What is a territorial view in Spokane Valley worth?

Territorial View

I was recently asked to appraise a high quality dwelling with a beneficial view of the Spokane Valley. The subject property was located in Veradale and it faced the northwest.

Some of the comparables recited in the appraisal had competitive (similar) views while others had neutral residential views which were considered to be inferior to the subject.

To determine the likely market reaction to significant beneficial territorial views in the subject’s neighborhood, I compared three recent vacant land sales that were all located inside of the subject’s neighborhood boundaries. Two had beneficial territorial views and one had an inferior neutral residential view.

Vacant land sales were used to extract the likely market reaction to the view influence because these vacant land sales had no significant variances other than view after accounting for market variation from each comp’s respective sale date and variances in lot size. After accounting for these variances, the remaining adjusted sale price difference could reasonably be attributed to the view influence variance.

The first vacant land sale with the beneficial territorial view was a 0.82 acre parcel. It sold for $122,000 in September of 2017.

The second vacant land sale with a beneficial territorial view was a 1.15 acre parcel. It sold for $135,000 in October of 2016.

The vacant land sale with the inferior neutral residential view was located on the subject’s street. This sale was a 0.52 acre parcel. It sold for $75,000 in November of 2016.

The vacant land sale with the beneficial territorial view on the 0.82 acre parcel sold within the last month so it was not given a market variation adjustment.

The vacant land sale with the beneficial territorial view on the 1.15 acre parcel sold in October of 2016. This comp was adjusted upwards to account for the rate of market variation between its sale date and the sale date of the comp on the 0.82 acre parcel with a beneficial territorial view (typically contract dates are better than sale dates when making market variation adjustments but the contract dates for these sales were not available). Market research revealed the year-over-year rate of appreciation within the subject’s neighborhood boundaries to be 3.6% among homes deemed to be generally similar to the subject property. This equated to a monthly rate of appreciation of 0.0030048 per month. The vacant land sale with the beneficial territorial view on the 1.15 acre parcel sold 9 months prior to the vacant land sale on the 0.82 acre parcel with a beneficial territorial view. Because of this, the monthly rate of appreciation was multiplied by 9 which gave a product of 0.0270432 and this was multiplied by the $135,000 sale price of the comp. The product was $3,651 and this was the indicated market variation adjustment which was added to the $135,000 sale price.

The vacant land sale with the inferior neutral residential view sold in November of 2016. The vacant land sale with the inferior neutral residential view sold 10 months prior to the vacant land sale with the beneficial territorial view. Because of this, the monthly rate of appreciation was multiplied by 10 which gave a product of 0.030048 and this was multiplied by the $75,000 sale price of the comp. The product was $2,253 and this was the indicated market variation adjustment which was added to the $75,000 sale price.

After market variation adjustments, this is how the three vacant land comps adjusted out:
Beneficial View on 0.82 acre parcel: $122,000
Beneficial View on 1.15 acre parcel: $138,651
Neutral Residential View on 0.52 acre parcel: $77,253

The next step was to analyze variances in lot size. The subject’s lot size was located on a 0.66 acre sloped lot. No significant variance in overall utility was noted between the subject’s 0.66 acre lot and the 0.82 acre lot because both lots were sloped and both comps had a similar amount of level / usable lot.

The 1.15 acre parcel was also sloped but not as much as the 0.82 acre parcel and it had greater overall utility / usability. Because this was its only significant variance from the 0.82 acre lot, a lot size adjustment of $16,651 could be extracted using paired sales ($138,651-$122,000 = $16,651).

The 0.52 acre parcel was much smaller than the 0.82 acre and 1.15 acre parcels but it was level. Its utility was similar to the subject and the 0.82 acre parcel and adjusted 1.15 acre parcel. Thus, no lot size variance adjustment was deemed necessary or found to be adequately supported.

After lot size variation adjustments, this is how the three vacant land comps adjusted out:
Beneficial View on 0.82 acre parcel: $122,000
Beneficial View on 1.15 acre parcel: $122,000
Neutral Residential View on 0.52 acre parcel: $77,253

The beneficial territorial view sales adjusted out at $122,000 (although, no adjustments were deemed necessary or found to be supported). The inferior neutral residential view sale had an adjusted sale price of $77,253. The difference was $44,747. Adjustments are made by comparing a comparable sale to the subject which means that comps with inferior neutral residential views required upwards adjustments of $44,747 in each instance.

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