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HomeMy WebLinkAboutDocumentation_Workshop_Tab 01_11/03/2014 479 & 483 Seabrook Road, Tequesta Definition of Va{ue The Appraisal Institute provides the following definition and clari�cation of market value: The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified properly rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress' The following definition of maxket value is used by agencies that regulate federally insured financial institutions: Market value means the most probable price, which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting pru.dently and knowledgeably, and assuming the price is not afFected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: • Buyer and seller axe typically motivated; • Both parties are well informed or well advised, and acting in what they consider their best interests; • A reasonable time is allowed for exposure in the open market; • Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and • The price represents the normal consideration for the proper[y sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. (12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24, 1990, as amended at 57 Federal Register 12202, Apri19, 1992; 59 Federal Register 29499, June 7, 1994) The above definitions are consistent with the definition of market value provided by the Uniform Standards of Professional Appraisal Practice (USPAP). Both the Appraisal Institu.te and USPAP require a reasonable exposure time in the open market, discussed in the following section. Additional definitions are in the addenduxn. 2 Dictionary of Rea! Estate Appraisal, 4"' Ed., Appraisal Institute. 3 Ibid. � IMegra ReaHy Rewurces Page 5 ! 479 & 483 Seabrook Road, Tequesta � Exposure Time / Marketing Time � Exposure time is always presumed to occur prior to the effective date of the appraisal. However, marketing time is prospective, i.e., looking forward. � Discussions with brokers, developers, and owners indicate that there is increased demand currently for residential vacant land as we appear to be emerging from the economic ( recession which economists believe began in December 2007 and ended in June 2010. Given the subject's location and the scarcity of vacant developable residential land in � Tequesta, a reasonable exposure time is reconciled at 6 to 12 months when reasonably priced and professionally marketed. Finally, moderate demand for similar properties supports marketing periods commensurate with the reconciled exposure time of 6 to 12 months. � MARKET STUDY AND ABSORPTION ANALYSIS To value the subject "as is" a study of supply and demand for competitive properties must � first be undertaken. This involves an analysis of absorption, or sellout, for the individual lots and also includes estimating the lot values. � A fundamenta.l analysis is developed by reviewing demographic trends and projecting future demand based upon population growth and related purchasing power. However, it is a difficult undertaking for properties like the subject because the demand is not directly linked � to growth forecasts. Rather, it is linked to housing preferences among buyers. Therefore, a fundamental analysis is not applied. � Inferred Analysis ` The purpose of an inferred market study is to estimate or infer expectations of the overall maxket, such as sale prices and absorption, by analyzing competitive properties. The subject ` is assumed to support development of 5 residential lots averagirig 8,000 sq.ft. in size. Our ( analysis of competitive projects comprises those developments located in Tequesta and the neighboring portion of Jupiter, with specific attention paid to: � a. Property type (single-family non-waterfront homes/home-sites); b. Prospective purchasers (those that can afford to purchase in similar priced projects); c. Recent projects andlor those existing projects with recent re-sales (as alternative � housing choices). Primary Competition � We found no residential subdivisions that are offering lots for sale in Tequesta. One small residential subdivision in Jupiter has experienced sales recently. We spoke with Neal Vander C Waal of Vander Waal Realty (561-758-5364) who is involved with the sales at Cinquez Park in Jupiter north of Indiantown Road. He began marketing the lots either vacant or with new 1,700 sq.ft. single family dwellings in January 2013 and has sold 19 parcels since then � indicating absorption of one lot per month. � In�gre r�ealty Resa.^rces Page 6 1 � 479 & 483 Seabrook Road, Tequesta � We e:amined resident�a? l�nd sales data fo�.zd on t?�e P�ILS. T?�e s�arcr �Yi�er ��as �?or�- ( waterfront lot saies that occur: withir the past year listed bptween $5�,��JQ ai.d $25t�,�OG� in the comiru�lities of Jupiter, ai�d Teq_uesta. The search found 28 sales �riTr� an a��et•abe sales price af $98,1�2. This i��d5�ates a����:ai absorptio� of 28 lots �er yea_r. ! Information is deemed to be reliable, bu� is not guaranieed. OO 2014 �ALS and �-_. Prepared by Angie M Har on ivlonday, July 28, i 2014 12:43 PPA. The informaiion on this sheei has been made availabie by ihe MLS and may not be the lisi;ng of tne provider. , Original List Price Sale Price CDOM Pr�ce % Price � Price Chg Chg This Search (-- Matches) Volume -- $3,231,600 $2,764,500 ^Average -- $115,414 $98,732 240 -- -- ❑Median -- $92,500 $83,000 60 -- -- ❑Low -- $55,000 $35,000 0 -- -- ❑High -- $250,000 $250,000 2,013 -- -- Number of listings` -- w/Orig. Pr. 28 28 sold 28 0 changed price VJe also e�amined currer�t listings for non-waterfront lots using the same search criteria. This search shows 46 lots available for sale excluding the subject lots. Th?s data indicates an 18 month supply assuming no new lots come on the �narket. CONCLUSIONS In summar�r, gzven all of the rr�arket �ata and assuming pricing c€�mrr�ensurrate with the market values reconciled herein, we estimate that a p? developer wo�,Id ��arket the lots �uhile going th�ough the appr�oval process (estimated at 3�?onths) and si�e preparation which includes constructii�g � street with utilities (�stimated at 3 mont�s). The 5 lots vvi�1_ sell out in 3 months after all pennits are approved and all infrastnzctua is c�mpieEe ��vha�l� we �sti�ated to be by Juiy 2015. A?� fve �ots are �arojecte� to be sold by October 2�fl5, li�[\ , ��ge 7 � 479 & 483 Seabrook Road, Tequesta � Highest and Best Use � The concept of highest and best use is market-driven, as the competitive forces within a � properly's market area directly impact it. As such, the trends observed in the preceding sections are further analyzed to indicate their impact on the subject, both `as if vacant' and `as improved'. The market conditions discussed, such as supply and demand, help to determine highest and best use, including maximum productivity and ideal improvements. Highest and best use is defined as: the reasonably probable and legal use of vacant land or an improved properiy, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and b use must meet axe leg al permissibility, physical possibility, financial feasibility, and maximum productivity. There are three steps involved in highest and best use. The first step is to analyze potential uses for the site as vacant (including leaving it vacant). If the conclusion is to improve the site, the second step is to identify an ideal improvement for the site. The last step involves analyzing the site as improved (if applicable). Existing improvements are compared to ideal improvements and a conclusion is drawn to maintain the existing improvements or modify the property to resernble its ideal improvements. Analysis of the subject site `as vacant' and `as improved' is performed by application of the following four tests: • Legal permissibility: uses allowed by private restrictions (such as deed restrictions), or public restriction (such as zoning and land use). • Physical possibility: uses which are physically possible, given the subject size, configuration, etc. � Financial feasibility: legally permissible and physically possible uses that have sufficient demand to indicate value commensurate with cost. • Maximum productivity: the feasible use which returns the most value to the site. As Vacant Highest and best use of land or a site as though vacant is defined as: among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination. The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements. The four tests are applied to the subject as follows: 4 Dictionary of Rea! Estate Appraisal. 5 Ibid. � mc��a �ny ees«,rc� Page 28 �79 & 483 Seabrook Road, Tequesta L�sally Permissible IIses The subject parcei is cu�eAltly zo�led R-QP (Rec?•eatio?7 and Open Space). As previously stated, t�.e Village ir�tends ta sell the s�abject for residential dev�lopment and intends t� � e- z�ire the parcel bacic to R-1, wh?ch was the zoning prior ta them purchasing the property i�1 2010 ai�d re-zoning the site to R-OP. We are assuming the R-1 zoning �,vill be reirstated and are appraising the property based on this premise. The only use pennitted by right withi�l ar� R-1 district is single family °esidential use with subdivision of tl�e site into buildable lots with a minimum size of 8,000 sq.ft. and a minimum frontage of 75 feet. Physically Possible The Village has i�ot provided us either a preliininary or final site plan depicting residential lots on the site. We sketched a potential subdivision assumi�ig a minimum lot size of 8,000 sq.ft. with a minimum frontage of 75 feet. Sased on discussions with Nilsa Zacarias, Director of the Village of Tequesta Dept. of eominunity Development, we projected a 25 foot wide street comirlg into the site with a 10 foot buffer along the north perimeter of the site and allowed 10 feet for a sidewallc on the south side of the proposed street and an 80 ft. diazneter cul-de-sac at the end of the street to accomnlodate emergency municipal vehicles, and concluded the parcel could accommodate 5 residential lots. We are assuming the Village will approve residential development of the parcel with 5 lots. The sites will be mostly rectangular to slightly irregular shaped. None af the infrastructure necessary for development has been constructed, but development of 5 �esidential lots a�pears to maximize its potential, and is physically possible. � An illustration of the projected subdivision is shown below. :; � C: ! � � " '1 L „ C ,� C � � �� � � 1 ;' i �� � � --- _ . _ _ ��_ ._ ,_.�._--------- �--- . - ___ _� ___ _� � i � �,_ ii_ ; ji'G:= - �t _ . _. _ _ .�_�_. _ . _._ ` _...�-- ,, ; � l �.... . , :.;� r ... ,.__..,,_.._..._ � 1 T_'_._' --t-__.___._��-..�.. `Y i ' ' � ' i T � . �' j -- ' -� � ��- f � ' - '� ^` , ` ; � , � � , � ._.__---- --- _ __ ._ ____ .___�_ __ ._- _--------------_ �.._ � 7 , Na scale lt� - �'�ge 2� 479 & 483 Seabrook Road, Tequesta Financially Feasible Based on our analysis of the maarket, there is increased demand for additional residential lots at the current time. Sales of single family lots and houses have increased considerably in the past year, although in most cases prices are down significantly from their peak in late 2005/early 2006. It appears that demand has increased, albeit at lower prices than the peak of the market. The recovery of the market is underway accompanied by a rise in property values to a level that justifies the cost of new construction. Thus, it is anticipated that residential subdivision sell-out is financially feasible. Maximally Productive There does not appear to be any reasonably probable use of the site that would generate a higher residual land value than developing the property with a residential subdivision. Accordingly, it is our opinion that developing the properiy with a residential subdivision, based on the normal market density level permitted by zoning, is the maximally productive use of the properly. Conclusion Creating the subdivision for residential development is the only use that meets the four tests of highest and best use. Therefore, it is concluded to be the highest and best use of the property as vacant. We are assurning the parcel can be subdivided into 5 residential lots and will value the property accordingly. Typical Purchaser ' � ' The most probable buyer of the lots in bulk is a speculator/investor or home builder. li�tt ��� �„� �� Page 30 � 479 & 483 Seabrook Road, Tequesta I Land Value Reconciliati on and Conclus�ons As isldicated in the Land Sales �Com�a? Grid, adjusted sale prices rar�ge froin $i08,3?5 to $122,985 per lot. lhe data �rocided a lnean indication of $115,669 per lot and a r.:edian of $114,841 per lot. Greater cansideration is given to Sales 1 and 2 as they are located in the subject corrzi��unity. Based ozl this analysis, we have concluded a market vaiue of $115,J00 per Iot. The retail values of the subject lots assuming completion of infrastructure are summarized below. Lot 1 $115,000 Lot 2 $115,000 � Lot 3 $115,000 I Lot 4 $115,000 i Lot 5 $115,000 � Aggi•egate of Retail Values $575 ,000 li�E� Page �?