by TimTheAppraiser on Fri Jun 27, 2008 11:38 am
It also depends on whether you are in an eminent domain situation or a negotiated purchase situation. Also, this is a general overview and might not be appropriate depending on the specifics of your situation.
In eminent domain I'd probably be looking at the cost of building the extra capacity and/or the loss to that subdivision for having the extra capacity, plus any additional maintenance costs that may exist. Did they lose developable land for the retention pond, or did they have to make lots smaller, therefore getting less of a premium? What incremental costs were involved in building the excess capacity? You could make an argument that they are losing the opportunity to sell the excess capacity, but that may be a stretch, depending on the laws in your area.
If you are not in emeinent domain, looking at the value to the subdivision that needs the capacity might be part of the analysis. The value to the subdivision that needs the capacity might be higher, if they can't develop as many lots or need to make the lots smaller to accomodate the required capacity. They would also have incremental costs as well. But, as I'm sure you know, one buyer does not make a market, so using that as the sole source of market value may not be appropriate.
I hope this helps.
Timothy Holzhauer
Appraising 20 years and still not sure what I'm doing!