Fannie Mae and "Multiple Parcels"

[J Grant]

People buy gold bars and hold them as an investment. Do they hope gold goes up in future? They do, one of the reasons they buy it. However, if we were appraising gold bars on an as of effective date,, the value would be what gold traded for as of that date..

Buying for future appreciation does affect a present value, because hope for appreciation is one of the motivations for the acquisition.

 

[George Hatch]

Part of what gold trades for on the date is the investor's expectations for the return of their investment as well as the return on their investment, the sum being measured in terms of the current value of the dollar (or yen or peso or bitcoin)

 

[Eli]

I have a feeling the adjoining lot deserves a bonus. I am not sure I can quantify it. I will do qualitative analysis if I can't quantify it. However, it will still have a different highest and best use. It is simple for a surveyor to combine them if the local authorities allow it. I have told people forever if they want things combined, just ask the authorities and hire a surveyor.

 

[George Hatch]

Why bother joining them if you can continue to use the vacant as additional lot area to the improved?

I've seen a number of situations where the existing improvements straddle the parcel boundary or else encroach on the side setbacks. HBU is more than just zoning and and recorded lots.

In the city of Huntington Beach they have blocks and blocks of properties that were originally mapped in the 1920s with 25ft wide lots, many of which were joined to create 50ft wide parcels. In that jurisdiction a property owner can buy one of those 50ft or 75ft parcels with the existing SFR and build 3 detached homes on them without going through any lot split process because those lots were already mapped that way.
But in most other jurisdictions in this region you can't do that. All RE is local.

 

[Michigan CG]

You IMPLY one lot (or one economic unit if you like that better) when you combine the site sizes on the grid.

One lot, two lots, it does not matter. It is excess land.

 

[J Grant]

One lot, two lots, it does not matter. It is excess land.

We established it as excess land from post one.
It does matter wrt one lot or two. It is misleading to state it became one large lot. Note fannie directive is excess land is considered value in use, not considered surplus land . Stating it is one large lot implies the second lot is surplus land, which is not the case. That is why so many appraisers had problems with this concept, they believed it meant appraising the two lots as combined into one larger lot.

It is as of eff date, a house (improvement ) on a site sold as one economic unit with a contiguous vacant lot of excess land ( see post 130-Greg B) I used the word one property, he said one economic unit, we both understand it the same way. Conveying the two together does not make it into one large lot..

Fannie_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.

 

[Eli]

The definition of value being appraised is huge. Always is regardless.

 

[J Grant]

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).

For those who believed (for the excess land lot ) value in use and HBU and market value could not be reconciled, read the above.
Value in use, MAY be the property's HBU on effective date. Value in use MAY be equal to market value.

It also may not be, but it may be, - one does not always preclude the other. Which means the appraisal can be done with reconciling the aspects of value in use, MV, and HBU. for the vacant lot

And regardless of how an appraiser reconciles the value and use of the vacant excess lot, the HBU question appraisal page one is the HBU for the one economic unit, the property consisting of the house and the lot conveyed together

 

[alebrewer]

One lot, two lots, it does not matter. It is excess land.

It MIGHT be excess land...

 

[Eli]

So do it as "use value" definition. CYA and make Fannie happy. Won't have to worry about borrower coming back on you with lawsuit on MV. Disclose it as assignment condition.