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Split Of Parcel For Sell Off

Discussion in 'General Appraisal Discussion' started by Ray Miller, Jul 24, 2005.

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  1. Ray Miller

    Ray Miller Elite Member

    0
    Feb 20, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Wisconsin
    How would you approach this assignment?

    HO owns all of lots 6 & 7 and South ½ of lots 5 and 8. Approx 26,136 sq. ft.

    HO wants to sell all of lot 6 and South ½ of Lot 5, which is vacant.

    An appraisal is needed on remaining lot 7 and South ½ of lot 8 containing house. Also need addendum per the investor guidelines, for value as a whole and value of lot 6 and South ½ of lot 5 that is to be released.

    There have been no land/lot sales within this rural town of lots for the past 9 years. At best in side the town limits there has been a sale of a home every couple of years.

    I am starting with assuming I will need a survey of the lots so that I know how much land is being sold.

    I will also need to check and make sure that the sell off will be legal and the resulting home and lots or part of lots will be legal.

    Then I should extract the value of homes sold in the town from the land to establish the value of the lots.

    I also assume that this would be consider a complex assignment, correct?

    This would not be your standard appraisal fee for a single family appraisal, correct?


    I visited a bit with the home owner. The home owner came up with this idea, because the neighbor across the street. Sold his house and split off an acre of ground to build a new home on, with the proceeds from the sale of the house. The neighbor has this home owner convince that because he is building his new 150K home. That is will increase the value of the lots and the HO will be able to sell them.

    The problem is the subject property is on a dead end road at the edge of the rural town, and it is only. The only homes on the road at this time is the one that sold, the new one being built and this home owner who wants to refi, do a split, cash out the equity and sell the extra lots.
     
  2. David R. Stevenson

    David R. Stevenson Elite Member

    0
    Dec 6, 2003
    Professional Status:
    General Public
    State:
    Tennessee
    Sounds simple enough.

    You have a house plus an extra lot.

    Appraise house and appraise seperate lot in the same appraisal;

    Put the additonal lot value in your sales comparison approach under a hypothetical

    condition.

    Land value estimate could be approached from two different angles.

    1) Extract land values from "new home sales" - if you can - even go 20 to 40 miles

    if it will offer a prevail picture of "new package" sales - then make adjustments

    for thier locations, view, etc. (this way you avoid messing around with large

    amounts of depreciation in your extractions) - you should have a good fix on these

    land values.

    2) Extract from homes near the subject as you have stated -

    ( I am dealing with a difficult one myself right now) - in crazy markets you get these folks who have lots backing up to train tracks and they want to cash-in while
    irons hot.) - but these lots are last pick of the litter - no market will help them until
    all other supply is exhausted - my client bought a two lots for $8,000 and put a modular on one of them. Now he wants the lot to be worth $15,000. - no way - its still a duck - I'm thinking maybe $6,000.

    good luck

    I have excess land/lot appraisals all the time - make some wide hypotheticals to CYA yourself and move on - no big deal.
     
  3. Richard Carlsen

    Richard Carlsen Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Michigan
    Two assignments because you have two sites for which to considered value.

    Doing these for release of lien is not unusual. The client (lender) wants to make sure that his security remains sufficent after the lot is split off.

    Tell them two assignments and give them a break on the cost of the second half. You won't need a survey because they will not split it off until later. Use an HC to describe both parcels. That in essance is what the lender wants. After all, the lender has not made the decision if he will issue the realease of lien. Part of what he is waiting for to make his decision is your report.
     
  4. Pamela Crowley (Florida)

    Pamela Crowley (Florida) Elite Member

    3
    Jan 13, 2002
    Professional Status:
    Retired Appraiser
    State:
    Florida
    Since they are numbered lots, you should be able to find the plat at the county.

    2 values = 2 appraisals the reporting of them is up to you. I would prefer 2 separate reports.
     
  5. David R. Stevenson

    David R. Stevenson Elite Member

    0
    Dec 6, 2003
    Professional Status:
    General Public
    State:
    Tennessee
    Why is two assignments necessary?

    Why can't you explain what your are appraising in the 1004?

    Seems like you are making more than it really is.
     
  6. Richard Carlsen

    Richard Carlsen Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Michigan
    David

    I think you could certainly do it within the bounds of one URAR report but since you are developing two values, it will be necessary to comply with USPAP on each of them. If you think you can do that within the bounds of one URAR form without being misleading to the client, you certainly can do it. There is no form reporting requirements in USPAP. One thing to keep in mind which the lender may not have thought of is his ability to use the report if the loan goes to the secondary market. They may not want to see any additional values in the report that would confuse an ultimate investor.

    Regardless if the parcel is platted or not, you have two parcels to put forth a value on. I would try to keep it as separate, as uncluttered and as non-confusing as I could to my client and any additional user (investor) downs the road.
     
  7. David R. Stevenson

    David R. Stevenson Elite Member

    0
    Dec 6, 2003
    Professional Status:
    General Public
    State:
    Tennessee
    Richard,

    I do some work for a client who is loaning money to folks in "trailers" - no

    disrespect intended towards Jo Ann - but the word more aply describes the home-

    cart. Citi - for example - I do a lot of these types of loans on smaller properties

    and up to some mid-sized homes ....

    Increasingly with land values taking off in this area - I try to be as explicit as

    possible. Two values are given - the value in the grid is based soley on the house

    and the one lot under it. This is a very "common" situation around here. But you

    just need to make sure zoning is staying the same - in my area - zoning is

    loosening up to allow for more development in lew of excess land.

    Excess land turns into "a buildable lot" instead of just an "oversized" single parcel.

    If you make it into one asignment - you allow the lender to make a straightforward

    loan underwritten by straightforward participants. I suppose their is some liability

    in this practice - and I am all ears to what I may be risking.
     
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