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Two Houses On Two Parcels; One Appraisal?

Discussion in 'General Appraisal Discussion' started by CKrinsky, Dec 2, 2003.

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  1. CKrinsky

    CKrinsky New Member

    0
    May 29, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    I had an order for one purchase of a house and a bungalow. Turned out that each was on a separate parcel, althought they were being sold together. The assessor has two property cards, two separate parcel #'s; the building department considers them to be two separate lots that can each be legally transferred as single family dwellings.

    I did two appraisals, one of each dwelling. One is a bungalow of 500 SF +/-. My client /lender is not able to find a bank that will take the loan; they will not lend on a house of less than 700 SF. THe lender has asked me to combine the two parcels onto one SF appraisal and considered the smaller bungalow as an accessory dwelling. The lender said that the "last appraiser did this for the current owner." I'm 99.9% sure that I cannot do this, but before I say no, I need advice from the experts. Thanks for your help.
     
  2. Austin

    Austin Elite Member

    0
    Jan 16, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Virginia
    The question is: What is the highest and best use; assembled or two separate properties? If you explain that assembled is not the highest and best use and yields a lower opinion of value I don't think you should have a problem. Just make sure you don't mislead and make it clear what you are doing. I would also state that this appraisal is not based on highest and best use and the value conlcusion is not valid for any other purpose other than this particular appraisal request and under the use assumption imposed by the client.
     
  3. Richard Carlsen

    Richard Carlsen Elite Member

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

    Of course you can.

    Two words: Hypothetical Condition

    "At the specific request of the client, the two seperate parcels are to be considered and valued as one parcel. This may not be the Highest and Best Use of the property. Extreme care should be taken if the value contained herein is to be used for lending consideration. The client is specifically warned that the value conclusions in this report, based on the requested hypothetical conditions, may not reflect the actual value of the properties as constitute."

    Or words to that effect and then go forth looking for your comps.

    Good luck
     
  4. Tim Hicks (Texas)

    Tim Hicks (Texas) Elite Member
    Gold Supporting Member

    47
    Jan 15, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Texas
    Bingo! I have lenders require half duplex properties that are on divided lots and taxed separately combined into one appraisal because they are sold that way. Years ago, I was told separate properties, separate appraisals because you can sell one without selling the other. I have been instructed to do separate appraisals for that very reason. However, sometimes the lender only wants to make one loan with one appraisal. The Hypothetical condition covers your bases and puts the appraisal in the scope provided by the lender. Just make sure the lender puts their requirements in writing.
     
  5. Mickey Stevens

    Mickey Stevens Junior Member

    0
    Nov 29, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Dom. Republic
    It sounds to me like you may just have a guest house. If seen several properties with small guest houses. The tracts having separate parcel numbers isn't necessarily an issue. It's not unusual for homes that have additional lots to have separate parcel numbers. As long as the parcels are next to each other they could be marketed and sold as one property. I would consider how potential buyers would view the property. Would they see the bungalow as a guest house or additional amenity to the other house or would they see it as a separate property. If the bungalow is too small to be marketed individually that could figure into the highest and best use question.

    One more thought. Is there a single contract or two separate contracts. If there are separate contracts for each parcel I would be more leary of appraising them together.
     
  6. Joe Moore

    Joe Moore Junior Member

    0
    Jan 30, 2002
    Professional Status:
    Appraisal Management Company
    State:
    Pennsylvania
    The report would have to be "subject to" if they aren't under one deed.

    Joe
     
  7. Tawfik Ahdab

    Tawfik Ahdab Senior Member

    0
    Feb 19, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Oregon
    I disagree with Joe, but Richard got it right. As you have been advised, do not fail to PROMINENTLY note the extremely limited reliability of the appraisal and value conclusion due to the client-imposed hypothetical condition invoked, especially at the statement of the value conclusion.
     
  8. Richard Carlsen

    Richard Carlsen Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Michigan
    Subject to what Joe?

    There is nothing to finish or complete or fix or separate or combine. You are just pretending that the two houses are tied together in such a way that they cannot be separated and it's your job is to appraise them. Our "pretend" word is "hypothetical condition". That's what we appraisers say when we pretend.

    It's up to us to tell the client that we are doing exactly what they want us to do and to warn the client that this may be a risky thing to do. Then we go ahead and do it just like the client wants. It may not provide the most accurate results but the methodology is what the client wants and that's what he gets. Once we have done that, we are finished and there is nothing more on that order that needs to be done or checked or finished to make the appraisal complete.
     
  9. Phil Chamberlin

    Phil Chamberlin Sophomore Member

    0
    Jun 6, 2003
    Professional Status:
    Certified General Appraiser
    State:
    California
    Highest & best use may be to combine both parcels on the report - if as stated, no financing would be available for the 500 sq ft house on its own parcel.
     
  10. Caterina Platt

    Caterina Platt Senior Member

    0
    Jan 17, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    My only concern would be if the two are assumed to be combined, is it legally permissable? Check with your zoning department. I've had lenders force the issue of combining separate parcels so that there's no outside chance one component could be sold out from under the mortgage. If they required the parcels to be combined, could it be done?
     
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