Bad advice from Fannie--"Multiple Parcels" from Dec. 2019 'Appraiser Update'

[Mr Rex]

So Lee, where is the word immediate in any text? I have great respect, but as some have noted here, some current (or former) Appraisal Board members have their own misguided interpretationjs of USPAP that may be detrimental to other appraisers.

In any case, again, I ask can the property be appraised as is? Just because the separate lot has potential H&BU as developed separately doesn't mean that the property can'f be appraised as is, with contributory value less than as sold off separately. What is the down side to this scenario from an appraisal or lending scenario? I also question the level of H&BU analysis if the owner is so stupid they would not sell but hold on to a piece of adjacent property worth so much more if the sold it. I seem to remember something about acting in their best interest in the definition of Market Value. How deep do you require H&BU to research absorption, vacancy rates etc?

 

[djd09]

Is this issue much different then Cert 23. Yeah sure name an client/intended user. No one cares.

 

[Lee Lansford]

Immediately? Is that word in the H&BU tests? Is that really part of the tests? If so, I stand down. Otherwise its total Bullsheet

Again, if an appraiser can't do a simple H&BU analysis for the case at hand, that person should not be appraising.

 

[Mr Rex]

Immediate and simple. Please provide your definitions. I don't think I see them in the latest USPAP. I can match your snarky answers all day until you really answer the real questions.

 

[J Grant]

So Lee, where is the word immediate in any text? I have great respect, but as some have noted here, some current (or former) Appraisal Board members have their own misguided interpretationjs of USPAP that may be detrimental to other appraisers.

In any case, again, I ask can the property be appraised as is? Just because the separate lot has potential H&BU as developed separately doesn't mean that the property can'f be appraised as is, with contributory value less than as sold off separately. What is the down side to this scenario from an appraisal or lending scenario? I also question the level of H&BU analysis if the owner is so stupid they would not sell but hold on to a piece of adjacent property worth so much more if the sold it. I seem to remember something about acting in their best interest in the definition of Market Value. How deep do you require H&BU to research absorption, vacancy rates etc?

That brings up the point ( expressed in a prior thread by a few...) if the immediate, or present as of eff date for the vacant lot was so maximally productive to sell on this date, why isn't the lot in contract, or have a for sale sign on it, with an offer?

I see in my market area individual vacant lot sit there for years. Only exception is " hot" / changing areas - otherwise, many market participants elect to hold the lots for future appreciation - ( value in use), knowing it has potential to be developed.

 

[Lee Lansford]

So Lee, where is the word immediate in any text? I have great respect, but as some have noted here, some current (or former) Appraisal Board members have their own misguided interpretationjs of USPAP that may be detrimental to other appraisers.

In any case, again, I ask can the property be appraised as is? Just because the separate lot has potential H&BU as developed separately doesn't mean that the property can'f be appraised as is, with contributory value less than as sold off separately. What is the down side to this scenario from an appraisal or lending scenario? I also question the level of H&BU analysis if the owner is so stupid they would not sell but hold on to a piece of adjacent property worth so much more if the sold it. I seem to remember something about acting in their best interest in the definition of Market Value. How deep do you require H&BU to research absorption, vacancy rates etc?

2 properties, adjacent. One owner.

One SFR improved; H&BU is as improved.

2nd parcel is vacant. The market says that the H&BU is for SFR development.

Each parcel has a MV of $350k. Each.

The market rightly sees these as two properties.

Mr. Loan Officer comes along and asks that the appraiser offer but one opinion of MV.

Questions for you:

1. Should the appraiser ignore H&BU and offer one opinion of MV?

2. If the appraiser does as asked, how might the appraiser avoid X'ing NO to the question "Is the H&BU as improved the current use?"

I am trustful that you see the problems here.

 

[Lee Lansford]

That brings up the point ( expressed in a prior thread by a few...) if the immediate, or present as of eff date for the vacant lot was so maximally productive to sell on this date, why isn't the lot in contract, or have a for sale sign on it, with an offer?

I see in my market area individual vacant lot sit there for years. Only exception is " hot" / changing areas - otherwise, many market participants elect to hold the lots for future appreciation - ( value in use), knowing it has potential to be developed.

Why is it that you seem to want to apply a one-size-fits-all response to the application of the principle?

 

[Lee Lansford]

Immediate and simple. Please provide your definitions. I don't think I see them in the latest USPAP. I can match your snarky answers all day until you really answer the real questions.

How about "knowing one's market and being able to analyze same"?

There should not be need here to go through a 15-hour class on H&BU analysis.

 

[J Grant]

Why is it that you seem to want to apply a one-size-fits-all response to the application of the principle?

That is what you are doing !

We as appraisers are supposed to appraise to the market if the owner of this adjacent lot leaves it vacant as of effective appraisal date, why isn't owner seizing the amazing HBU to sell today for development ? Maybe developers are not lining up to buy it...lol - or at least not at a good price. If area was hot and lots selling, we'd see that happening. But it may not be the case. I see vacant lots begging for a buyer in areas, even at a low price, they have owner will finance ads to get rid of it.

Owner may believe better to hold a lot vacant a few more years. If there are other vacant lots in area sitting there , the market is telling us something. We are not supposed to ignore that.

 

[Lee Lansford]

That's an outlandish example and I would never assert that, so yes, you are misinterpreting - just because I under stand how ONE vacant adjacent lot selling along with a house can be conveyed and the HBU reconciled with a value in use for the one lot, does not mean it would apply to an adjacent 80acre parcel that can be subdivided ! Stretching much...Plus the fact you seem incapable of realizing that since post one I have not been treating this as "combining"...
[/QUOT

Value in Use: “The value of a property assuming a specific use, which may or may not be the property's Highest and Best Use, on the effective date of the appraisal. Value in Use may or may not be equal to Market Value, but is different conceptually”. (The Dictionary of Real Estate Appraisal, 6th Edition). The terms Value in Use and Use Value have the same meaning in the dictionary.

Given the above, do you see a way to reconcile the HBU of vacant lot ( Potential to be developed) and value in use ( as of eff date the lot is not being developed ) The above says value in use ($) MAY be equal to the market value..which imo is the key to resolution for the vacant lot aspect of the appraisal.

AI offers some excellent H&BU classes either on-line or perhaps in a location somewhere in Florida. You should take advantage of their offerings.