I doing a CMA on a very small piece of commericial land for my client, 0.18 ac, does anyone have a calculation how to adjust vacant land to arrive at a purchase price?

Pull up the average price/acre of the sold comps, divide by 8 and try that number.

When valuing land the value is more than just comps. For commercial what is the highest and best use for the land?

Is there water and sewer connection available at the street?

Is this parcel undeveloped raw land,cleared but undeveloped,or partially developed with pipes sticking out and land graded but just needs to have vertical improvements(building)?

What is the topography of the land? If it is very unlevel you might have to do alot of grading or if it has a steep slope up or down. This will also affect site distance from the road whatever is built there.Also the site might require alift station which can get expensive.

.18 is a very small parcel to do much with. Is there land next to it for an assemblage where a larger project could be built?

Is your parcel located on a corner with high traffic or is it speculative further down from the main artery?

As you can see if you just take a .18 commercial parcel as a sold comp it is not realistic.When I value land for a client I know what a developer is going to look at as far as costs.Then I look at comps and say do they compare in location,traffic,topography,utilities available,etc.

If all of that isn't similar you will have to make many adjustments.You can do much more with a 1/2 to 1 acre parcel then a .18 as far as what can go there. Sometimes an adjoining property would want it for extra parking or to increase their building size.Your land owner could also enter into a joint venture for an equity interest with the other owners around him for a big project. Just depends on what is around them,the future land use map for the area,what type of asset class is there and how old the existing buildings are.

Hope it helps........................

The land was formerly a gas station. The tanks have been pulled up and there are not similar comps that were formerly a gas station. The business my client has, a church, is already using the land, per authorization of the owner, as a parking area. The owner now wants to sell the lot to the church. She is asking for $250,000, we feel it's a lot for the area.

The land will have to be graded again.

The church and adjoining land are a corner lot that is fenced in.

Does this help a little?

Just because the tanks have been pulled up does not mean there is no contamination left. The EPA requires whomever the owner is to clean up contaminants when they are discovered.This INCLUDES adjacent land that is affected from the site.

Has the gas station been demolished or is it just a shell and the church parks there? Does the church pay the owner of the lot now for parking or is it currently free use?

250,000 for that little piece is insane.They are wanting about 1,375,000 per acre when you break it down BEFORE the cost of the church making the land site ready for the use they want which is additional parking.

You might be better off moving the church nearby to a bigger building with more parking to accomplish 2 things at once.If they won't budge much on price try to focus on terms. For instance if they own outright have the church put enough down to cover your commission plus a little more and then have the seller hold a first position note at under market rates.

If the seller won't go for this have the church sign a lease of the land instead.

Is this gas station building really old 21 to 50 years or newer 1-20 years? If it wasn't that old and in good shape the seller might get more money for a gas station owner to buy and reface.

The church will have to look at demolition costs,site cleanup from contaminants,and possibly asbestos abatement depending on how old the building is. These costs can be extremely expensive hence why they might want to just sign a lease to use the land but not be responsible for it.

There could be a burning issue the seller isn't sharing as to why they want to sell now.

It's really hard to asses everything without being there. I hope this helps. Do you have a picture of the site in question you could post here? Has the church already gotten written estimates on the cost from a GC company to change to a parking lot?

The fence goes around the church and the lot. The owner allowed the church to use the lot for free for a long time. The owner has died, the probate is ending and his daughter wants to sell it. (Underlying cause)
The EPA has cleared the site of possible contaminants and we have a written sign off. There is no building, just land, hence no demolition costs. I'll be attending service tomorrow and I'll post a photo.
A move is possible but not in the near future since he remodeled the interior, added a second floor with classrooms, etc.
There are no similar commercial lots that were formerly a gas station. All other lots in the city are much larger and for new home developments 3.00+ acres.

Thank you so much for taking time with this.

The only other sale then I could imagine is if a buyer wanted to put a used car lot on the corner but it would be really small.

All the corporate gas stations require lots of 3/4 to 2 acres so it sounds like the teardown was a small independant lot.

So the daughter is the only one who has an interest in the estate? The daughter also is the executor and controls the estate correct?

Sounds like the daughter is motivated. She has a perception that the church HAS to have the space so is trying to play hardball. The truth is she needs you more than you need her. She is carrying estate taxes and most likely needs to cash out and that number came from money she needs for her life. That all has nothing to do with the value of the land.

Does the church have cash? If so I would low-ball for 100,000 and see the response. What does the church think is fair? How many parking spaces are we talking here?

You could find pay for parking lots or transit facilities and find a cost per parking space average. Then figure out how many spaces would fit on the .18 acres with a site layout and offer that amount.

Will be interesting to see what happens with this one.I don't see another buyer coming along and paying 250k for a .18 acre site they can't assemble with any other adjacent land.

Geez where is this at, beverly hills? 250k...no way

I think a licensed appraiser should handle this situation.