Blue Ridge Real Estate

This is a rule developed and used by commercial real estate brokers and appraisers to parcel out the valuations within any one piece of property. The first thing to determine in the use of the rule is where the highest traffic side is, or from which side ordinary ingress is usually to be made. That side thereupon is determined as the commercial frontage of the property.

Then starting from this frontage and working back, the front one quarter of the lot is cut off and this lot is then determined to possess four-tenths of the entire value contained within the entire parcel. The next parcel thereafter is cut off, being the one-quarter of the parcel immediately behind the front parcel and this second one is assigned a valuation of three-tenths of the valuation for the entire property.

So, for the front half of the lot, which is both parcel number one and parcel number two combined, the valuation is determined to be the combined value of seven-tenths of the entire valuation for the property. Hence, we have determined the front quarter of the property to have 40% of the entire parcel value, the second to have 30%, then the third has 20% and the one quarter of the property to the very rear will then have only 10% of the entire value or one-fourth the value which reside in the frontage parcel.

So, there you see the reasoning behind the four-three-two-one rule. The rule is to be used only with lots with regular or at least semi-regular boundaries.

Now the rule is useful when one is subdividing and parceling out a larger tract of land. As an example, say the entire property is worth $100,000. So then, the values determined for the quarter parcels would be $40,000 for the front, $30,000 for the second, $20,000 for the third and $10,000 for the last.

The rule is also useful in the case of eminent domain. Should a utility cut across the frontage of the property and thus be sold in eminent domain, this will be four times as expensive than if the same chunk is taken off the rear of the property.