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Appraising SFR Homes with Commercial Zoning / Planning

by Administrator on Jul 24, 2019 Highest and Best Use 89 Views

There are many homes located in Clark County, Nevada that adjoin primary or arterial roadways and some have been zoned and / or planned for a commercial purpose.  Appraisers understand that if a property has commercial zoning and / or planning in place that zoning or planning is not necessarily its highest and best use.  That’s why a certified general appraiser is employed to analyze the highest and best use of a property, it may appear to some to be obvious but in fact it may not be. 

While it is possible that an existing residential use is more profitable than the land “as vacant” and available for redevelopment, there is no way of knowing that without having researched land values.  Some appraisers don’t want to consider the “as vacant” condition scenario, it mean that you have to complete a separate land valuation, but without having completed it how would you know whether or not the land is worth more “as vacant” or the property is worth more “as improved?”

Many single-family and multi-family residences have been converted to an office or a retail use, and the conversion costs and potential income from the property “as converted” must be analyzed.  There is no guarantee that once a property is converted that it’s use is then the highest and best use.  It may be that a great deal of money was spent to convert a property for a commercial purpose but the highest and best use may still be for assemblage for a larger-scale commercial purpose.

Some real property owners can’t understand why they need to have a commercial appraiser analyze a real property just because it has commercial zoning or planning.  It appears looking at the property that its value is clearly “as improved” for its residential use.  The problem with that assumption is that it’s not always correct.  If may be that the commercially zoned land that has older improvements on it has become so valuable that the improvements no longer provide a reasonable return to the land.  Commercial land in Las Vegas / Henderson (Clark County) Nevada can, based on its location and other factors, could possibly be worth $ 20 per square foot (SF) or more.  That means a half-acre vacant site could be worth $ 435,000 or more.

There are many commercial “corridors” in Las Vegas that have strips of commercial zoning and / or planning and that zoning / planning runs along both side of a roadway and the zoning / planning creates an opportunity for residential homeowners to use their property for a commercial purpose.  When getting on and off the adjoining roadway is difficult or when the roadway is not wide enough to support a high traffic count, the demand for the underlying land may not be high enough to support large-scale redevelopment.  In these areas there are mostly converted properties and few new developments.

A review of up-to-date zoning and planning maps is important and most appraisers take care to correctly identify which areas a property falls into, it can make a great deal of difference if a property can potentially be used for one purpose or another.

Appraisers also consider “overlay” districts created by governments that can affect property value.  In the Las Vegas and Clark County areas there are districts displayed in government drawn maps that layout enhancements and / or limitations for things like; airport noise / crash zones, mixed-use development density areas, gaming, rural neighborhood preservation, adult uses, cooperative management areas (CMAs), historic neighborhoods and others.

If you have a property that has commercial zoning and / or commercial planning and it was appraised by an appraiser who did not consider the fact that the commercial zoning / planning existed, you need to have it appraised again.  Appraisers are supposed to address the commercial zoning / planning in their reports and a highest and best use should discuss if a property is worth more “as vacant” or “as improved” based on its existing zoning / planning.

For more appraisal information contact Glenn J. Rigdon MA, MRICS, IFAS, ASA who is a Las Vegas / Henderson Nevada based broker and appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas  (, or, or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at

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