Land Evaluation

Name: University: Course: Tutor: Date: Land Evaluation Before Shane Simmons purchases a house and land for private residence, a valuation report appraisal will have to be prepared using the comparable sales method. The value of a house is estimated by comparable sales approach (CSA) through comparison of similar properties which were sold recently and are located in similar regions. The approach assumes that the worth of a property is what it sells for in a reasonable time period without the presence of undue stress (Property-Investing.org 2011). The client has already located the property whose street address is 39 Lavarack St, Darling Heights, Toowoomba. In addition, the legal description is Lot 7 on Sp 16426913, Parish of Drayton. This document provides a valuation report appraisal of the above property based on comparisons made on similar properties located in the region. The table 1 below represents some similar attributes of the properties located within this particular area. The attributes of the properties will be compared based on the comparable sales values which have been provided. It is evident that these properties were sold within a time span of three months, from July, 2010 to October, 2010. Property 12345Price$363,000$353,000$371,000$329,000n/aTime15/09/201018/10/201012/7/201026/7/20102/10/2010Land Area m2700600660636732ShapeRegularRegularRegularRegularRegularLocationQuiet streetFeeder street to schoolFeeder streetCorner of residential streetQuiet streetElevationNorth-south, Road levelNorth-south, Road levelEast-west, Road levelNorth-south, Road levelEast-west, Road leveltopographyLevellevellevelWell drained level Table 1: Different attributes of properties and their sales information (University of Southern Queensland 2010, p.10) This method was found to be more appropriate since the houses in question are in a suburb and they are approximately of standard size, condition, design and age. In addition, when sales attributes of two properties are identical, the sales price may differ due to an attribute that is different between the properties. When a comparison is made on some similar properties, people will be in a position to give a particular value to individual characteristics which give value to the property (Pagourtzi 2003, p.389). Afterwards, the price value of the subject property will be determined through adjustments of comparable sales to be identical to the subject property. If a land is vacant, differences in sales prices can be attributed to several characteristics such as land size, general location, shape, topography, views, drainage, street position, soil type, orientation and road level. Analysis of sales difference Unquantifiable: Land area Adjustment grid sales 2 and 3 Property23Price $353,000$371,000Land area600660 Land area difference: 60 m2 Effect of land area difference is the change in sale price: $18,000 = $18,000 / (660 – 600) = $300 per sq. m We can conclude that properties located in Feeder Street are valued at $300 per sq. m and therefore properties with similar attributes will be sold at similar prices. In our current example, we need to find the values per sq. m of properties in different locations (like Quiet Street and Feeder Street). The property we are currently valuing is number 5 and its price has not been indicated (University of Southern Queensland 2010). In addition, all its characteristics are similar to those of property 1 apart from land area. Both properties were sold within a period of less than one month implying that any fluctuation in price cannot be very significant. We need to find how the price of properties in Feeder Street compares to those in Quiet Street. Properties 1 and 2 have similar attributes apart from land area and price. Property12Price$363,000$353,000Land area700600 For us to make an assumption that the land area of both properties is equal, we divide 600 by 700 = 600/700 = 0.86. This value will be essential when it comes to calculation of the value of a property per square meters. The difference in land area between property 1 and 2 is 100m2. The difference in price is $10,000 Effect of land area difference is the change in sale price: $10,000 = $18,000 / (700 – 600) = $180 per sq. m. Valuing property 5 raises several challenges especially when you take into consideration the attributes of other properties have more than one difference with property 5. Property15Price$363,000xLand area 700732 Property 1 is the most appropriate property to use when calculating the price of property 5 since most of their attributes are similar. Land area difference: 32 m2 Let us assume that the price of property 5 is equal to (x). The ratio between both Land areas = 732/700 = 1.05 Therefore, x = $363,000 x 732/700 = 363,000/1.05 = $379,549 This result shows that the current price of property 5 is $379,549 based on comparison with the price of property 1. The approximate population of Toowoomba is 95,000 and this region is 2 hours drive from the Sunshine and Gold Coasts and 1.5 hours drive west of Brisbane. Apart from being an economic and social hub of the Darling Downs region, it is considered that biggest non-coastal city in Queensland. The reasons behind the upward rise in land and property valuations are attributed to the historical gardens, parks and scenic views. The City of Toowoomba is composed of quality and affordable housing, efficient network of health services, extensive educational opportunities, professional services as well as recreation facilities. Several property valuation experts are of the opinion that comparable sales method works best with the market value of residential homes. This method has often been used in the residential property market to analyze the general trends and projections. Moreover, the method has been used to employ the principle of substitution when calculating the selling prices of houses. For this method to be effective, the client needs to collect diverse information about the attributes of the property he wants to purchase. In our situation, Shane Simmons has collected the attributes of the land and all that was required is to determine the price of both the land and house. In addition, we already have the attributes of four different properties and they can be relied upon to establish the price of Shane’s property (University of Southern Queensland 2010). First, an important step is to steadily arrange data based on their comparable properties. This is because the forces which influence value of properties must be weighed against each other. The elements which are commonly used can be divided i...