Tuesday, September 4, 2012

Appraisal of a 1700-acre ranch in Belize

I sometimes encounter misperceptions about the effect on land value when a property is divided into two parts. In this instance, a ranch of several thousand acres of mahogany, rosewood and cedar in Belize had been appraised for $45 million in 2006 for a wealthy landowner. Then he died, and the ranch was split between heirs into western and eastern portions. I was to appraise the eastern portion.

Per the map, the western portion was accessible via the Northern Highway leading from Belize City to Orange Walk, and the eastern portion was accessible via the Old Northern Highway, 2 miles east of the Northern Highway. The property to be appraised was the eastern portion, and the mortgage broker must have assumed that values had remained unchanged from 2006 and that eastern and western parts were similar in value.

When I arrived in Belize I was surprised to find out that the Old Northern Highway serving as the western boundary of the eastern ranch had been dismantled back in the 1970s by the UK government because it was being used by Colombian drug smugglers as a landing strip. The subject property, two miles east of the Northern Highway, could only be accessed by tractor due to brush and topography (including wetlands).

To make matters worse, most of the valuable timber had been stolen, a common problem in Belize.

In the end, the value of the property, which had been represented as a seven-figure number, was appraised as a six-figure number.

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