Fannie Mae and "Multiple Parcels"

[alebrewer]

You forgot to add "in your opinion".

Do we have your permission to share USPS mailing addresses?

To Fannie Mae in general? Of course - that is information that could easily be obtained through a Google search. Lookit - there are lots of folks at fannie who I think are less than professional (Mr. Radke not being one of those). I would, however, NEVER post their personal information on this forum without their permission. That is, and I'm trying to be nice, deplorable.

 

[Carnivore]

"As an appraiser, you must determine if the additional parcel is excess or surplus land. The main difference is that surplus land cannot be developed separately from the property, while excess land has the potential to be sold separately because it is not needed to serve or support the existing improvements. Excess land is considered “value in use” for the purpose of the appraisal, so the land should be described and its contributory value included in the grid. "

Even if the additional lot can be sold and developed separately there must be a demonstrable market for it as of the effective date. Otherwise, it should probably be treated as surplus land... e.g. a bigger lot.

If there is a market for the additional lot then it should probably be treated as excess land. The most technically correct way to value excess land is to value it separately and not as "contributory value." e.g. two appraisals in the same report. Resist the temptation to combine the two properties into a single opinion of MV.

If the appraiser thinks they can develop credible assignment results of a combine lot transaction through the use of sales of similar then perhaps they might go for it. But in those few cases, it's more likely the subject of the appraisal consists of surplus rather than excess.

If Fannie wants to make proclamations regarding excess land, then they need to be prepared for how excess land should be treated. The old 4150.2 (Chapter 4) spelled it out pretty well.

I like what you said. Something to think about and here is where it all gets kinda of nebulous. If the market is so weak(low demand, few vacant sale over an extended period of time. Question: Is this really Excess land or is more closely resemble Surplus Land? Pure definition is excess, because it can severed .sold and will be improved.
If the Market is really strong for Vacant sites! Which i have one such super hot market, Contractors have bought homes with a excess land and pay top dollar. They did this so they could get that Vacant site. One sale i came across the buyer renovated the House, sold it with out the excess lot for a profit and immediately began building a new SFR. In that same market segment Zoning department is issuing variances on minimum site SFT and setbacks.

So what is considered surplus may actually be excess.

Bottom line is HBU can be a very difficult process even with residential.

Maybe I am confused, so I welcome any thoughts or criticism, guidance.

 

[J Grant]

Is the highest and best use of the subject property as improved (or as proposed per plans and specifications) the present use? Yes No If No, describe

For those who say check HBU as NO, what you describe it as ? HBU page one is for the property being appraised ( house and the vacant adj lot )

 

[J Grant]

Is the highest and best use of the subject property as improved (or as proposed per plans and specifications) the present use? Yes No If No, describe

For those who say check HBU as NO, what you describe it as ? HBU page one is for the property being appraised ( house and the vacant adj lot )

I'm surious to see what folks answer. But if any answer the HBU is as vacant, that means in your opinion demolish the house ? Why does that make sense ? (unless the house is very depreciated or the lot the house sits on has an alt HBU )

 

[J Grant]

Excess Land:
Land that is not needed to serve or support the existing improvement. The highest and best use of the excess land may or may not be the same as the highest and best use of the improved parcel. Excess land may have the potential to be sold separately and is valued separately.

Surplus Land:
Land that is not currently needed to support the existing improvement but cannot be separated from the property and sold off. Surplus land does not have an independent highest and best use and may or may not contribute value to the improved parcel.

If there is no or low demand for the adj vacant lot, ( HBU is not profitable to build or sell at present) , it does not "become" surplus land. It remains legal per zoning and platting a vacant lot that can be sold. However, there is low marketability to sell - it remains a parcel of excess land. It might function as surplus land does ( thus value in use), but it does not "become" surplus land

 

[J Grant]

Even if the additional lot can be sold and developed separately there must be a demonstrable market for it as of the effective date. Otherwise, it should probably be treated as surplus land... e.g. a bigger lot.
If there is a market for the additional lot then it should probably be treated as excess land. The most technically correct way to value excess land is to value it separately and not as "contributory value." e.g. two appraisals in the same report. Resist the temptation to combine the two properties into a single opinion of MV.
If the appraiser thinks they can develop credible assignment results of a combine lot transaction through the use of sales of similar then perhaps they might go for it. But in those few cases, it's more likely the subject of the appraisal consists of surplus rather than excess.

I agree, I would provide a second, additional, separate market value opinion for the excess land (lot). However, what if the lot's contributory value to the whole is the same $ amount as its separate value? The market might see it that way - because it can be severed from the mortgage via payoff and sold at any time. So why would the market of buyers for a vacant lot see it as less valuable than a similar, other vacant available lot?

 

[J Grant]

I like what you said. Something to think about and here is where it all gets kinda of nebulous. If the market is so weak(low demand, few vacant sale over an extended period of time. Question: Is this really Excess land or is more closely resemble Surplus Land? Pure definition is excess, because it can severed .sold and will be improved.
If the Market is really strong for Vacant sites! Which i have one such super hot market, Contractors have bought homes with a excess land and pay top dollar. They did this so they could get that Vacant site. One sale i came across the buyer renovated the House, sold it with out the excess lot for a profit and immediately began building a new SFR. In that same market segment Zoning department is issuing variances on minimum site SFT and setbacks.
So what is considered surplus may actually be excess.

Surplus land is always surplus land because of zoning - no matter how hot a market -unless a zoning variance or change occurs allowing a segment to become its own legal build able lot.

Excess land remains excess land per zoning, no matter how weak a market is for it. In a weak market, most owners let these lots sit there ( value in use or interim use). But that does not change the fact that it is excess land.

The HBU question on page one is for the property being transacted ( the house and adjacent lot of excess land ) So no matter how one handles the vacant lot HBU including if one determines value in use, there remains the question of HBU for the two sold together.

 

[Lee Lansford]

Surplus land is always surplus land because of zoning - no matter how hot a market -unless a zoning variance or change occurs allowing a segment to become its own legal build able lot.

Excess land remains excess land per zoning, no matter how weak a market is for it. In a weak market, most owners let these lots sit there ( value in use or interim use). But that does not change the fact that it is excess land.

The HBU question on page one is for the property being transacted ( the house and adjacent lot of excess land ) So no matter how one handles the vacant lot HBU including if one determines value in use, there remains the question of HBU for the two sold together.
[/QUOTE

Is the highest and best use of the subject property as improved (or as proposed per plans and specifications) the present use? Yes No If No, describe

For those who say check HBU as NO, what you describe it as ? HBU page one is for the property being appraised ( house and the vacant adj lot )

I don't say NO for any other reason than the obvious one: In such a situation, the H&BU as improved is not as one property. This is true no matter how much you desire to lump the 2 together to offer one opinion of MV>

 

[alebrewer]

Surplus land is always surplus land because of zoning - no matter how hot a market -unless a zoning variance or change occurs allowing a segment to become its own legal build able lot.

Excess land remains excess land per zoning, no matter how weak a market is for it. In a weak market, most owners let these lots sit there ( value in use or interim use). But that does not change the fact that it is excess land.

The HBU question on page one is for the property being transacted ( the house and adjacent lot of excess land ) So no matter how one handles the vacant lot HBU including if one determines value in use, there remains the question of HBU for the two sold together.

I don't think that's quite true, J. Zoning is one component that goes into the determination of whether land might excess or surplus, but not the only one. For instance, if a contiguous 2nd parcel is landlocked, it might be considered surplus land depending on what market preference is for site size - it cannot, however, be sold off separately. Conversely, if a single parcel, containing a house and 30 acres, has adequate road frontage for subdivision, part of the lot might be considered excess land - even though there is no zoning.

 

[J Grant]

I don't think that's quite true, J. Zoning is one component that goes into the determination of whether land might excess or surplus, but not the only one. For instance, if a contiguous 2nd parcel is landlocked, it might be considered surplus land depending on what market preference is for site size - it cannot, however, be sold off separately. Conversely, if a single parcel, containing a house and 30 acres, has adequate road frontage for subdivision, part of the lot might be considered excess land - even though there is no zoning.

I agree, zoning is not the only component...I used it for simplicity sake -agree with above, did not write it out as my posts get verbose, you make a good point!