Sounds like a mobile home setup. Do you pay monthly rent for the land use? Are there many houses owned on the same basis on that piece of land? The cost of moving it may not be worth it.

On resale homes, you can see in the tax assessor records (Seattle Area) “% improved”. I went to a property the other day that was assessed at $403,000 with only $45,000 attributable to structure and a house down the street sold at $517,000 with only $10,000 of the assessed value attributable to structure. So “1/2 the value in the land” is clearly not universal.

As to 3X vs. 4X or 5X, a lot of that has to do with size of new construction and interior finishes…view considerations, lot size, etc…

My 3X is more of “a given” that the property will sell, and less of a gamble.

I have an acquaintance who bought 3 lots at $250,000 each and told him to build at resale price points of $750,000 to $850,000. He didn’t listen and put in mega square footage homes on less than 5,000 sf lots with top of the line finishes and priced them all over a million. They are not selling. So 4X and 5X lot value, depending on that for resale, is not a good move in this market, in my opinion.

3X is the more conservative approach and likely to be more successful. No one wants to pay that much more for upgraded finishes or expanded square footage on three levels vs. less square footage on two levels, unless you have extensive view considerations and “close to”/”walk to” amenities appeal plus privacy factor. A difficult combination to achieve.

How do you account for that first one selling for only $325,000 in May of 2006? How do you account for the current owner not subdividing the lot and selling the new lot and existing home separately?

There are 32 view houses on market within 1/2 mile, 3 pendings and only 7 sales in the last 6 months. 19 cancelled and expired listings during the same timeframe. Some are overlaps.

Are you going to live in it? How much would you take off the value of the existing home for having another house in close proximity and what do you deem the afterprice of the new house on the subdivided lot?

That doesn’t answer your question, but I can tell from your comment which two properties you are talking about, which limits me a bit as to commenting on a blog. So I thought I’d throw out a few questions you should consider.

Consider also that the house with the larger main floor footprint only has 2 bedrooms on the main level and one in the basement. The other has 126 sf less on the main floor, but 3 bedrooms on the same level…that being the main.

View houses cannot be valued by assessed value and these two houses are not apples to appels given the bedroom differences. The value of the view is determined by which rooms within the house offer the view, which I can’t see (especially on the subdividable lot)

Valuation of these two properties (3 with one built on the subdivided lot) has not much to do with price per square foot calculations or variances in assessed value as to home and lot. The bigger issue is what are you planning to do if you buy either of them? If you plan to sell in a short period of time, both are risky given the area sale stats. If you are planning to live in either of them, let me know and give me a rough idea of for how long.

Blogs are really for generic info. Once everyone can tell which houses you are talking about…the info gets too specific for “blogfodder” and has to be moved to private email.

These two homes have nothing to do with the example I gave involving English Hill. View property and subdividable lots are a much more complex valuation method, and can’t possible be done without walking the two lots and being inside the two houses.

But I do hope my questions have at least helped you in gathering more and possibly new information while making your decision.

Property #1:
Lot size: 16,687 sqft
Land assessment: $385,400
Structure assessment: $175,100
Listed price: $540,000

Property #2:
Lot size: 7500 sqft
Land assessment: $286,400
Structure assessment: $230,900
Listed price: $529,000

Both are view properties in the same neighborhood. Do those numbers seem right? FWIW, #1 is subdividable, though building a second house would be a messy proposition.

I am using recent solds (within 6 months) so that we are looking at real prices and not “asking” prices. I am pulling the search for property as I am typing this comment, so it will either prove me right or wrong in “real time”.

Highest priced sold was a house sold for $950,000 on a 24,000 sf lot with 4,430 sf. Just behind that in total sale price, we see a house of 3,720 sf built in the same year on a 71,000 sf lot.

Both were in the same neighborhood of Cascade Park. The home with the lot size that was basically 3X the size received $239 per square foot based on structure, vs. the home with the “smaller” lot that received $214 per square foot for the structure. Perhaps the $20 per square foot increase was about the 3X lot size, but still just a fraction more and not a full value for the addtional 50,000 square feet of extra land.

This example fits pretty well into the 10% for “extras” guideline of getting 10% more on a price per square foot (of structure only) basis for the 3X extra land.

Another home of 2,930 sf built in the same year on a 10,000 sf lot sold for $777,000 in the same timeframe at $265 per square foot. This home with the relatively small lot backed to a green belt. So you had the privacy and feel of lots of land, without the maintenace. If you use this as an example, then the large lots were actually sold at a discount vs. a plus.

Now lets see what the tax assessor does with land value on these three.

71,000 sf assessed at $194,000 for the lot and $602,000 for structure of 3,720 totalling 796,000 sold for $890,000.

24,000 sf assessed at $193,000 for the lot and $712,000 for the structure of 4,430 totalling $905,000 sold for $950,000

10,300 sf assessed at $157,000 for the land and $566,000 for the 2,930 sf structure totalling $723,000 assessed value sold for $777,000.

The first house sold for 1.2 times assessed value, and the additional land was given little or no value for tax purposes.

The second house sold for 1.05 times assessed value.

The third house sold for 1.07 times assessed value

So the first house of 71,000 sf lot was given little or no added value for the lot by the tax assessor, but the market allowed the 10% ” extra” value which would have been 1.155 X assessed value.

The other two houses valued out normally and balanced out at roughly the same relationship to value given by the tax assessor.

The 71,000 sf lot vs. the 24,000 sf lot are almost an identical example to Larry’s original question. While I answered his question without looking for proofs, the first search and with only looking for same year built and neigborhood, offered this almost identical proof of my position. I must say it amazes me when that happens.

So neither the tax assessor nor the market values the 3X extra lot at more than a 10% allowance for “extras”. Land is about “not enough” or “too much” or “just about right” for the most part unless the land can be subdivided. It’s more like Goldilocks and the Three Bears with minor additions and subtractions for too much or too little land.

And so I repeat…”Trust the Tax Assessor”. If the Assessor is giving extra value for that land, so does the market. Don’t vary in huge swings from the tax assessor’s valuations as to land, unless it is a separate, buildable lot.

I have seen many assessments where there were permits and the County has all the info, but the assessment wasn’t raised in proportion to the improvements. There have been incentives over the years for improving historic homes and upgrading areas that were getting run down. My own assessment is ridiculously low and doesn’t account for the view at all. It has something to do with the fact that when the previous owner expanded it from 1,000 sf to 3,300 sf, he didn’t change the look of it from the street and maintained the historic integrity. I have a friend in Goat Hill with the same situation.

At different periods of time, the assessments were downgraded as to improvements, to promote revitalization and to reward upgrades that were made by government desires of the time.

Government often promotes change with incentives. I know Kirkland a couple of years back was allowing subdivision of lots to smaller than area requirements, if the owner didn’t tear down a home built in the 20s in the process. Of course once they allow the subdivision, there likely is nothing to stop the future owner of the lot with the historic home on it from tearing it down.

I know Mayor Nickels is looking to promote more green building and certain asthetic aspects of condos, townhomes and multi-family dwellings in Seattle. Sometimes in order for Government to invoke changes that they desire, the offer incentives.

I have also seen very low assessments on homes that use the senior citizen tax discounts, though I haven’t understood how Seattle accommodates that. I think they may lower the assessment and not just the tax.

So just because the assessment value is low, does not mean it has a direct relationship to market value. When I say “trust the assessor” I also said do a lot of work to find out what the assessor is doing. He always has a reason, and that reason may or may not influence market value. But don’t just wave the difference away as not important.

Why would an assessor care if you have a granite counter in your house? In three years that granite counter may be obsolete and everyone will want something else. Cosmetic improvements can be a fad for a time, and generally the assessor doesn’t go into people’s homes to count the number of gold plated faucets.

Some houses do and some houses don’t. Historic homes with character that is basically irreplaceable and priceless clearly do appreciate. If the house becomes functionally obsolete, then it will depreciate. A 4 bedroom 2 1/2 bath Craftsman home from 1910 with a large main floor foot print and all bedrooms up, that has been well maintained and updated over the years, clearly will appreciate in value.