How much is the extra large lot worth? - Posted by Tim (Cleveland, OH)

Posted by RRSmith on October 10, 1999 at 13:08:18:

The lot is worth nothing, in fact it has negative value, (up keep) UNTIL you use the whole property for some higher use. A good example would be a day care center or a beauty salon. But until you convert the property to HIGHER USE, it has no extra value. My local market has surplus small business (commercial) property, and it is DEEPLY discounted. Three years from now it will be at a premium (supply vs demand) when the economic wave passes through the area.
…In fact some people are basing their entire beginning REI course on HIGHER USE, it is an interesting method, and should not be ignored. The more liberal your local zoning laws are the higher the value will be (this would be a good time to fine out about the zoning laws in your area OFFICALLY in your area). My town has a committee and then another review by the town council(yikes!). I have seen industrial sites that the OSHA PERMITTING, EPA permitting, and other paperwork was worth $4-5 million for that site (more than the physical assets of the plant).
If your house is the smallest on the block and you fix it up till it?s a little above average that also makes sense (profitability).

How much is the extra large lot worth? - Posted by Tim (Cleveland, OH)

Posted by Tim (Cleveland, OH) on October 10, 1999 at 09:46:48:

Hi all, thanks in advance for any help.

I called on an add the advertised a house for $85,000. The current owner bought it as a rehab and is now looking for a buyer. He has advertised owner assisted financing. He says it will appraise for $97,000. When the seller heard that I am aware of soem of the creative techniques, he offered a price of $65K cash without even blinking.

I ran comps to get an idea of the value of the houses in the area. $85K is on the high end of these homes. Using the cost per square foot method, I peg this house at just under $70K FMV.

The issue is that this house is on nearly an acre of land, approx 10 times larger than other area lots. So how do I figure how much the extra large lot adds to the value of the property? For that matter, is there a rule of thumb for any “special feuature” that a property might have, such as a swimming pool, nice large deck, garage with more than just one or two slots? And what about other types of potential benefitrs such as the fact that a house is on the edge of a state park or lake?

Thanks again,

Tim

Re: How much is the extra large lot worth? - Posted by PeteH(NYC)

Posted by PeteH(NYC) on October 10, 1999 at 14:36:05:

Another possibility for squeezing more profit out of the extra square footage is splitting it off into a separate lot. This strategy would require, at the very least, local zoning/planning commission approval and road access to the split-off parcel, so study carefully before attempting. However, if all the dice fell in your favor it might turn a question mark into a quantifiable profit.

Re: How much is the extra large lot worth? - Posted by Ed Garcia

Posted by Ed Garcia on October 10, 1999 at 11:21:18:

Tim (Cleveland Ohio)

It’s worth what you can get. Or if your buying would want to pay.
Some people might view a larger lot, as more maintenance, and be
concerned about the cost of the up keep.

Of course logically it would have more value. But that can depend on
Location , Lot usage (I’ve seen lots that were half is hillside and not usable),
Property availability, etc.

I’m sorry to say there is no carved in stone answer.

A realtor, will show you the per foot method indicating a formula
established by the market. I wouldn’t necessarily go by that.
In many cases, a realtor will use the larger lot as a selling point to show
that the property is valued at more than the others, and therefore your
getting a good deal. That’s fair, and makes you feel like you’re getting
more for your money.

Obviously a larger size lot is a selling point, but that can depend on
Other factors such as the improvements on the subject property, and the
condition of those improvements. There are appraisal methods, but again
I don’t think that is information that can be depended on.

I Have 21 commercial acres and only about 17.6 is build able. I have
About 3.4 acres that the grading cost would make the property not
competitive in the market place. So I’m marketing 17.6 acres and the
potential buyer will get the other 3.4 as a through in.

Good Luck,

Ed Garcia