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  #1  
Old 09-20-2004, 08:43 AM
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I just got a call to do a field review of an appraisal that was done on a house with 5 acres. The guy wanting to place the order told me that the property contained 9 acres but the lender requirements were to appraise only the house and 5 acres. He asked if I was ok doing it that way. I told him that I would be happy to review the appraisal, however it was done. However, if my opinion of value was needed, that I would appraise the entire 9 acres unless I was provided with a survey. Land in that area can be woods, pasture, or scrub ground. Which 5 acres were appraised can make a considerable difference in value. He was polite, but said he would have to find someone who will do it that way because that is his lender's requirements.

My question is: How many people consider it an acceptable practice to appraise only part of the property? Did I miss a meeting where that is now acceptable? I know people do this all the time, but I still do not know why. Can someone here please explain it to me?
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Old 09-20-2004, 08:59 AM
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Doug:

This topic keeps coming up time and time again. Fannie does not have a 5 acre requirement but a lender can have their own rules.

How could you have appraised the property when you didn't know what it was as to dimensions, characteristics, etc? Where were the 5 acres in relation to the total of 9 acres? You had no way of knowing unless they told you.

I will not appraise an unknown, either a drive by I have never been in, or 5 acres without some sort of legal description. Do I lose some business? Sure, Skippy will do anything for a buck but I get to sleep at night.
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Old 09-20-2004, 08:59 AM
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Doug, I understand your point. If the appraiser adequately described which 5 acres, I don't see him doing anything wrong. I don't get many of these anymore. Over the years, maybe I've done a 5 or 10, maybe. If I were the original appraiser, I likely would have made the homeowner draw out the 5 acres, as best as possible, with my help(off the record, LOL). Now if it is an irregular shaped property, I might and likely would have a problems. How could it be described? Not very easily. But if square or rectangle, it is not very problematic, but one must be very very careful.

Just had USPAP 7 hour update. Teacher does a few 5 acre (PortionOf) deals, so he didn't have a problem with it. Just an appraisal of a portion of the property. If it can be described, it can be appraised.

Hope you don't think less of me than you already do. :rofl: :rofl:
  #4  
Old 09-20-2004, 09:29 AM
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If there's a plat of the entire property and the 5 ac. is indicated on the plat, I don't have any problems with it. Under the legal description I put "part of (original description) containing 5 acres, to be surveyed and contain the acreage indicated on the attached plat" Include a plat of the lot with the subject 5 acres delineated and do the appraisal with the hypothetical condition.

I've taken photos of bare land and appraised it subject to a new home being built. I don't see much difference between appraising a bare lot "subject to completion of a new home" and appraising an existing home "subject to survey". I think that both are reasonable hypotheticals.
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  #5  
Old 09-20-2004, 09:44 AM
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The difference is, you have plans and specs for the new home. In these cases I am referring to, there is no intention of a survey.

Bill, it is not possible to think any less of you :rofl: :rofl: :rofl:
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Old 09-20-2004, 09:57 AM
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He didn't want a REVIEW, he wanted a rubber stamp .

Doug, it hurts to turn down business, but depending on your market and state boards views on the matter... you probably did the absolute right thing.

Which absolutely depends on your area. Some places it is an accepted and acceptable practice!

Fannie says they don't want or need the five acre thing... There are other lenders/secondary sources who DO want and think they need it but the appraiser best be very careful accepting such work despite local practice and complete 'legality' of lenders requests...

In my neck of the woods that 'five acre supposition' can lead to hefty lawsuits.

Too many properties were assigned leins and then forclosed on or simply resold as the 'five acres'... with an effective illegal lot plit in some areas. Result upon 'major damage' to the homes is that rebuilding is immpermissible. Bad idea. Everyone gets sued.

Also with some lending contract terms, lenders can foreclose on a property due to 'threat of insolvency' or some such nonsense, calling the note. IF they do so illegally (based on the five acre valuation), when taking the WHOLE (on which they actually recorded the lein) it can be a very bad idea for the appraiser resulting in but time in a courtroom! tho that only happens if hte homeowner gets a sharp lawyer. <_<
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  #7  
Old 09-20-2004, 09:57 AM
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If you have an 100 acre farm, and it is a perfect square, can you appraise 5 acres on the corner, say a 200'+- x 1,089'+- rectangle , withouth a survey or legal description? This is the question. This happens all the time, in my state. In my state, the owner can furnish a legal description, so this may vary state to state.

I think, if it can be identified, it can be appraised, without hiring a surveyor, in my state, for sure. In the example above, one could easily spend $4,000 on surveying the entire farm, so they can most accurately survey the 5 acre tract, according to their standards. In my area, one might have to spend $4,000 on survey fees, to appraise what may be a $10,000 or $15,000 tract, in some of the more rural areas.

Appraiser hat off, I wouldn't want to spend $4,000 on a $10,000 tract, which I may want to give to a kid or grandkid.
  #8  
Old 09-20-2004, 10:00 AM
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Lee Ann is right, there are many lawsuits going on with this, according to my last USPAP class.

The bank takes the entire house and 9. Borrower gets in trouble. Bank will not give a release on the back 4, so the borrower can get caught up, on their payments. Lenders may lose big time, in these lawsuits, but who knows for sure?
  #9  
Old 09-20-2004, 10:07 AM
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5 acres from 100 would make more sense than 5 acres out of 9, but I disagree with appraising it that way unless it can be adequately described. (as in your example above). But the question is, Bill, is that 5 acres 200' x 1089' or 1089' x 200' or 50' x 4,356'. The topography changes tremendously in these parts. It does make a difference in value. The lein recorded is for the entire 9 acres. That size tract is not uncommon. Why ignore the other 4 acres?
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  #10  
Old 09-20-2004, 10:14 AM
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Doug:

Usually it is a internal 'roole' which is based on what really was a rumor that Fannie wouldn't buy those loans!!!

Scratch your head, educate your cleint or potential cleint that Fannie considers this an unacceptable practice, and move on. You may get more work downline for faxing or emailing a link.

this biz doesn't make any sense anyway.

They will come acalling when the fit really hits the shan... as it appears more an dmore likely may be the case

lots of rumblings about value and banks these days. and not just here.
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