Name:	John C -	Reply
Subject:	LM Lot Pricing - In Depth Study Pt 1
Date:	3/26/2014 12:53:31 PM

Hey all, I thought you might like a link to a 3 part series I did on my blog recently to study methods used to calculate lot prices on Lake Martin. I did this originally for a client back in December, so I studied sales from Jan 1 - December 5th or so, but I have no reason to think December's sales would throw the numbers off.

Basically, the reason I did the study was to finally prove (to myself and my clients) the math behind my assertion that the comparable sales method is the most accurate way to price a waterfront lot on Lake Martin. Over the years I have heard many people try to START with a price per waterfront foot, then adjust it. Or START at a price per acre, then adjust it. I hope I have laid out clear reasons here, but the most accurate way is to START with the comparable sales (sales comparison) approach, and make fine tune adjustments AFTER that.

The results are telling:

Lot Pricing Methods Part 1

at the end of this post I put in links to parts 2 and 3.

Name:	au67 -	Reply
Subject:	LM Lot Pricing - In Depth Study Pt 1
Date:	3/26/2014 1:18:59 PM

Thanks for all your "nerdwork" and making the results available to the public. A question for you.  How does Tallapoosa County (and Elmore and Coosa) assess lots for tax purposes?

Name:	au67 -	Reply
Subject:	LM Lot Pricing - In Depth Study Pt 1
Date:	3/26/2014 1:21:49 PM

To clarify, I'm just talking about lots on Lake Martin.

Name:	Osms -	Reply
Subject:	Questions??
Date:	3/26/2014 2:22:58 PM

While I certainly agree with your approach to valuing an unimproved lot, a few questions come to mind:

1.  How can you put a value for a subdivision type lot (The Ridge, Emeral Shores, Marina Marin, etc) with many varied amenities up against a lot in strictly rural setting such as APCo lease lots?  How do you account for the extra value?  Can you use a comp in a subdivision to justify the value of a "rural lot"

2.  Do you find the values of out-of-town appraisers to be accurate?  You indicate they aren't.

3.  The 65 lots you show sold in '13, are Russell Lands and APCo lease lot sales included in those numbers?  If not, are those numbers available elsewhere?

Name:	John C -	Reply
Subject:	Questions??
Date:	3/26/2014 3:15:47 PM

I will attempt to answer:

1. this precisely why the sales comparison approach works the best. A big water view, flat lot in Trillium is not very comparable to one that is steep, back of the slough, outside of a neighborhood, and north of the railroad trestle in Alex City. You start with lots that are most similar and adjust for differences. Adjusting for differences is where one's expertise comes in - expertise of the market as a whole, first hand knowledge about the lots in question, and practical knowledge about what REAL buyers think about lots.

2. IMO, where the appraiser is from doesn't matter as much as where he / she makes his / her living. If I were the client, I would want my appraiser to be someone that appraises on Lake Martin full time.  Similarly, although I can legally be someone's RE agent in Birmingham, I don't think I am very qualified because that's not my bailiwick, even though I am pretty familiar with that city.  It always baffles me when I see agents market themselves as experts in more than one market.  They must be a lot smarter than I am, and have more than 24 hours in a day.

3. true, these numbers are from the Lake Martin MLS so they don't include any sales that RL does not publish. However, RL did put several lot sales in the MLS in 2013 in, eg, the Ridge Phase III.  I honestly don't know how many more pure lot sales they had in '13 that were not published in the MLS, but I would be surprised if it were more than 10, which would not be that much of a change to the result (statistically). The leased lot sales from AP to the home owners are not included.  I have no clue about this, but I would guess and say there were at least 300 of these this year, an anomoly for sure. If these two camps (RL and AP) were included I don't think it would change the results on the scatter plots and the correlation coefficient because my sample size was as large as the previous 2 years ('11 and '12) combined.  I would have included those two years as well but honestly it's a pretty tedious calculation because you have to look up almost every lot's WF footage and acreage.

Name:	John C -	Reply
Subject:	LM Lot Pricing - In Depth Study Pt 1
Date:	3/26/2014 3:23:54 PM

I think allegedly the tax assessors use the sales comparison approach.  I say allegedly because the only person that knows is the person that sets the value.  If I were assessing hundreds of lots I will admit there would be a temptation to find some kind of shortcut. For me, the big question for assessors is not how they got the value, but what their value is. Unless they're way off, I don't advise fighting it. You have to get an appraisal, go through a long process, and people usually lose. It's hard to fight "city hall."

Name:	Osms -	Reply
Subject:	Questions??
Date:	3/26/2014 5:07:25 PM

Thanks.  I absolutely agree on the local appraisal comment.  APCo's appraisals of the lease lots were all done by an out of town contractor who tended to use RL and other subdivisions as comps for lease lots, which inflated the value of the APCo lots, but did not give a fair appraisal.  I was told by APCo personnel that they were offering all of their leased lots on Martin for sale to the leasees and that were about 125 lots involved.  I'm not sure how many of those have been closed, but I have heard of a number of people who refused the high offers from the power company.  It would be interesting to hear from others about their experience with the leased lot offers and purchases.