Discussion in 'FHA/HUD and VA' started by GARY TRENT, Feb 12, 2008.
Had A Lender Tell Me Today That You Can Only Appraise Up To 5 Acres. Is This True?
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.
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!
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.
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......
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.
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").
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.
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.
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.