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Land Appraisal Issues

by Administrator on Nov 14, 2014 Vacant Land Appraisal 631 Views

There is a great deal of diversity in the vacant land market.  Properties, even those in a relatively "uniform" physical place like Las Vegas (Clark County) Nevada, are unique because of their; location, size, topography, soils, physical offsite improvements (like roadway frontage / accessibility, orientation, utilities, power, sewer, water and sewer), legal differences (like zoning, planning, airport impacts and deed restrictions) and economic differences (like supply and demand factors that have to do with the location and the proximity to existing developments).  Two properties that are side-by-side and appear to be identical can in fact have significantly different values.

In some areas there are multiple zoning overlays that impact a property and if you don't identify all of the overlays you can't select appropriate properties for comparison.  A property can be within a resort hotel overlay but outside of a gaming enterprise district overlay or it could be inside of a central business district overlay but restricted with regarded by a building height overlay.  In some jurisdictions there are so many districts, sub-districts, overlays and restrictions that it is even difficult for an appraiser to identify and consider them all.

Use potential is one of the most important valuation factors considered by appraisers.  You can compare a vacant shopping center site with a residential subdivision site, but it's likely that buyers are paying different prices for each of them depending on supply and demand.  There are times when residential subdivision sites are in demand while shopping center sites are not.  You just can't make assumptions or generalizations about value without knowing what is going on with market supply and market demand.

In the Las Vegas land market you can find vacant residentially zoned land that has sold between $ 4.50 and $ 9.00 per square foot in a 3 mile radius.  Appraisers understand that there are a number of physical, legal and economic factors that can account for the difference in sales price per square foot beyond imperfect market conditions, more factors than I can list in this short article.  The more information that you as an appraiser can accumulate on the market and each of the individual sales that you investigate the more likely it is that you will understand price differences. 

The most fault that I have found with the appraisal reports of others on vacant land parcels and lots has had to do with omissions.  What appraiser admits in open court that they never considered the planning of a property?  That's a major fault and a major admission but I'm here to tell you that it happens.  Even the best appraisers can make a mistake, and I'm not trying to claim the high ground, but there should be a detailed outline that new appraisers can follow so that they are not selecting the wrong comparable sales.

In Clark County an R-E zoned property can be planned (RL) Residential Low, and be planned for a low density use of 2 dwelling units per acre (DUPA) and the adjoining property can be zoned R-E and it can be planned (CG) Commercial General and thus planned for future commercial development.  Since market participants give considerable weight to planning an appraiser should not ignore it.

Of course each city / county in the country has its own zoning code and its own land use plan so generalizing about any of them is not useful.  There are some places where you need an attorney just to interpret what can be done on a parcel of real property, the overlays are so complex, and other places where there is no zoning or land use plan in existence.  So for appraisers there can be no questions about use zoning and use potential to cases where it's difficult or impossible to interpret the rules.

Being in the "path of future development" is also an important consideration. Many properties may be 5 miles from downtown but if expansion is toward the southeast part of town along a major arterial roadway, the properties in that area are likely to have a higher demand than others.

There are times when "shades of grey," like the difference between a C-1 zoned property and a C-2 zoned property can make all the difference in the world with regard to whether a property is in demand or not in demand.  Thus it's important that owners pay attention to what the local jurisdiction is doing when it makes zoning and planning changes.  Even a change that doesn't seem to be that significant can leave a property unusable.

For more appraisal information contact Glenn Rigdon, MA, MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email at grigdon@cox.net 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/Real-Property-Appraisal/Real-Property-Appraisal/Vacant-Land-Appraisal//4518-Land-Appraisal-Issues.html

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