How do you know what a golf course location is worth? I had a real estate agent ask me recently how much value appraisers give to a golf course lot. My answer: What does the market say?
Let me walk you through some of the available options for determining what a golf course location is worth. There is no standard dollar figure or value percentage that applies to every property, so an appraiser must research some of these steps to come up with a credible value.
- Guess: This isn’t a good option. 🙂
- Golf sales vs non-golf sales: This is really the first step. Look at golf course sales vs non-golf course sales to see if you can extract a percentage amount for what the market paid for the golf course location. If a golf course lot sold for X amount and an identical standard lot (not on the course) sold for $50,000 less, then there is your adjustment. Make sure you are also considering differences like condition, upgrades, and lot size though.
- Older Sales: But what if there are no recent sales? One of the best things to do is to look at older sales over the past few years until you find a few golf course transactions. Then compare these sales to other non-golf course lots at the time. What was the difference in value between the golf course sales and standard lots? If you can extract a price difference percentage at the time, you can then apply that difference in the current market. Granted, something could have changed about buyers’ perceptions for today’s market, but assuming buyers view the neighborhood the same as they used to, this can be a great way to help justify a value or price difference for a golf course lot.
- Subject Sale: If the subject property sold previously in the past 10 years or so, this can be golden because you can analyze other sales at the time to see how buyers responded to the subject property at the time.
- Find Other Golf Course Neighborhoods: You can always try to find a competitive neighborhood and then extract a location adjustment out from that neighborhood to apply to yours. However, a competitive neighborhood might be really far away, and the real issue becomes whether it is truly similar or not.
- Conversation with Local Pros: Talk to local real estate professionals who really know the market, explain your situation, and ask them questions. I find agents who specialize in neighborhoods to be an incredible resource when it comes to knowing the idiosyncracies of a market (they’re often spot on – though not always).
- Be Aware of the Course: Be aware that the location on the golf course might matter. Does your property have constant broken windows from balls or are you located in an area with less ball traffic?
I hope that was helpful. Anything else you would add? If you’re in real estate, what have you learned about golf courses?
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Very true about placement on the hole, is it off the tee or right where folks slice into your patio and how desirable the golf course is … What’s your thoughts on gated or off private golf courses vs. public golf courses?
Thanks Heather. You’re spot on. That’s one of the reasons why I always look for golf balls in the yard when doing an appraisal (or in the pool). I think gated communities tend to have a little more appeal among buyers, though it ultimately comes down to the house and the location. The right house in a non-gated community can sometimes fetch a similar price, but usually the gated community tends to have the best views or lots, which plays into the value. I don’t have a strong opinion on private vs. public. I know a local neighborhood with a private and public course though and it’s interesting to compare data from agents and appraisers. While agents swear the units along the private course have a huge value premium (they did when they sold from the builder, but lots of things have a “premium” when selling originally), but some appraisers say that’s not the case. From a data standpoint it’s been hard to really justify a huge premium. Any thoughts on private vs public?