Waterfront Adjustments

[Lee Steidel]

Help, this is first waterfront appraisal I've done!

The subject is located in Canyon Lake, CA. There are so many variables I cannot do a true paired- sales analysis for location and view adjustments. Need LOCATION adjustments for (1) topography of land vis-a-vis access to dock, i.e. steep vs. flat, (2) muddy vs. sandy beach (3) cove vs. main lakefront. Need VIEW adjustments for cove view (45 - 90 degree angle restricted view of main channel from rear of cove) vs. full on main lake view.

As far as I can tell, the market does not perceive front feet to be a variable since lots here are generally only 50 - 128 front feet wide.

The simple thing to do would be to find similar waterfront sites and adjust for GLA. Unfortunately there is little data available in the way of recently closed sales. I do however has a very similar active listing.

This appraisal is for refi purposes and the Borrower is an appraiser for the County Assessor's office and is giving me a hard time with her inflated estimate of value.

Have any of you done this type of appraisal using poor available comps? Any tips you could provide would be greatly appreciated! If anyone has tackled a really tough one and could send me a .pdf of their grid and comments pages, this would really clarify my thinking. Many thanks!

Lee
lsteidel@cox.net

 

[Dave Smith]

Lee:
I deal with your kind of problem on a daily basis. I do an adjustment on the "site" line of the grid based on the "net site value" of the comps as compared to the site value of the subject, taking into consideration all the items you listed in your first paragraph.

Then I include a full paragraph in the sales comparison approach comments addendum that says what you said and explain, explain, explain.

The value per front foot is derived from the net site value and isn't the only unit measure of importance. Refer to your first paragraph again. Those are the items that determine what the front foot values.

I've discussed your type of siuation with our local assessor and he agrees with my philosophy. What is your "appraiser - assessor's" value of the property on the tax rolls and how does your property owner explain it?

Good luck.

 

[Pamela Crowley (Florida)]

I do it similar to Dave.

*The individual line items of Location, Site and View are combined after estimating each comparable site as though vacant and any adjustment deemed necessary is taken on the Site line.

I continue to explain the variables of each site. I have not found a justifiable way to break out these individual items for this type of property. I've never been questioned on it and do have the land sales and estimates for everything in my workfile. If it helps you figure them out, put each comp site on a land form grid. I always collect as much site information as I can on each comp, look at each from every angle that I can when driving by for the comp pic, then think about each as if I were in the market to buy a vacant waterfront site and these are my choices. I also take a look at most if not all the vacant land sales found. After a while, once you are experienced in the area, it becomes much easier as you are already familiar with those sales and sites.

 

[Dave Smith]

Pamela:

Well said. This is a classic example of the fact that appraising is more of an art than it is a science.

 

[Nancy in Friday Harbor]

I too have these types of problems every day....

My comment typically is something like "Site value adjustments are based on analysis of sales of unimproved properties in the comparables immediate neighborhood."

And that's how I come up with the site values for the comparable sales--I actually do a site value estimate of value for each comparable exactly the way I do for the subject.

Due to lack of sales up here, I often end up comparing much larger, but inferior (as determined by the market evidence) waterfront lots to smaller waterfront lots. Did one last week where the subject was on a 100'Wft/.5acre lot and one of the comps had 400'Wft & almost 3 acres---of tidal mudflats and marsh at the back of the bay. But the houses were almost dead ringers for each other. Just have to be able to back up the difference in waterfront values by analysis of waterfront lot sales.

To adjust solely for view or for size or for location would be misleading.


Good luck,

Nancy

 

[Tim The Enchanter]

comparing much larger, but inferior (as determined by the market evidence) waterfront lots to smaller waterfront lots. Did one last week where the subject was on a 100'Wft/.5acre lot and one of the comps had 400'Wft & almost 3 acres---of tidal mudflats and marsh at the back of the bay.

Yes, look at the usability of the lot. If it's 3 acres but mostly marsh, or more likely in Orange county, vertical or very steep, it's probably not usable. In hillside areas I normally base adjustments on the usable pad area, not gross lot size (assuming steep unusable areas). As for the waterfront, more (usable) is merrier right? Then again, as long as you have access, you at least have the minimum amenity. Mud or sand, big view or average? At least here's separate lines for site and view.

Practice your art.

 

[jtrotta]

Would have to agree with Dave on the "assessors" answer and add, most assessors need to meet specific requirements for their state, having said that, most need to be State Certified for assessing (don't know about your state), they also need to be impartial (no pressure towards you).

Years ago, we used to use several formulas regarding Waterfront, but in recent years they only offer a small amount of help. There is one constant that I've found and that is most people in search of Waterfront Properties will spend whatever it takes to own some. Location & Views are generally of the utmost importance. There is one area near us that took off about 5 years ago and the prices being paid there are for old housing, which gets taken down and new homes put up; it was & is an excellent source for determining "Land Value" and from there it goes all over the place. They've also gone from a "summer place" to year round in most instances.

Good Luck in your area.

8)