McKissock Course 3 – Pre-License; Due first draft 4/12/04 Chapter 5

Chapter 5

The Site Analysis

Learning Objectives of Lesson

The goal of this lesson is to have the student:
• Describe the site in terms of
o Dimensions - Shape and Size
o Topography - Soil Composite and Drainage
• Contrast On-Site versus Off-Site Improvements
• Compare the Site to Competing Sites in the Market
o Establish Market Demand Conclusions
o Utilize the Site Analysis in a Land Valuation
• Sales Approach - Abstraction Approach
• Practice in a case study a site analysis

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P.O. Box 1673 – Warren, PA 16365 Phone: 1-800-328-2008
McKissock Course 3 – Pre-License; Due first draft 4/12/04 Chapter 5

5-2

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P.O. Box 1673 – Warren, PA 16365 Phone: 1-800-328-2008
McKissock Course 3 – Pre-License; Due first draft 4/12/04 Chapter 5

Chapter 5

The Site Analysis

Describing the Site

The Site Analysis begins with identifying key components that will define the site’s
utility. Those key components of utility begin with the surface of the site, i.e.

• Dimensions
• Shape
• Size

On page 6 there is a copy of the site section where these three components are
reported. The dimensions of a site should be taken from the most recent recorded survey.
However, in the absence of a current survey the appraiser can research the Tax Parcel
information and base the dimensions on that taxable demarcation. Regardless of where
the dimensions are credibly obtained the appraiser needs to ensure the user understands
of the extraordinary assumption about the dimensions and size of the site. Only the
surveyor can attest to the true dimensions and site area.

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McKissock Course 3 – Pre-License; Due first draft 4/12/04 Chapter 5
Describing the Site
(continued)

There are many shapes of sites due to the differential of land’s unique permanency,
surface and dimensions. No two grains of sand are alike, nor are any two sites exact in
their likeness. The basic shapes used to describe land are:
• Square - Equal or near equal dimensions on all four sides
• Rectangle – The length or width is greater than the opposite side but equal in
their parallel measures
• Irregular Rectangle (Parallelogram) – The nearly rectangular shape has off-
setting parallel measures that create triangle areas on two of the four corners.
• Pie and Cul-de-Sac – Generally uneven on all sides but triangular in a visual
shape. Cul-de-Sac lots are often curved in their small side of the triangle
having no point as the Pie shaped lot.
Shapes play a significant role in the utility of the site as it defines that area for the
designed improvements.

Example: Consider a site area with 21,780 square feet or ½ acre. The exterior
measurements of the dwelling are shown in the exterior sketch. The lot is 75’ x 290’ with
15’ side setbacks, 25’ front setbacks and 12’ rear set backs. Will this house fit on this lot?

12’

8’
2’
16’ 10’ 14’
2’
10’
10’

16’
4’ 12’
8’

6’ Fireplace

35’
8’
3’ 3’
2’
4’ 4’ 11’
11’
13’
8’
16’ 8’
Front facing Street 14’

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McKissock Course 3 – Pre-License; Due first draft 4/12/04 Chapter 5

Describing the Site

(continued)

The front horizontal line of the house totals 58’. When the 15’ foot side set backs
are added the front total needs of the width of the lot is 78’. This house will not fit on this
lot. The size of the ½ lot meets the need of the dwelling but the shape of the lot does not.

Topography
Topography is known as the “lay of the land”. In some areas of the country the land
is extremely flat, low lying and subject to destruction from natural causes such as
hurricanes. Some regions are extremely steep others sloping or slightly sloping. How the
land lays and the position of the land from abutting sites can significantly impact the utility
of the land. Cost to have a level structure vary in relationship to the lay of the land.
Topographical maps will show varying degrees of elevation that are often referred to in
areas with broad ranges of topography. In the residential appraisal report form known as
the URAR (Fannie Mae form 1004) the appraiser is required to communicate the
topography. In the event it differs significantly from the other sites there must be a notation
and how that variance affects the value.
This is NOT where the
size is reported. This is a
commentary on the
comparison to other sites.

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McKissock Course 3 – Pre-License; Due first draft 4/12/04 Chapter 5
Describing the Site
(continued)

Soil Composite and Drainage

Although the appraiser will not always detail in the
appraisal report what type of soil composite the residential
site has the appraiser must have knowledge of that soil
type and understanding of its suitability for improvement
and ability to drain. Often the term “permeability” or “perk”
is used when describing the site. The permeability of the
soil refers to the soil’s ability to absorb water during heavy
rains. When the site fails its “perk test” it is not capable of
handing private sewer systems or in some cases cannot
be considered suitable for any residential improvement.
The appraiser should seek to obtain a soil composite map
of the county/parish they chose to practice to ensure
understanding of the soil’s capability to support
improvement and have adequate drainage.

Illustration of a cross-section
of soil composite

Illustration of the Site Section of the URAR where drainage of the site is reported

The comment expected in this section of the residential report form 1004 is an attest
to the site’s drainage. Often you will see terms such as “appears adequate” or “towards
front-rear or side”/adequate”. In some cases where it is evident that water stands for
periods of time (visual water marks on either fencing or dwelling or out buildings) the
appraiser will comment “inadequate”, soil remedy is recommended for the remaining
economic life to equal the physical life of the improvements. Obviously in this section
lengthy comments are not possible and an addendum to the form report will be necessary.

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McKissock Course 3 – Pre-License; Due first draft 4/12/04 Chapter 5
Describing the Site
(continued)

Soil Composite and Drainage

Typical paths of water and moisture in

crawl spaces

Notice this illustration shows a

dwelling down-slope from a hill
where surface runoff finds the
dwelling in its path.

This second illustration shows a

cure to the surface runoff that
leads the water around the
dwelling.

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McKissock Course 3 – Pre-License; Due first draft 4/12/04 Chapter 5
Describing the Site
(continued)

Legal Encumbrances of the Site

Zoning is a city’s implementation of their plan for development. Good planning and
forecasted growth track the density of the population and trends of residential travel to
work, recreation, education, worship, medical care and shopping. Zoning changes are a
city’s efforts to amend the use of the land as dictated by the changes in the population and
demands for change in land use are evident.
Building codes are legal encumbrances of the improvement to the land. Building
codes are governmental minimum standards for construction quality. The purpose of the
building code is primarily one of safety.
Deed restrictions or deed covenants are private regulations established by the
developer to enhance homogeneity within the development. Deed restrictions can never
diminish government regulations but they can exceed the zoning or building regulations.

On-Site and Off-Site Improvements

Within the boundary of a site that is improved there will be a main improvement and
then additional amenities to the site known as “site improvements”. Typical residential site
improvements include, but are not limited to:

• Fencing
• Sprinkler system
• Landscaping
• Swimming Pools
• Tennis Court
• Court Yards
• Flatwork-driveways, sidewalks, etc.

Beyond the boundary of the site the residential developed area will generally have
off-site improvements. Typical off-site improvements would include, but are not limited to:

• Street Lights
• Curbs-Gutters
• Paved Roads
• Storm Sewers
• Public Drainage Canals
• Alleys
• Gated Walls and Entrances

In Planned Unit Developments there will also be an off-site common area that can be as
minimal as a plot of small land holding a community mail-box to amenities such as
swimming pool, tennis courts, recreational centers, etc.

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Describing the Site
(continued)

All sites for residential use will have various stages of improvement. The typical
development of residential site follows a path from beginning to end starting with the
financing of the site.

Development Flow Chart for New Construction on a Residential Site

Survey of Lender is
concluded-Lender is
selected

Loan Package is
submitted

Appraisal is ordered Permanent

valuing the site under Financing for
hypothetical condition individual site
“as proposed”
Bridge Loan
is Originated
Loan is approved (based if Existing
on appraisal) Mortgage
Exist on other
Periodic Certificate
property
Payments of
Construction Loan is are made during Occupancy
made construction

Final
Site Excavation and Plumbing/Fixtures Electrical/Fixture Inspection
Preparation
Roof Cover Heating/HVAC Floor Cover

Foundation for spec

house Roof Structure Interior
Interior Walls Wall Finish

Framing Exterior Walls Kitchen Appliances

Cabinets

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McKissock Course 3 – Pre-License; Due first draft 4/12/04 Chapter 5
Comparing the Site to Competing Sites

The appraiser must identify through the Market Analysis how the market perceives
the utility and the demand. Demand is based on:
• Utility
• Scarcity
• Affordability/Transferability
The market will have a distinct reaction to land beginning with its location. From the
point of location the typical points of reference for comparison to competing sites are:
• Size – The area and in some cases the dimensions
o Front Foot – A measure most often used by investors of
residential sites when fronting an amenity such as a waterfront
or nature trail or golf course. Sometimes in cul-de-sac lots this
frontage is significant if the depth is not suitable for typical
design and size of dwelling
o Square Foot – A measure most often used by investors of
residential interior lots.
o Acre – A measure most often seen in rural properties and in
many of the suburban properties

• Location within the development – Each development will have “prime”

locations that separate the sites from others within the development.
These sites are in higher demand because of their “Situs” (prime
location within the development).

• Cleared/Raw – In the natural state a site has additional costs with clearing the
site that a market participant will consider in the offer

• Topography – The “lay of the land” and whether or not there are trees. In some
regions of the country (especially the Southwest) there is a minimal
reaction to the lack of trees; in other areas, such as in parts of Texas
the lack of trees there can be a higher demand for lots having trees. In
some regions where trees are plentiful the treed lot can be a
determinant because of the cost of clearing the trees.

• Linkages and Access – This goes beyond the distance issue as most
comparisons are made within the same development. However, if the
site is located deep within a development the morning and evening
commute can be a deterrent during heavy traffic. In the event there
are no sites within the development and a competing market area has
to be used in the analysis the distance/time to travel to the
environmental amenities of work, worship, recreation, education,
shopping and medical care should be studied, analyzed and
commented on in the report.

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Comparing the Site to Competing Sites
(continued)

• View – This refers to what is seen from the site. The market participants will vary in
their demand for the site when the view from a residential site is commercial or a
landfill or a sewer lift station. The positive views would be a natural site such as
mountains, lakes, or similar residential improvements. The view is a circumference
view and not from any one specific direction. However, in the event there is one
view that either negatively or positively is obvious the appraiser will need to consider
the impact.

• FEMA Flood Zone – If the subject or the competing sites differ in their FEMA Flood
delineation the comparison analysis should include identifying these differences.
There is an additional cost involved with improving sites in the FEMA Risk Zone of
100-year Flood Plane.

• Utilities – If the site is vacant and in a rural area there will be additional costs
involved with the private utilities. In developed urban areas vacant sites will have a
cost to connect to the city utilities. At any point a comparison of the subject site to
competing sites requires going outside the market area this point of comparison
must be studied, concluded and reported.

Governmental and Legal Characteristics

• Zoning – In some cases the residential site may have one zoning classification and
abut to a site that has a different allowance. The regulations of land use should be
stated in both the legal classification such as R-1 and the detailed allowance of the
classification, i.e. Residential One-Detached Unit only. There should be an analysis
of the zoning restrictions in terms of parking, setbacks, etc.

• Property Tax Jurisdiction – When comparing the subject site to competing sites it
should be compared in its tax rate to ensure the same services are afforded or
adjusted in the land valuation process for the additional costs.

• Deed Restrictions – A private encumbrance for the enhancement of conformity.

• PUD – If the site is in a Planned Unit Development the competing sites should also
have a similar restriction and mandatory Homeowners Association Dues.
Comparison of sites in a PUD that differ in common amenities should be considered
in the analysis.

• Environmental – In the event the site is located in a region where construction must
meet local “safe-habitat” conservation needs the comparison of the site should be
with other sites of similar restriction.

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Comparing the Site to Competing Sites
(continued)

This sample analysis has a comparative conclusion of the competing site to the
subject. Unlike the Sales Approach where adjustments are made downward for superior
characteristics this analysis identifies the competing sites characteristics as being
favorable, inferior or similar to the subject through the mathematical directors of:

Favorable Competing Site + when compared with the subject

Inferior Competing Site - when compared with the subject
Similar Competing Site = when compared with the subject

Example of a Site Analysis

Item Subject Competing Competing Competing
site Sale 1 site Sale 2 site Sale 3
Location Suburban Suburban = Suburban = Suburban =
Interior Lot Yes Yes = Corner + Yes =
Golf Course Yes- Yes-Green = No-Interior 3rd - Yes-Green =
Fairway 10th Hole + Row Street - 8th Hole +
Dimension 85’ x 110’ 72’ x 90’ - 100’ x 100’ + 72’ x 90’ -
Shape Rectangle Similar = *Square = Similar =
* no market
reaction to
difference in shape
View Golf- Similar = Residential - Similar =
Course Properties
and
Residential
Properties
PUD Yes Yes = Yes = Yes =
Zoning R-1 Similar = Similar = Similar =
Deed Yes Similar = Similar = Similar =
Restricted
Tax Mill Rate 95 mills 95 mills = 95 mills = 95 mills =
FEMA Risk “C” Similar = “C” and “B-1” - Similar =
Zone
Utilities Public Similar = Similar = Similar =
Environmental No Fence Similar = None + Similar =
on Rear
facing GC
Conclusion: The subject has a favorable comparison to the market area and will not
negatively be impacted to any significant degree from the competing sites.

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Comparing the Site to Competing Sites
(continued)

In a Sales Approach those superior (+) and inferior (-) characteristics would be
adjusted in dollar amounts in the opposite direction. Example: If FEMA Risk Zone has a
market reaction of $4,000 (the capitalized difference of the cost of insurance for one year)
then Competing Site number 2 would have a + $4,000 for its inferior (-) comparison to the
subject. This opposite adjustment methodology is necessary to adjust a sales price
simulating a similar transaction to the subject.

Practice Exercise in a Site Analysis

A series of sales of vacant sites is detailed. Select what you believe are the best
three sales and perform a site analysis.

Item Subject Competing Competing Competing site

site Sale 1 site Sale 2 Sale 3
Sales Price $55,000 $75,000 +/- $45,000 +/- $50,000 +/-
Pending “?” “?” “?”
Location Suburban Suburban Suburban Suburban

Interior Lot Corner Yes Yes Corner

Boulevard Yes No No Yes

Nature Trail No Yes No No
Hillside
Dimension 75’ x 90’ 65’ x 85’ x 85’ x 100’ 65’ x 90’
110’ x 100’
Shape Rectangle “?” “?” “?”
View Boulevard Nature Trail Residential Similar
Residential Residential Properties
PUD Yes-Nature Yes-Nature Yes-Nature Yes-Nature
Trail Trail Trail Trail
Zoning R-1 Similar Similar Similar
Deed Restricted Yes Similar Similar Similar
Tax Mill Rate 105 mills 105 mills 105 mills 105 mills
FEMA Risk Zone “C” Similar “A-1” Similar
Utilities Public Similar Similar Similar
Environmental No Fence on No Fence on None No Fence
No Fence on Front rear Nature on Front
Front Boulevard Boulevard Trail Boulevard
or on Rear lots
abutting Nature
Trail Hillside
Conclusion:

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Comparing the Site to Competing Sites

(continued) Practice Exercise in a Site Analysis

Item Subject Competing Competing Competing

site Sale 4 site Sale 5 site Sale 6
Sales Price $55,000 $77,000 +/- $43,000 +/- $53,000 +/-
Pending “?” “?” “?”
Location Suburban Suburban Suburban Suburban

Interior Lot Corner Yes Yes Corner

Boulevard Yes No No Yes

Nature Trail No Yes No No
Hillside
Dimension 75’ x 90’ 75’ x 95’ x 105’ x 100’ 70’ x 90’
105’ x 110’
Shape Rectangle “?” “?” “?”
View Boulevard Nature Trail Residential Similar
Residential Residential Properties
PUD Yes-Nature Yes-Nature Yes-Nature Yes-Nature
Trail Trail Trail Trail
Zoning R-1 Similar Similar Similar
Deed Restricted Yes Similar Similar Similar
Tax Mill Rate 105 mills 105 mills 105 mills 105 mills
FEMA Risk Zone “C” Similar “A-1” Similar
Utilities Public Similar Similar Similar
Environmental No Fence on No Fence on None No Fence
No Fence on Front rear Nature on Front
Front Boulevard Boulevard Trail Boulevard
or on Rear lots
abutting Nature
Trail Hillside
Conclusion:

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McKissock Course 3 – Pre-License; Due first draft 4/12/04 Chapter 5
Comparing the Site to Competing Sites
(continued)

Practice Exercise in a Land Valuation – The Sales Approach

Using the sales gathered in the Site Analysis and the following adjustments
determine a land value and the price paid for the subject’s lot that is pending the appraisal.
Sale No. 3 is exampled in this practice, find two other sales you believe are most similar,
adjust for dissimilarities and conclude a land value.

$’s of Adjustment Dissimilarity Characteristic

$100 Front Foot Difference
$1,500 Interior Lot versus Corner Lot
$3,000 Location of Boulevard
$16,000 Location on Boulevard versus Hillside
$4,000 FEMA Flood Hazard Risk Zone
$5,000 View superior versus inferior
$ -0- No reaction for Environmental Restrictions

Item Subject Competing Competing Competing site

site Sale site Sale Sale 3
Sales Price $55,000 $ +/- $ +/- $50,000 +/-
Pending
Location Suburban Suburban - 0 -

Interior Lot Corner Corner -0 -

Boulevard Yes Yes - 0 -

Nature Trail No No - 0 -
Hillside
Dimension 75’ x 90’ 65’ x 90’ +5,000

View Boulevard Similar -0-

Residential
FEMA Zone “C” Similar -0-
Environmental No Fence on Similar -0-
No Fence on Front
Front Boulevard
Boulevard or
on Rear lots on
Nature Trail
Adjusted Sale Pending Net $’s + 5,000
Price Sale Is/is not
Supported $55,000
Reconciled Land Value $

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McKissock Course 3 – Pre-License; Due first draft 4/12/04 Chapter 5
Comparing the Site to Competing Sites
(continued)

Practice Exercise in Land Valuation Using the Abstraction Method

When the market analysis concludes an area built-up 90% or greater it is often difficult
to find vacant land sales. One of the alternative land valuation methods, when the property
is not income producing, is the Abstraction Method. The Abstraction Method utilizes Land to
Value Ratios. These Ratios can generally be documented by the local Tax Assessor’s office.
Although the assessor’s office may not be current in their land valuation they are generally
the most credible indicators of the land to value ratios.

Illustration of Methodology
Tax District of Subject Improved Improved Improved Improved
Record Data Tax Parcel 1 Tax Parcel 2 Tax Parcel 3 Tax Parcel 4
Total Assessed Market
Value $135,000 $143,000 $139,500 $141,000
Market Value Land
Assessment $ 40,000 $ 45,000 $42,000 $43,000
Land to Value Ratio 30% 31% 30% 30%
Land to Value Ratio Reconciled 30%

Application of Land to Value Ratio Analysis

Item Improved Improved Improved Improved
Sale No.1 Sale No. 2 Sale No. 3 Sale No. 4
Sale Price $139,500 $145,000 $142,700 $144,000
X Land to Value Ratio 30% 30% 30% 30%
Abstracted Land Value $41,850 $43,500 $42,810 $43,200
Land Measurement 85’ x 130’ 93’ x 130’ 88’ x 130’ 90’ x 130’
Land Area 11,050 sq. ft. 12,090 sq. ft. 11,440 sq. ft. 11,700 sq. ft.
Abstracted $’s per sq. ft. $3.79 per sf $3.60 per sf $3.74 per sf $3.69 per sf
Reconciled $’s Sq. Ft. $3.72 per square foot reconciled abstracted land value
Subject’s Land Measurement x Reconciled $’s per Sq. Ft. = Abstracted Land Value
89’ x 130’ = 11,570 sq. ft. x $3.72 per sq. ft. = $43,040 Rounded to $43,000

5-16

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McKissock Course 3 – Pre-License; Due first draft 4/12/04 Chapter 5
Comparing the Site to Competing Sites
(continued) Practice Exercise in Land Valuation Using the Abstraction Method

Given the data below reconcile to the median whole percent

Tax District of Subject Improved Improved Improved Improved
Record Data Tax Parcel 1 Tax Parcel 2 Tax Parcel 3 Tax Parcel 4
Total Assessed
Market Value $113,000 $123,000 $119,000 $121,000
Market Value Land
Assessment $ 20,000 $ 25,000 $22,000 $23,000
Land to Value Ratio % % % %
Land to Value Ratio Reconciled %

Application of the reconciled percent above will be based on a final rounded whole to the
nearest $1,000. Choose the price per sq. ft. you feel best reflects a similar substituting
transaction. You can reconcile by a median sales price per square foot (between the two
middle prices per square foot) or choose two sales to have the greater weight and draw a
conclusion. Be prepared to defend your land value.

Item Improved Improved Improved Improved

Sale No.1 Sale No. 2 Sale No. 3 Sale No. 4
Sale Price $119,500 $125,000 $122,200 $114,000
X Land to Value Ratio % % % %
Abstracted Land Value $ $ $ $
Land Measurement 65’ x 90’ 73’ x 100’ 68’ x 100’ 60’ x 85’
Land Area sq. ft. sq. ft. sq. ft. sq. ft.
Abstracted $’s per sq. ft. $ per sf $ per sf $ per sf $ per sf
Reconciled $’s Sq. Ft. $ per square foot reconciled abstracted land value
Subject’s Land Measurement x Reconciled $’s per Sq. Ft. = Abstracted Land Value
69’ x 100’ = sq. ft. x $ per sq. ft. = $ Rounded to $

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Chapter Review Exercise

1. The site measures 94’ x 100’ and sold for $53,000.

A. The site has 9,400 square feet
B. The site sold for $5.64 per square foot
C. The site is rectangular in shape
D. All of the above

Answer the next three questions on the market area following data:

Item Improved Sale 1 Improved Sale 2 Improved Sale 3 Improved Sale 4

Sale Price $83,000 $89,000 $80,000 $85,000
Land to Value 20% 25% 22% 25%
Ratio
Land
Measurements 75’ x 102’ 95’ x 105’ 75’ x 92’ 80’ x 100’
Work Area
Work Area
Work Area

2. The land value ranges in the market area are:

A. $15,000 - $25,000
B. $16,600 - $22,250
C. $18,000 - $25,000
D. $25,000 - $35,000

3. The site analysis reveals:

A. a higher demand for the smaller lots
B. a lower demand for the larger lots
C. a higher demand for the larger lots
D. a higher price per square foot for the smaller lots

4. The reconciled value per square foot is $2.20 per square foot. The site measures
75’ x 99’. Rounded to the nearest $100 what is the value of the subject’s site?
A. $20,700
B. $23,400
C. $15,500
D. $16,300

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5. Street Lights, Curbs-Gutters, Paved Roads and Storm Sewers:

A. are examples of site improvements
B. cannot be considered a capital improvement
C. are known as “off-site” improvements
D. are known as “on-site” improvements

6. The sales price was $135,000. The cost new of the improvements is $120,000. The
effective age of the improvement is 8 years and has an economic life of 60 years.
What is the indicated land value using two decimals in working the problem?
A. $30, 600
B. $25,200
C. $50,000
D. Not enough information to answer question

7. Which of the following would be most impacted by a permeability test?

A. Fence
B. Deck
C. Window
D. Septic System

8. A PUD impacts:
A. how the land can be physically developed
B. the legal allowance of the use of the land
C. the cost of ownership
D. all of the above

9. The function of a site analysis is to:

A. determine the marketability/competitiveness of the site
B. form an opinion of the land value
C. recognize the intended users reason for the appraisal
D. reconcile the consistence use conclusion

10. In the market area the site analysis revealed a market reaction to the size of the site
in the amount of $2.75 per square foot. The subject measures 82’ x 112’,
comparable land sale 1 sold for $30,000 and measured 90’ x 125’. What is the
adjusted sale price of comparable 1?
A. $35,400
B. $24,300
C. $42,200
D. $28,400

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