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The Use of Gross versus Net Area in Appraisals

by Administrator on Feb 1, 2009 General Appraisal 2728 Views

Appraisers try to compare properties using uniform measurements, and area is an important physical characteristic of a property compared when land or buildings are analyzed. Land area comparisons appear to be simplistic, until you consider why parcels sizes vary.

Most parcels of vacant real property were subdivided, based on the U.S. Department of the Interior / BLM rectangular survey system, from square mile, 640 acre Sections to 320 acre half-Sections to 160 acre quarter Sections to 80 acre, 40 acre, 20 acre, 10 acre, 5 acre, 2.5 acre down to 1.25 acre parcels. These parcels sizes, deemed "gross acreage" by the following Clark County definition, are often affected by survey adjustments, roadway dedications, utility easements and other factors and these parcels can be reduced dramatically in size prior to their becoming "ripe for development."

Per a Clark County, Nevada definition, "Gross Acre" means "an area of forty-three thousand, five hundred and sixty (43,560) square feet and includes the total area within the property lines of a lot or parcel of land before public streets, flood control channels or basins, or other areas to be dedicated or reserved for a public use are deducted from such lot or parcel, including property previously dedicated." (Clark County, Title 30, Unified Development Code, 30.08.030 Definitions)

Properties affected by public streets, alleys, and flood control channels or basins or other dedicated areas no longer fit the "gross acreage" size definition, since they have been modified.  Thus a 5.0 gross acre parcel of vacant land can be reduced to a 4.2 modified gross Acre parcel by roadway easement takings alone.

Since owners want to represent the largest site size possible, many (in the Las Vegas area) don't dedicate roadway easements until they absolutely have to. It's easier to sell 5.0 gross acres than it is to sell 4.2 modified gross acres, even though they will have the same net usable area after roadway easements are taken from both. In fact, many sales are based on the total square footage, and individuals who haven’t made dedications have more than those who have made dedications.

The public has little knowledge of the difference between a gross acreage size and a size reduced by dedications. Ads, MLS data and other property information sources do not differentiate between a true gross acreage size and a size after some dedications are made.

In my opinion there are three land states or areas. Gross acres, where comparisons can be made based on the Clark County definition; a modified gross acreage state, which is a state that considers the fact that some dedications have been made for roadways or for other purposes, however the property has not been “finished” (it’s not a "site") and it is not "ripe for development;" and the “net acreage” area that is reached when all property dedications have been made and the "site" is ready to develop.

The third state or area is what I call the modified gross area which considers parcels that have been affected by some roadway takings and other dedications before it reaches its “finished” net area.

It’s important to remember that what appears to be a square 40 gross acre parcel can actually be more or less than 40 acres due to the curvature of base and median lines.

2012 Update:  Since I considered it confusing and technically wrong, I took out the word "site" in some parts of this article, the term has a specific appraisal definition, and it made the article confusing.

2013 Update:  If you are considering everything as gross acres don’t forget to include the roadways in your plat map displays.  Otherwise it looks like you are saying that you are comparing gross acres but you are displaying modified gross acres in your maps.

For more appraisal information contact Glenn Rigdon, MA, MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email or via his business website Horizon Village Appraisal (http://www.horizonvillageappraisal.com), or you can also click on “Contact Us” on the home page of this website.

Article source: http://www.appraisalarticles.com/General-Appraisal-Articles/308-The-Use-of-Gross-versus-Net-Area-in-Appraisals.html

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