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Acreage Limitation ?

Discussion in 'FHA/HUD and VA' started by GARY TRENT, Feb 12, 2008.

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  1. GARY TRENT

    GARY TRENT Sophomore Member

    0
    Dec 22, 2006
    Professional Status:
    Licensed Appraiser
    State:
    Indiana
    Had A Lender Tell Me Today That You Can Only Appraise Up To 5 Acres. Is This True?
     
  2. Restrain

    Restrain Elite Member

    56
    Jan 22, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    Check out all the other threads regarding this in the AF...when you've got a couple of hours.

    Here's the deal. With FHA, it's the amount of land reasonable for the subject (at least it was back when I did them). They didn't want to do land appraisals. For F/F, it's what is typical for the market. In an urban market, it's homes on typical lots or small acreages. In rural areas, it's what is typical for the market. For example, in some areas of Colorado, there's a 40 acre minimum. That makes it typical.

    The problem is 5 acres out of ???acres. In this instance, you need a survey identifying the 5 acres to insure the home is on the five acres.

    However, there is no 5 acre limit per se. Lenders may not want to lend on over 5 acres, and, for example, in Texas, equity loans are limited to 5 acres. This becomes a lender-directed decision. Not a secondary market decision. Explain what you are appraising, why, and support your decision from the market.
     
  3. GARY TRENT

    GARY TRENT Sophomore Member

    0
    Dec 22, 2006
    Professional Status:
    Licensed Appraiser
    State:
    Indiana
    Thanks For The Reply. It's A Log Home In A Rural Setting With 17 Acres, That Is Not Uncommon For This Area. Thanks Again!
     
  4. Michigan CG

    Michigan CG Moderator Staff Member Moderator

    498
    Nov 1, 2006
    Professional Status:
    Certified General Appraiser
    State:
    Michigan
    Gary do not let them talk you into appraising only five acres and ignoring the rest. You must disclose the entire parcel in your report.
     
  5. Greg Bell

    Greg Bell Senior Member

    0
    Jul 7, 2006
    Professional Status:
    Gvmt Agency, FNMA, HUD, VA etc.
    State:
    Louisiana
    Subject will need to be appraised on the whole 17 Acres.Client may try to get you to appraise on 5 acres only , don't do it.FNMA
    guidelines will not allow the lower acreage.Comparables on similar size site will do......
     
  6. CANative

    CANative Elite Member

    456
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    The requirement to exclude excess land that is readily marketable is still in the 4150.2. The appraisal is to be developed using a hypothetical condition and a survey is required.
     
  7. David Beasley

    David Beasley Senior Member

    2
    Dec 12, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    North Carolina
    Right, but shouldn't one first determine if the land is excess or surplus? There is a difference, usually based on each case and the applicable zoning, current land use, etc, and which type it is determined to be determines the approach to handling it.

    Excess: can be separated from the primary improvement supporting parcel and can have its own H&B use. Surplus: cannot be separated for whatever reason - 100% build-up surrounding it, land-locked, zoning regs, etc - and thus does not have an independent H&B use. (From the AI's - "The Appraisal of Real Estate").
     
  8. CANative

    CANative Elite Member

    456
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Excess = Don't need it but can get rid of it.
    Surplus = don't need it and stuck with it.

    Good example: Clearlake, CA. Old neighborhood with dirt roads. Platted into 50 x 100 lots 50 or more years ago. Most never got developed. Some people bough 2, 3 or a dozen. Very little demand and low prices for years and years (you could buy one for $2,500 5 or 6 years ago). Sudden demand in 2003 to 2006 and speculators went on a building frenzy.

    Say a guy has a house built on one of these lots but owns 5 others all in a row with nothing on them. They were "merged" for one tax bill so his "lot" is 100 x 250. All it would take is a $200 fee and a few weeks to unmerge them and sell them and there is now good demand. Most residential property is one house on one 50 x 100 lot. Vacant lots selling for $30,000 plus.

    That would be an easy to figure out example of excess land that is readily marketable.

    Same subdivision. They also platted some 25 x 100 lots for trailer houses back in 50's. Say a guy has a house on 3 of these lots. Surplus land because HBU is one house on one 50 x 100 lot but he can't split the other 25 x 100 off because that would result in a non-conforming lot.
     
    Last edited: Feb 13, 2008
  9. Dutchman

    Dutchman Member

    0
    Jul 11, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Washington
    I understood (new) Fannie guidelines to state that all the acreage must be included in the appraisal and mortgage divisions (5 acres) will no longer be accepted.
     
  10. Joyce Potts

    Joyce Potts Elite Member

    58
    Feb 6, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Ask the LO/MB to check with the underwriter or with whomever he/she intends to fund/place the
    loan with before you go providing an appraisal that may end up being totally worthless for their purposes which translates to waving your fee goodbye.
     
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