Land can be divided. Attorney says not so fast...

[J Grant]

seems some confusion regarding a prospective date value, current effective date value, and a retrospective date value . Typically, the HBU of a property would be the same on all 3 dates, ( unless a zoning or other change occurred ). The. Market conditions and sales /listings around a specific date would indicate the value as of that date.

Unless a buyer is an idiot ( not a well informed buyer) ,the buyer recognizes today the future benefit use of subject multi acreage lot is to subdivide (HBU) . It was the HBU on X date months ago on DOD, it is HBU now on current effective date, would be the HBU in a near future date one assumes.

A future prospective value is not the assignment. Reason was bought up is an informed buyer today purchases a property with future benefits in mind, and bases today's purchase price on that expectation.

Imo agree with some others OP might be better off withdrawing- their choice

 

[glenn walker]

Thank you all. I didn't think I could do as a hypo, but like to question other appraisers to get their thoughts. HBU is not to leave it as it is with two homes on such large acreage. HBU is to remove the homes, and a developer will purchase (where the home sits, utilities, zoning, other homes that have been recently built in subdivisions) and divide the land to build more home which is financially feasible. I figured, just as J Grant said, I appraise it lower, and she sells in a year (which she already told me she is going to do) and they sell it for $1M+. Just need some feedback from my fellow appraisers sometimes. Thank you

No offense but lot of assumptions especially from Certified Residential Appraiser who most likely has never developed any homes much less subdivisions, So I show up and tell the client, hey your removing your homes, and selling to a developer for way more money, So let me get out my magic wand and no you don't need a CG or MAI because I just took a Highest and Best class on a public forum, O' and by the Way Mr Estate Attorney, please don't sue me after I get done because, golly-gee--I don't know if I can answer any basic questions about what a developer would pay for this parcel ? and I don't even really know if it can be developed, but since it's zoned for condos , that's its H & B use , and other sites near by have been developed, and the Zoning Tech at the counter said it's definitely, zoned for high density , this bad boy is worth a ton-more, and just to make sure I am covered , I will throw in a few Hypothetical Assumptions to cover myself.

In Summary : Why am I such a jerk ? Well because our commercial brokerage worked for years with developers and we-also located potential sites for builders and developers, what we learned in a 20 year period, was how many obstacles can come in the way of a development, the Realtors would list a site and say hey someone can build 100 condos on this bad-boy, sure until our engineer went out and drilled 10- deep holes, did soil tests and nothing was perking or it was all rocks, or the jerk in a white suit arrived and 15 days later he came back with a report saying the dirt bag owner had been disposing 40 years of his motor oils, lead based paints and other toxic chemicals, or the adjacent land owner suddenly showed up one day and stated he had been using that dirt easement for 45 years and he only wanted $100,000 cash to get rid of him, I would estimate that less than 60% of all sites located ended up as feasible to develop and California is not development friendly unless you are wealthy, a relative to one of the politicians, or you donate a lot of moeny to their campane. So if you have a large parcle and want a H & B use analysis first do your own feasibility study and then engage a MAI or CG who carries a minimum of $5,000,000 or more E & O because sometimes all those hypotheicals and extraordinary assumtions , are just B.S : ) LMAO

 

[CANative]

If the HBU leads the appraiser to the conclusion that a commercial buyer, considering development land, is more likely than a residential buyer motivated by the amenity benefit, then that dictates how the property is to be appraised and the current use is in transition. Simply finding two houses on a random 5 acre lot is not the way to go;

 

[glenn walker]

If the HBU leads the appraiser to the conclusion that a commercial buyer, considering development land, is more likely than a residential buyer motivated by the amenity benefit, then that dictates how the property is to be appraised and the current use is in transition. Simply finding two houses on a random 5 acre lot is not the way to go;

I am banging my head on the concrete , I certainly hope the Attorney , gets a new appraiser on this one : )

 

[Res Ap]

I appreciate all the feedback on this. I come to this forum for helpful advise and for the most part I do get that. Glenn Walker you're an ***. When someone asks for help on a forum, you don't need to be a total jerk and act like a big know it all. I can't stand people like you. I always try to help out people any way I can with polite conversation and knowledge. There is no reason to make someone feel like a fool, because they don't understand and maybe bit off more than they can chew. I have no problem giving this back to the attorney, if I do decide I am not capable. Believe me, I am not hurting for work, so returning this order will not hurt my bank account. Your last post was completely uncalled for. Whenever I meet someone like you, my first thought is, man I feel sorry for any relative, spouse or child that has to deal with this person on a day to day basis. Next time I post, just keep your snide comments to yourself. I will appreciate all the many others that have helped me before. You might want to do some soul searching about how you act with others. I'm sure God above is not impressed. Don't bother to reply, I will not even bother to look at it.

 

[devin]

The Attorney ordered a Retrospective to date of death (DOD) "not a "Prospective Appraisal" based on any potential future uses. The appraiser completes the report based on what is currently existing there now and what it's physical condition was upon the persons date off death. *** The poster is confusing the difference between completing a Highest & Best Use Analyze "V" appraising a property for a proposed different future use, which normally would be significantly higher and inflate the stepped up basis, it could also result in the IRS auditing the estates appraisal and accusing them of inflating the value. If the estate wants a second appraial based on them developing it that appraisal would be completed by a commercial appraiser and based on a "prospective" date which is frequently sought in connection with projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy.”

In Summary: The appraiser "will complete a highest and best use analysis for all reports including DOD" for estates and that's to make the client/user aware of it's current zoning and potential future uses, then he-she will determine the Subjects value based on what is currently existing on the land. No offense but the poster should decline the assignment or return the Attorneys money because he/she needs to take some courses on DOD appraisals and read the IRS guidelines and definitions of value.

I've never done a (DOD), is the only difference the actual (DOD).?

 

[Terrel L. Shields]

HBU is not to leave it as it is with two homes on such large acreage.

Yes it is, "AS IS"... the HBU as if vacant and available for its HBU may be commercial, but unless it is more valuable VACANT than improved, then the HBU is not a scenario, rather is HERE, NOW, TODAY(actually the DATE of VALUE). Further, if retrospective, and it STILL isn't divided and redeveloped, the HBU "AS IS" is the current use (as of the date of the value). The comps you use would be comparables that are similar in having a different HBU "as if vacant" from the HBU "as is". That does not require a hypothetical condition that is contrary to what actually existed that day. HBU of a simple lot with a simple house that is one year old or a ten year old is NOT the ideal HBU as improved because a NEW house on that lot is likely more valuable. HBU does not evaluate what what could be built but rather compares the vacant land value to the current existing improvements. You do not value a property based upon a HBU of a future event or possible outcome, but today as is. (or the date of value as is)

If the value of the property as vacant is more than the value of the property with a house, then the appropriate comparables are vacant land tracts with a deduction for removing the improvements.

Get your textbook out - The Appraisal of Real Estate (you have that right?) or a book on HBU and study it. Date of death appraisals are strictly as is, and Walker is right, the IRS could pounce on that for over-valuation. The developer/buyer may arbitrage that value by taking the risk to invest, but as is, the property is what it is on that date...and that is what that developer would pay, not what that developer would build.

I've never done a (DOD), is the only difference the actual (DOD).?

When doing an estate appraisal, the value is of a certain date exactly "AS IS"... you cannot create some scenario that does not exist. A subdivision appraisal is a HYPOTHETICAL CONDITION. Contrary to what existed as of the date of value. The date of death appraisal is generally used to divide property and/or determine a cost basis and that basis is the actual value on that date. "What if" is for bank new construction. "Subject to" is for bank and secondary market. It is not for setting a cost basis.

 

[glenn walker]

I appreciate all the feedback on this. I come to this forum for helpful advise and for the most part I do get that. Glenn Walker you're an ***. When someone asks for help on a forum, you don't need to be a total jerk and act like a big know it all. I can't stand people like you. I always try to help out people any way I can with polite conversation and knowledge. There is no reason to make someone feel like a fool, because they don't understand and maybe bit off more than they can chew. I have no problem giving this back to the attorney, if I do decide I am not capable. Believe me, I am not hurting for work, so returning this order will not hurt my bank account. Your last post was completely uncalled for. Whenever I meet someone like you, my first thought is, man I feel sorry for any relative, spouse or child that has to deal with this person on a day to day basis. Next time I post, just keep your snide comments to yourself. I will appreciate all the many others that have helped me before. You might want to do some soul searching about how you act with others. I'm sure God above is not impressed. Don't bother to reply, I will not even bother to look at it.

No I am just trying to help you stay out of a lawsuit, when I originally read your post I was kind of thrown back by your comments and interactions about the attorney who is representing the estate. The Attorney engaged your services and told you what the assignment was for. At this juncture if you believed his request was unreasonable or incorrect you could have walked away from the assignment. I hope unlike me you did not bring his spouse, family, children or God into your discussions, but you created an-adversarial position with him the minute you started telling him what he needed. Even if he was wrong , attorneys tend to have a lot of Chutzpah, and your guys relationship was essentially over before it got started. As far as God , maybe you should consider that maybe he used a person to intervene in your behalf before you ended up in a lawsuit.

 

[J Grant]

but you created an-adversarial position with him the minute you started telling him what he needed. Even if he was wrong , attorneys tend to have a lot of Chutzpah, and your guys relationship was essentially over before it got started.

I see the above differently. The purpose of interaction with a client, in this case an attorney, is not just to get an order for $, but to make sure client understands that if appraisal is for market value purpose, the appraiser is not going to take/sides manipulate results for a client directed outcome ( high or low value /other conclusions. ) If that means the client cancels order, fine. .

Though in my experience, clients often "test" an appraiser: can they be influenced ? If yes, client will hire them, but have no respect for that appraiser and may abuse them throughout the process. However, if the appraiser, explains in a professional manor to client why they can not appraise to achieve for agenda purpose, usually the client will retains the appraiser - and respect them. If not, better have it over with upfront rather than later..

 

[glenn walker]

but you created an-adversarial position with him the minute you started telling him what he needed. Even if he was wrong , attorneys tend to have a lot of Chutzpah, and your guys relationship was essentially over before it got started.

I see the above differently. The purpose of interaction with a client, in this case an attorney, is not just to get an order for $, but to make sure client understands that if appraisal is for market value purpose, the appraiser is not going to take/sides manipulate results for a client directed outcome ( high or low value /other conclusions. ) If that means the client cancels order, better at the beginning than later.

Though in my experience, clients often "test" an appraiser with it, is the appraiser a person who can be influenced ? If so, client does it and while they will keep the appraiser on for assignment, will have no respect for the appraiser and thus may abuse them throughout the process. IF appraiser is willing to walk from a tainted assignment, and in a professional manor explains to the client why they can not appraise to achieve XX agenda , often the client still retains the appraiser , (they were just testing ) .

I respectfully disagree, because what got lost in the entire thread was the appraiser forgot that the client was the Estate and the intended user will also be the Internal Revenue Service. In this situation, the accountant will file the estates final tax return to close it out. So when the appraiser receives the assignment the client will normally communicate what the appraisal will be used for. The appraiser had to begin taking the steps to determine if the scope of work will provide the Client and the ( IRS ) with credible results. The highest and best use analysis was never an-issue with me because those conclusions are reported in all appraisals. But the value for estate tax purposes is not predicated on any future hypothetical assumptions, which may never even happen. ** Please See IRS Qualified Appraisal Release Below : June-2019.

A Qualified appraisal refers to a type of appraisal document that meets Internal Revenue Service (IRS) appraisal standards. These appraisals must be conducted by a qualified appraiser ... This designation is awarded on the basis of demonstrated competence in valuing the type of property for which the appraisal is performed. Jun 25, 2019

Note: This appears to deal mainly with donations, but some of the accountants and estate attorneys are already starting to use only Appraisal Institute members, what's confusing is nobody seems to know which organizations qualify, other than the AI & ASA .

In Summary: I realize I was to harsh with the original poster because she simply came on board to get assistance but the thread went from H & B to prospective "V" Retrospective, and finally I came to the opinion that, if I could help prevent-the forumite from stepping on a land mine, then I would rather have her hate me then end up dealing with some potentially litigious attorney. The bottom line is I am confident the appraiser will make the right decision.