Golf Course Conversion Appraisals

Converting a golf course to a single-family residential (SFR) use can be an expensive proposition.  Some golf courses can simply not be economically adapted for such a use, since adaptability has a lot to do with proximity to offsite improvements / utilities and if the golf course is too remote or has natural topographic features that are extreme redevelopment for a SFR use may be economically not feasible.

Some golf course conversion plans can be thwarted by the lack of appropriate zoning.  If the jurisdictional authority isn’t open to a zoning change that would allow SFR development again the conversion plan may fail.  The local government and the surrounding community have to see the change as beneficial.  “You are changing the golf course to what?” may be the comment that you get from the public. 

Golf courses are generally good neighbors, they don’t pollute, they don’t make noise and they create relatively little traffic.  If your subdivision just happens to have a view of the golf course you as a homeowner feel like you benefit from its continued golf course use.  If it becomes a SFR subdivision you just have more neighbors to look at, not beautiful fairways and greens.  

Home builders are a risk adverse group and they will not want to buy into a “can of worms,” they will reasonably expect guarantees regarding the use of a golf course property for their intended SFR subdivision use.  If they see exorbitant excavation, fill and compaction costs, a lack of utilities or rezoning difficulties with a public relations nightmare that comes with it they simply won’t bite.

Many golf courses use irrigation water that is clean while others use effluent.  Excavation and clean fill will often take care of many soil problems but testing will still be an important part of conversion costs and testing will be required by most local governments and potential developers prior to their purchase of a site for a golf course conversion. 

What about the golf course buildings?  They do not generally have value to most home builders so the cost of their demolition must also be considered as part of a conversion appraisal.  The more extensive the golf related buildings the greater the redevelopment or conversion costs.  Appraisers must consider the cost of golf cart paths, that are often concrete or asphalt paved, the removal of irrigation systems and the demolition of greens, sand traps and related improvements. 

Residential home builders look at developed golf course sites as possible conversion sites for SFR development, but they compare them to other vacant sites in the market area that are suitable for development, so the costs associated with bringing them to a comparable state must be subtracted from their appraised value.  Thus appraisers must also consider the use recent vacant land sales purchased for SFR development as their comparable sales with attention paid to the cost to bring the subject to the same condition. 

Of course appraisers cannot imagine every possible conversion cost but they can approximate the costs that they are aware of.  When the golf course is a “going-concern” an appraiser must consider not only vacant land comparable sales but also the value of the property with its business entity.  If the golf course generates income that provides a net return that is well above the value of the land the golf course use may be contributory and possibly the existing golf course use is greater than its value “as vacant.”

For more appraisal information contact Glenn J. Rigdon MA, MRICS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas  (http://www.appraiserlasvegas.com), or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at http://www.linkedin.com/pub/glenn-rigdon-ma-mrics-asa/1a/30b/879/

Article source: http://www.appraisalarticles.com/Real-Property-Appraisal/Golf-Course-Appraisal/4603-Golf-Course-Conversion-Appraisals.html