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Impropriety of using dissimilar-size comparable land sales.

Parcels of different sizes generally sell for markedly different unit prices. Thus, their use is limited in measuring the value of appraised parcels of either smaller or larger size. At a minimum, considerable caution must be exercised in attempting to use dissimilar-size land sales to derive the value of an appraised parcel. At the heart of the direct sales comparison technique is the requirement that physical features of comparable sales and an appraised parcel must possess similar characteristics. What then is a comparable land sale? Such a sale is one that a prospective purchaser would judge to be a reasonable substitute for a parcel under consideration. For example, an investor interested in developing a site for highway retail activity such as a service station, a fast-food outlet, a convenience store, or possibly a branch bank generally would be interested in purchasing a site of approximately one acre. An investor seeking to develop a community shopping center would probably require a site of 15 to 25 acres. Similarly, a family desiring a home-site may seek a half-acre site while a residential subdivision developer may require a tract of 100 acres or more.

The significance of this substitutability principle, as illustrated by these examples, is that there are distinctly different submarkets for various land use activities. In turn, a party interested in a particular land use generally does not consider parcels of distinctly different sizes as viable alternatives, even though they may be in the same vicinity and have the same zoning classification. For example, a service station site developer would not consider a 100-acre regional shopping center site an equivalent or comparable site. Certainly, there is a range of sizes within each of the various land submarkets where buyers and sellers would view parcels of slightly different sizes as reasonable substitutes. It is outside of these size limits that parcels are no longer considered comparable by investors, and should be so regarded by real estate appraisers. This article is intended to shed some light on this issue of potential misuse of widely different-size parcels as comparable sales in the valuation process as well as suggest supportable adjustment and alternative valuation methods.

Closely related to the concept of determining whether a particular land sale is in fact a comparable transfer is whether it is of the same highest and best use as the appraised parcel. If not, then it likely is not a valid comparable sale. A parcel may be in close proximity, have the same zoning, similar terrain, and similar access features, but, because of its variance in size, have a different highest and best use and unit value.

Prevailing views on this issue of comparable land sales of divergent size in valuation literature are presented here, followed by a digest of judicial rulings that address the impropriety of using comparable land sales that differ significantly in size from an appraised parcel. The third part of the article is devoted to analysis of actual land transfers in two Virginia metropolitan areas. Finally, two size-adjustment techniques and two alternative valuation methods are suggested when sale parcels similar in size to the subject parcel are unavailable for analysis.

The analysis of valuation literature, the digests of court cases, and the examples of actual land transfers are expected to show that smaller parcels of land tend to have a higher per-acre value than larger parcels. Therefore, this combined perspective should show the weakness of using different-size comparable sales to estimate market value as well as the need for alternative valuation methods beyond the typical overall size percentage adjustment.

PREVAILING VIEWS IN VALUATION LITERATURE

Significantly, a search of real estate valuation literature over the past 70 years reveals very few articles either on the hazards of attempting to use markedly different-size land sales to support the estimated value of an appraised parcel or on methods for making size adjustments.

The topics of the variability of land prices according to size or the difficulty of analyzing comparable land sales that differ in size from an appraised parcel have received cursory treatment in appraisal literature. In a 1974 article, recalling their valuation of 11.7 acres in midtown Manhattan, White and Barth point out the value influences of plot size, plottage, and size adjustment. Finding that the price per square foot decreased both below and above the optimum size,(1) they further observe, "Price also is influenced by the problems that added plot size provokes, namely, higher unit building costs with very large buildings ...more speculation on the absorption of the space by the market, higher capital investment requirements, and higher proportionate carrying charges."(2) They further note that "plottage can be a negative factor when the tract under appraisal is larger than the optimum configuration for the prevailing pattern of site utilization."(3)

A 1989 article by Attaway refers to an interview with a developer concerning the fact that he would pay $3,000 per acre for a 100-acre parcel of a larger tract but would pay no more than $1,100 per acre for the entire 2,750-acre parcel. He found that there was an exponential size adjustment with a fairly common slope in the Summerville, South Carolina, market.(4) The author refers again to this plotting technique in an April 1990 article.(5)

Harps notes, "Land value usually is based on sales of comparable land with the same highest and best use. Land sales should be adjusted to subject land for ...size (assembly) ...and any other differences that the market recognizes and quantifies."(6)

Another widely cited authoritative source points out that size is not as important an element of comparison as the date of sale and the location of a comparable land sale. Specifically, this source states, "Size is generally a less important element of comparison than date and location. Most types of development have an optimal site size; if the site is larger, the value of the excess land tends to decline at an accelerating rate. Because sales of different sizes may have different unit prices, appraisers ordinarily give more weight to comparables that are approximately the same size as the subject property."(7)

Gene Dilmore notes that "increased size decreases unit price;...[but] the decrease is not in full proportion; that is, doubling size does not halve unit price."(8) After introducing several size/value curves applicable to depth tables, he concludes that "the shape that I believe fits land price ratio changes for size variance is in the form of the airframe learning curve" when adapted to land price problems is:(9)

[Mathematical Expression Omitted]

where

Y = Size factor or multiplier

[A.sub.c] = Area of comparable

[A.sub.s] = Area of subject

Dilmore finds that for his local area, a 90% curve provides the best fit for acreage and an 80% curve is the best fit for commercial sales.(10) He cautions that use of these formulae or tables will at best only provide reasonable value indicators in part because "the market itself is not that exact; we are not dealing in physical quantities, but in probabilities of mental reactions, some logical, some emotional, in purchasers and sellers."(11)

Suter observes in an article on farm real estate values that "when farm size increases, sale prices also increase, but generally not proportionately. On a per-acre basis in particular, prices have a tendency to decline. However, not always."(12) In applying this relationship, he suggests that it is preferable first to tabulate sale prices adjusted for such factors as location and percent of tillable land rather than applying raw sale prices. He implies that there will be a geometric relationship between size and per-acre price. Nevertheless, he suggests a linear adjustment on a per-acre basis. His method is to use several sales to reveal the average per-acre price for different-size farm sales. Computations of these average values is illustrated as follows:
 100 acres $2,530/acre
- 270 acres - 2,275/acre
 170 acres $ 255/acre


This example produces an average rate of decline of $1.50 ($255/170 acres) an acre as farm size increases.(13)

It should not necessarily be assumed that there is a uniformly descending unit of value in relation to increasing size of land. A truer depiction is that a parcel's unit value changes in accordance with a hierarchy of different highest and best uses. For instance, there ordinarily may be a progressively lower unit value for land as its size increases from an intensive use such as a one-acre retail site.(14) Yet, at different points on this use-value continuum, optimum and larger site users can justify paying what may appear to be premium prices. This notion borrows from the plottage principle, or where a decidedly higher and better use is allowed by ideal-size larger parcels. The fundamental guiding premise to be followed in the selection of comparable land sales is whether a particular sale parcel is of the same highest and best use as the appraised parcel. This should be determined with a high degree of specificity. For example, is this sale's highest and best use for a service station site, and not simply, is it suitable for a broad, generalized array of prospective commercial uses?

JUDICIAL RULINGS

Relevant court cases dating back to 1896 from six different states were searched. In a North Carolina case, the Winston-Salem Redevelopment Commission petitioned to condemn a landowner's land for urban renewal. Commissioners of Appraisal were appointed to determine the amount of just compensation. From an appraisal of $15,500, the owner, Weatherman, appealed to Superior Court, and the court entered judgment on the verdict for the payment of an award of $25,400.

The Redevelopment Commission appealed, charging that the court excluded evidence that the sale price of the comparable land used was approximately one-fifth the size of the condemned land. It also pointed to a North Carolina law that states, "Whether two properties are sufficiently similar to admit [as] evidence of the purchase price of one as a guide to the value of the other is a question to be determined by the trial judge in the exercise of a sound discretion guided by law." The Redevelopment Commission charged that the trial court abused its discretion in excluding the evidence on the issue of the disproportional comparable land size. Further, the Redevelopment Commission pointed to a similar case, State v. Johnson, in which the court found: "It is not necessarily objectionable that the lot of land, the price of which it is sought to be put in evidence, is of different size and shape from the lot taken; nevertheless, the court may properly exclude evidence of the price paid for similar land in close proximity to the land taken if the lot sold is much smaller than the land in controversy. A large piece of land cannot usually be applied profitably to the same uses as a small piece."

On appeal the court did not agree with the statement made in the State v. Johnson case and deemed that a smaller piece of land does not always overstate the value of a nearby larger tract of land. The court ruled that there were other differences between the two pieces of land and concluded that the trial court was not in error in its exclusion of the Redevelopment Commission evidence. The court upheld the award of $25,400 to Weatherman.(15)

In another North Carolina court case, Duke Power Company sought an easement and right-of-way over 495.21 acres of land owned by Smith. Smith argued that damages from the taking ranged from $90,000-$500,000 based on a highest and best use for residential or commercial use. Duke Power estimated damages at a maximum of $10,320 based on highest and best use as farmland. Smith sought to introduce evidence of comparable sales involving two nearby tracts of land that each had 80 and 75 acres. After hearing arguments of the parties, the court found that neither tract was sufficiently similar to the Smith property to be considered a comparable sale, and set the award at $15,000. Smith appealed.

On appeal the court ruled that the finding that the tracts were not comparable is supported in the record by the difference in the size of the tracts, the subject being 495.21 acres and the sale tracts being 80 acres and 75 acres, respectively. This was a sufficient difference to support the discretionary ruling of the trial judge. Judgment was upheld.(16)

In a Mississippi case, Pearl River Water Supply District petitioned the court for the condemnation of 13.8 acres owned by Wright. Based on expert testimony presented in court, the jury awarded $97,000 to Wright. Pearl River appealed the award based on the fact that the landowner's expert witness valued the property exclusively on the sale of individual lots in a highly developed subdivision, which were in no way comparable to the 13.8-acre tract occupied by Wright's summer home, barn, caretaker's residence, and other incidental outbuildings and improvements.

On appeal, the decision was reversed and remanded for a new trial based on the opinion of the court that the comparable sales used consisted solely of sales of small lots in a highly developed Natchez Trace subdivision and in no way were comparable to the subject property.(17)

An Iowa case involved Iowa Power and Light Company, which sought a right-of-way easement over and across 242 acres of farmland owned by Yoder. The court granted the easement and made a condemnation award of an unspecified sum to Yoder. Yoder appealed the verdict based on the fact that the court refused him an opportunity to admit into evidence the sale prices of seven separate tracts, all small parcels taken from larger acreages. The small parcels consisted of 25, 20.79, 10.1, 10.8, 6, 10.1, and 11 acres.

In ruling on the refusal to admit these comparables as evidence of value for the appraised parcel, the court stated:

The reason the court has ruled the way it is ruling is this: that we are involved here with the measure of damages which takes into consideration the fair and reasonable value of this property as a whole as it existed at the time of condemnation and that the difference in value of the fair and reasonable value of the property as a whole as it existed immediately before condemnation and the fair and reasonable value of the property immediately after condemnation as burdened by the easement. We are dealing with approximately a 240-acre piece of ground. Now if we go to comparables, we should find a comparable before condemnation. We are talking about a comparable before condemnation, comparable to 240 acres, 180 acres, 290, 320, in other words, a sale of an agricultural unit as a farm, not the sale of a portion of that farm taken off for acreage development.(18)

The court also pointed to the following three citations that supported its position: Hoeft v. State says:

It is the settled rule of law in this state that, where an entire tract consisting of several subdivisions is used in its entirety as a farm, it is not proper, in determining the damages, to show the reasonable market value before and after condemnation of the various tracts separately.(19)

Welton v. State Highway Commission states:

The law of eminent domain does not contemplate that, in fixing the value of a farm, plaintiff may cut to pieces his farm and a piecemeal valuation be taken as the basis of valuation of an entire tract before and after condemnation. It is the value as a whole before and after the condemnation and not the value in parcels.(20)

Nichols: The Law of Eminent Domain states:

A large piece of land cannot usually be applied profitably to the same uses as a small piece, and if the large piece is to be cut up into lots of the same size as the small piece, the length of time necessary to dispose of the lots to different purchasers is so uncertain that the price at which one such lot would sell multiplied by the number of lots is no criterion of the present value of the entire parcel.(21)

Based on the court rulings and supporting citations, the appellate court upheld the award. In still another North Carolina case, the state appealed an award made to a landowner based on the different-size comparable sales used. The sales contained 7.513 acres, 11.215 acres, and 10.26 acres, compared with 268.5 acres for the subject parcel that was to be acquired by the state. In this case, the appraisers for the state agreed with the appraisers for the respondents that smaller tracts of beach property tend to bring much higher [unit] prices than larger tracts and that generally a small tract has a higher per unit cost than a larger tract.

An expert witness for the state testified that the subject parcel was grossly larger than three tracts which the state had purchased earlier. Therefore, because of the disparity in size, the land sales were basically incomparable. He went on to explain it in these terms: "It is like comparing pork chops with a pig. By that I mean a pig will normally sell on the market for maybe $0.20 [a pound]. We go to a restaurant and buy a pork chop for maybe two or three dollars [a pound]. A pork chop is a subdivision of a pig."

The court agreed with the state's witness and new trial was ordered.(22)

In a late nineteenth-century Massachusetts case, there was a taking of about 16 acres. The petitioners' exceptions mostly related to the exclusion of testimony offered for the purpose of affecting the estimate of damages. Excluded from evidence was a sale of a lot that was less than one-and-a-third acre. Regarding another sale of a house lot, containing 8,400 square feet, it was ruled that "the mere difference in the size of the lot is not decisive against the competency of the evidence;...but it may be considered." The court went on to say that the sale of a house lot containing less than one-fifth of an acre is not a very decisive indication of the value of a large lot of 16 acres.(23)

A 1957 case involved the City of Amarillo, which sought to acquire 37.61 acres of private land to enlarge the Amarillo Air Terminal. On appeal, it was ruled that the trial judge was within reasonable discretion in allowing a 1.38-acre comparable land sale as evidence of value.(24) An opposing opinion was given in a subsequent Texas case where it was ruled that the court did not abuse its discretion in excluding evidence on sale of tracts smaller than one acre in area. The parcel taken by condemnation consisted of 6.79 acres, which was part of a 21.033-acre tract. The appellate court stated that "we have not seen any case where it has been possible to enunciate a general rule that would be useful and acceptable in the majority of cases. Each case has presented peculiar and particular difficulties."(25)

The preceding judicial rulings overwhelmingly support the premise that use of comparable land sales of a sharply different size to estimate the value of an appraised parcel is an improper valuation method. In all but one case, (Redevelopment Commission of Winston-Salem v. Weatherman), the appellate courts upheld the impropriety of using different-size comparable sale parcels.

The rulings of the courts are not always consistent with one another. Often the appellate courts state that the question of the admissibility of sales of comparable property is one left largely to the discretion of the trial courts. In other words, it seemed that the appellate courts, in many cases, were not willing to second-guess the discretion used by the ruling courts.

Except for the Winston-Salem, North Carolina, case, this research of court decisions produced two major findings. First, where comparable land sales were 20% or less of the size of an appraised parcel, the courts ruled that such sales were unacceptable evidence of market value. Second, the courts disallowed evidence of subdivided parts (piecemeal valuation) of a parcel as a means for estimating the overall value of an entire parcel (Hoeft v. State and Welton v. State Highway Commission). Nichols: The Law of Eminent Domain takes a similar position in stating that the present value of a large parcel cannot be derived simply by multiplying the number of lots times their individual lot prices.

SURVEY OF VIRGINIA LAND SALES

The author surveyed shopping center and outparcel sales in two metropolitan areas of Virginia. In one market, the following disparity in per-square-foot sales prices was revealed:
Average size of
outparcel sales: 1.11 acres

Average per-square-foot
price of outparcel sales: $8.36

Average size of shopping
center land sales: 15.27 acres

Average per-square-foot
price of shopping center
land sales: $5.79


These sale parcels, with the same zoning and locational attributes, reveal a square-foot difference of 31% between out-parcel prices and shopping center land prices. Stated differently, the square-foot price decreased 31%, while the size of the parcels increased 1,276%. The difference is even greater when comparing shopping center prices to outparcel unit prices - an increase of 44%. Analysis of commercial sales in another Virginia market revealed the following:
Average size of outparcel
sales: 0.91 acre

Average per-square-foot
price of outparcel sales: $8.91

Average size of shopping
center land sales: 13.94 acres

Average per-square-foot
price of shopping center
land sales: $1.88


This series of land sales reveals an average square-foot price decline of 79% compared with an increase in parcel size of 1,432%.

In the same market, a similar pattern of price variation occurred. For example, a one-acre commercial parcel could be acquired at the per-square-foot rate of $10.90, while the entire 2.43-acre parcel sold for $8.41 per square foot. This represents a square-foot price decline of 23% versus a size increase of 143%. Size-price patterns in both of these Virginia markets show that the rate of unit price decline occurs at a considerably slower rate than the increase in commercial site size.

The analysis of over 1,000 land transfers in the Richmond metropolitan statistical area (MSA), or the city plus three surrounding counties, further corroborates the assertion that the use of markedly different-size comparable land sales is an unreliable method of estimating the value of an appraised property - unless reasoned size adjustments can be demonstrated. Land transfers were divided into agricultural, residential, commercial, and industrial property types - with and without public water and sewer available for the years 1991 and 1992. The land sales were further broken down into five-acre intervals up to 20 acres. The mean per-acre value and differences between the 0-1 acre and 15-20 acre groupings are shown in Tables 1 and 2.

A consistent pattern of price decline was found among the land sales having public water and sewer available. This decline varied from 81%-88% between small and large parcels. Stated differently, the average price decline per acre was 85%, versus an increase in parcel size of 3,400%.

An inconsistent price change per acre was observed for sale parcels lacking public water and sewer. Three of the four zoning categories showed value declines ranging from 53%-92%. However, industrial site users paid a higher price per acre for large parcels than for small sites. Prices for sites of one acre or less generally were discounted because of the inability of such sites to accommodate the required separation between the well and septic drain field and still provide adequate space for buildings and outside storage. This inconsistent value pattern underscores the necessity for caution when attempting to make size adjustments between sharply different-size parcels. Illustrated as well is the risk of attempting to substitute size-price relationships from one class of property to another (e.g., land sales with and without public utilities).
TABLE I Price Differences for Parcels with Public Water and Sewer
Available

Zoning 0-1 acre 15-20 acres Difference

Residential $232,174 $27,498 -88%
Industrial 262,991 37,997(*) -86%
Commercial 379,701 56,287 -85%
Agricultural 86,166 16,713 -81%

* Limited number of sales; therefore used 10-to-15 acre category.
TABLE 2 Price Differences for Parcels without Public Water and
Sewer
Available

Zoning 0-1 acre 15-20 acres
Difference

Residential $ 29,517(**) $ 6,344 -79%
Industrial 28,986 46,270 +60%
Commercial 112,995 52,694(***) -53%
Agricultural 42,156 3,228 -92%

** No sales listed; therefore, used 1-to-5-acre category.
*** No sales listed; therefore, used 10-to-15-acre category.


COPING WITH REALITY

The undesirability of attempting to make substantial size adjustments is emphasized earlier in this article. Pointed out as well is the tendency of courts of law to frown on appraisers making such adjustments. Nevertheless, in certain situations, an appraiser is compelled to make substantial size adjustments or use alternative land valuation methods to complete a land valuation assignment. For example, for several years after the post-development boom years of the early to mid-1980s there were virtually no land sales, except foreclosures. During such periods of constrained market activity, an appraiser is prudent to use several valuation methods to provide maximum support of appraised values. Without resorting to land sales of a different highest and best use or zoning, an appraiser should expand his or her sales search either by encompassing a broader geographic area or using older sales. Even this expanded data search will not always produce convincing proof of market value. In these situations, one or more of the following valuation methods may be used advantageously.

Supported Size Adjustments

Size adjustments between parcels for which size is not markedly different may be made using a derived per-unit adjustment similar to the Suter method mentioned previously, or via interpolation. Both of these methods are subject to a degree of error because the per-unit price tends to change inversely with size on an exponential rather than a linear basis as computed by these adjustment techniques. Individual sales should be used in making the size adjustment, but for purposes of illustration, reference is made to the retail land sales on page 316. In the following example, assume that the appraised parcel contains 10 acres, and has comparable zoning and locational attributes:
Derived per-unit adjustment

 1.11 acre $8.36/sq. ft.
- 15.27 acres - 5.79 sq. ft.
 14.16 acres $2.57/sq. ft.


The average rate of price change per square foot is $0.0000042, or $2.57 per square foot/14.16 acres x 43,560 square feet. When this rate of change is applied to the subject parcel, the following value is indicated:
 15.27 acres $5.79/sq. ft.
- 10.00 acres
 5.27 acres x 43,560 x $0.0000042 = 0.96/sq. ft.


Per-square-foot value of 10-acre appraised parcel is $6.75.
Interpolation

 $8.36/sq. ft. 1.11 acre 1.11 acre
 ? 10.00 acres
- $5.79/sq. ft. - - 15.27 acres
 $2.57/sq. ft. 8.89 acres 14.16 acres

Per-square-foot value of 10-acre parcel

= $8.36 - [$2.57(8.89 acres/14.16 acres)]
= $8.36 - [$2.57(0.6278)]
= $8.36 - $1.61
= $6.75


LAND SALE LISTINGS

A search of multiple listing service (MLS) records and other sources usually will produce listings of similar for-sale parcels. For this example, assume that a search has resulted in the identification of four similar parcels that were listed within the past year. All of these sale listings are located within three miles of the subject parcel, and range in size from 7.5 acres to 13 acre The listing prices vary from $7.50 per square foot to $9.00 per square foot. A comparison of listing prices to sale prices indicates that purchasers of such land generally discount listing prices by approximately 7%. Applying this discount to these listings reveals a square-foot value for the subject 10-acre tract between $6.98 and $8.37. Although none of these listings are consummated sale transactions, they nevertheless set the upper limit of value for the appraised parcel.

LAND VALUE EXTRACTION METHOD

When an appraiser is unable to locate similar-size vacant sale parcels, it is sometimes possible to find improved land sales where the improvements either contribute minimal value or impair the parcel's highest and best use, and have negative value. The extraction method is appropriate when property sales have dilapidated farm structures, outmoded industrial buildings, or residential buildings on commercially zoned land. The land value extraction method involves the following steps in the analysis of comparable sales:

1. Confirm sale price and inspect the improvements

2. Estimate the salvage value of the improvements, less demolition expenses

3. Deduct the net salvage value of improvements from the sale price(26)

Assume that the following commercially zoned parcel containing 9.10 acres recently sold for $2,725,000. The only adjustment required is to reflect the presence of a concrete block building which was built in 1920 as a tomato canning factory. It is fire damaged and contributes no value to the underlying land. A contractor indicates that it will cost the purchaser $80,000 to raze the derelict structure and remove the

Sale price $2,725,000
Building removal cost - 80,000
Land value $2,645,000,

or $6.67 per square foot


Despite the potential for erroneous value estimates stemming from the use o significantly different-size land sales, it is still possible to produce reliable results using the per-acre and interpolation methods. It should be remembered that both methods assume a lineal progression in per-unit land prices rather than the probable exponential pattern. Thus, failure to account for this size-price progression may cause some degree of distortion in value estimates. When possible, these methods should be supplemented by the land sale listing and land value extraction methods. Further, the land residual earnings and subdivision development methods may be used as well. These latter two methods are somewhat more complicated, however, and include assumptions about future income, expenses, capitalization or discount rate, and the cost or value of hypothetical improvements. Clearly, the four methods discussed previously are more direct and more easily supported by an appraiser and understood by a client.

CONCLUSION

The use of significantly different-size comparable land sales may lead to an inaccurate valuation of a subject parcel. Contrastingly, more accurate valuations may be expected when comparable land sales of approximately the same size as the subject property are used by appraisers. Generally,the use of larger-size comparables understates the value of a smaller subject property. Smaller-size comparables, on the other hand, tend to overstate the value of a larger appraised property. Moreover, the amount of size adjustment between markedly different-size parcels becomes problematic, and the reliability of such adjustments is also questionable. For example, the Richmond area land sale study revealed a large (average of 85%) but relatively consistent size adjustment between small and large parcels having public water and sewer service available. In contrast, a divergent and inconsistent pattern was exhibited for sales of parcels lacking public utilities. This potential inaccuracy may result from the variations of highest and best uses along the use-value continuum (causing an inconsistent unit price pattern), plottage value influence,(27) and the inexact nature of real estate markets.(28)

Court decisions strongly suggest that it is unacceptable valuation practice to use widely different parcel sizes to estimate land value. Just where the point of size comparability begins and ends is unclear from these decisions, but the courts ruled in the cases studied here that when comparable land sales were 20% or less of the size of an appraised parcel, such sales were unacceptable evidence of market value. The literature, the empirical evidence, and the court rulings strongly imply that every effort should be made to secure land sale comparables of approximately the same size and highest and best use when preparing appraisals. If it is impossible to obtain such similar land sales, it is advisable to analyze comparable sales using several methods, including the derived per-unit method, interpolation, land sale listings, and the land value extraction method.

1. John Robert White and R. Gary Barth, "Land Market Comparison Techniques in High-Density Urban Areas," The Appraisal Journal (October 1974): 504.

2. Ibid., 506.

3. Ibid., 507.

4. Fred J. Attaway, Jr., "Graphical Analysis Solutions to Land Appraisal Problems," The Appraisal Journal (January 1989): 121, 126.

5. Fred J. Attaway, Jr., "Commercial Site Valuation by Technique Rather Than Direct Comparison," The Appraisal Journal (April 1990): 207.

6. William S. Harps, "Depreciated Cost Approach to Value." In The Real Estate Handbook, 2d ed., edited by Maury Seldin and James H. Boykin (Homewood, Illinois: Dow Jones-Irwin, 1990), 474.

7. Appraisal Institute, The Appraisal of Real Estate, 10th ed. (Chicago: Appraisal Institute, 1992), 303.

8. Gene Dilmore, "Size Adjustment Tables," The Real Estate Appraiser (May-June 1976): 23.

9. Ibid., 24.

10. Ibid.

11. Ibid., 26-27.

12. Robert C. Suter, "The Sales Comparison Approach Versus the Market Data Approach to Farm Real Estate Values," The Real Estate Appraiser and Analyst (Fall 1983): 28.

13. Ibid., 28-29.

14. See Attaway's article, "Graphical Analysis Solutions to Land Appraisal Problems"; also see Dilmore; and Suter.

15. Redevelopment Commission of Winston-Salem v. Weatherman, 208 S.E. 2d 412 (N.C. 1974).

16. Duke Power Company v. Smith, 282 S.E. 2d 564 (N.C. 1981).

17. Pearl River Valley Water Supply Districts v. Wright, 203 So. 2d 296 (Miss. 1967).

18. Yoder v. Iowa Power and Light Company, 215 N.W. 2d 328 (Ia. 1974).

19. Hoeft v. State, 221 Iowa 694, 697-698, 266 N.W. 571, 573, 104 A.L.R. 1008.

20. Welton v. State Highway Commission, 211 Iowa, 625, Loc. Cit. 632, 233 N.W. 876, 881.

21. Julius Sackman, Nichols: The Law of Eminent Domain, 3d ed., v. 5 (New York City: M. Bender), 23-31.

22. State v. Johnson, 191 S.E. 2d 641 (N.C. 1972).

23. Teele v. City of Boston, 165 N.E. 506 (Mass. 1896).

24. McCarthy v. City of Amarillo, 307 S.W. 2d 595 (Texas 1957).

25. Morgan v. State of Texas, 343 S.W. 2d 738 (Texas 1961).

26. James H. Boykin and Alfred A. Ring, The Valuation of Real Estate, 4th ed. (Englewood Cliffs, New Jersey: Regents/Prentice Hall, 1993), 162.

27. White and Barth, 507-508.

28. Dilmore, 27.

James H. Boykin, MAI, SRA, PhD, is the Alfred L. Blake Chair Professor of Real Estate at Virginia Commonwealth University, Richmond. He received a PhD from American University, Washington, D.C., and has served as a regional vice president of the Appraisal Institute. He has written numerous articles and books.
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Author:Boykin, James H.
Publication:Appraisal Journal
Date:Jul 1, 1996
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