to me. Personally it still feels like a leap since the comps being used are saleable. On the other hand, it at least recognizes some additional value. I don't have any improved comps which have such a high land to building ratio.

Regarding other questions, we are appraising market value. The surplus land does have road frontage. I know that the wetland area can't be built, and the zoning allows parks, recreational facilities, playgrounds, forest preserves...

Thanks for the responses guys.

 

[Meandering]

I don't have any improved comps which have such a high land to building ratio.
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And right here, is the problem the original appraiser had, and the reason he went the route he did.

Have fun Joe,

cause it sure sounds like the original appraiser did.

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