Fannie Mae and "Multiple Parcels"

[J Grant]

It MIGHT be excess land...

? The fannie value in use regarding the lot for appraisal only applies when appraiser determines that a contiguous lot is excess land.

If appraiser determines it is surplus land, then the fannie condition does not apply.

 

[glenn walker]

Fannie Mae says that in order to include the second parcel it must have identical zoning to the first, so how is it that the HBU is different?

Take that up with Fannie, not me...whatever your lender rules are their rules... I am not on the mortgage end which pertains to releases of properties with liens or mortgages paid off to get the release. It actually has nothing to do with the appraisal value except that it is to be noted that the properties will convey with one mortgage.

Not taking it up with Fannie YOU KEEP saying liens and mortgages have nothing to do with an-appraisal value which may be good theory but since I am the Mayor of Real-Ville when the engagement is for a mortgage related transaction then financing does come into play and especially when the assignment is where two separate parcels are being combined into one. At that juncture even if it made more sense for an-owner to keep them separate once I go down that road I am appraising it as one parcel. It's best and most probable H & B use may be a long term interim use until it becomes financially feasible to sell off or develop it. This is where appraisers often miss the mark because when a higher and better use is really feasible the vacant land or lot the time has arrived and it will be financially feasible to sell or develop it for a different use. If you get caught in a tight money market with limited financing options and cash buyers dry up it doesn't matter what the zoning is and all those grandiose ideas may sit idle for 20 years or more. WOULD ANY OF THESE situations change your value on a vacant parcel of land ? If so money and financing has a lot to do with appraised value and in the case of merging two parcel into one it does effect the value of adjacent parcel.

 

[J Grant]

It's best and most probable H & B use may be a long term interim use (for the lot )

Isn't that the value in use then? Which is what I said many times...

 

[J Grant]

Not taking it up with Fannie YOU KEEP saying liens and mortgages have nothing to do with an-appraisal value which may be good theory but since I am the Mayor of Real-Ville when the engagement is for a mortgage related transaction then financing does come into play and especially when the assignment is where two separate parcels are being combined into one. At that juncture even if it made more sense for an-owner to keep them separate once I go down that road I am appraising it as one parcel. It's best and most probable H & B use may be a long term interim use until it becomes financially feasible to sell off or develop it. This is where appraisers often miss the mark because when a higher and better use is really feasible the vacant land or lot the time has arrived and it will be financially feasible to sell or develop it for a different use. If you get caught in a tight money market with limited financing options and cash buyers dry up it doesn't matter what the zoning is and all those grandiose ideas may sit idle for 20 years or more. WOULD ANY OF THESE situations change your value on a vacant parcel of land ? If so money and financing has a lot to do with appraised value and in the case of merging two parcel into one it does effect the value of adjacent parcel.

When we appraise, we typically do not factor mortgages into the value except for affect on price of creative/special terms financing. And liens are gone on sale for clear title. Fannie talks of the lien and mortgage to explain to appraisers how the loan end works. Though it is true the ability to get certain properties financed or not can affect their marketability and value.

As far as financing affecting value of vacant lot-ability to get financing at favorable fannie residential rates and terms might positively affect value. Because otherwise a buyer has to purchase a vacant lot/land all cash, or owner finance which is usually short term balloon note, or if a lender finance vacant lot a big down payment and higher rates...

The real appraisal analysis question is what the value of the one economic unit is, seems many can't even get past the other aspects to even get to that part.

I find the subject interesting and (mostly) good posts on it...but much ado about nothing, these kinds of transactions are rare, and imo far less risky that some of the other garbage fannie finances.

 

[J Grant]

Not taking it up with Fannie YOU KEEP saying liens and mortgages have nothing to do with an-appraisal value which may be good theory but since I am the Mayor of Real-Ville when the engagement is for a mortgage related transaction then financing does come into play and especially when the assignment is where two separate parcels are being combined into one. At that juncture even if it made more sense for an-owner to keep them separate once I go down that road I am appraising it as one parcel. It's best and most probable H & B use may be a long term interim use until it becomes financially feasible to sell off or develop it. This is where appraisers often miss the mark because when a higher and better use is really feasible the vacant land or lot the time has arrived and it will be financially feasible to sell or develop it for a different use. If you get caught in a tight money market with limited financing options and cash buyers dry up it doesn't matter what the zoning is and all those grandiose ideas may sit idle for 20 years or more. WOULD ANY OF THESE situations change your value on a vacant parcel of land ? If so money and financing has a lot to do with appraised value and in the case of merging two parcel into one it does effect the value of adjacent parcel.

Two separate parcels are not being combined into one. After all these posts...the two parcels are sold/conveyed together in a transaction under one mortgage, but the vacant lot does not merge with house site to become one large parcel. The lot remains a potentially divisible parcel even after the mortgage is made. .

 

[alebrewer]

? The fannie value in use regarding the lot for appraisal only applies when appraiser determines that a contiguous lot is excess land.

If appraiser determines it is surplus land, then the fannie condition does not apply.

Fannie Mae has nothing to do with whether or not the appraiser determines the additional lot to be excess or surplus - that is the appraiser's determination based on his or her HUB& analysis. The guidance from USPAP FAQ is just there to help the appraiser understand what is required depending on what the appraiser's determination is.

 

[alebrewer]

Two separate parcels are not being combined into one. After all these posts...the two parcels are sold/conveyed together in a transaction under one mortgage, but the vacant lot does not merge with house site to become one large parcel. The lot remains a potentially divisible parcel even after the mortgage is made. .

Again, J, the FAQ citation as 'as if it were one lot' may be the cause of some of your animosity. Please don't try to keep perpetuating an argument that has, for the most part, been put to bed. If you like 'one economic unit' better, then just use that term. At the end of the day, you are RECOGNIZING them as separate, but you are APPRAISING them as if they were one (even though they are not). That is what the HC is for - determining that you can achieve credible results by treating something as if it were, even though you know it is not.

 

[J Grant]

Fannie Mae has nothing to do with whether or not the appraiser determines the additional lot to be excess or surplus - that is the appraiser's determination based on his or her HUB& analysis. The guidance from USPAP FAQ is just there to help the appraiser understand what is required depending on what the appraiser's determination is.

I agree.
However, if the appraiser determines it is excess and the excess lot is being mortgaged /sold along with an improvement with a fannie loan, then the appraiser is aware of the fannie cavaet on it, ...otherwise ithas no relevance.

 

[J Grant]

Again, J, the FAQ citation as 'as if it were one lot' may be the cause of some of your animosity. Please don't try to keep perpetuating an argument that has, for the most part, been put to bed. If you like 'one economic unit' better, then just use that term. At the end of the day, you are RECOGNIZING them as separate, but you are APPRAISING them as if they were one (even though they are not). That is what the HC is for - determining that you can achieve credible results by treating something as if it were, even though you know it is not.

Nothing to do with animosity...it is my position ( Greg B said the same , G Hatch recognized it..) ...not an argument, recognition that conveyance does not make the two parcels merge int one lot.

Indeed and agree, the purpose of appraisal is the market value opinion for two properties together as one economic unit. I always recognized that.

The problem is some appraisers claim appraising the two properties together for one market value opinion means the vacant lot merges with adjacent to become one larger parcel of land. Do you believe that is the case?

At the end of the day, you are RECOGNIZING them as separate, but you are APPRAISING them as if they were one (even though they are not).

Actually- we are APPRAISING them as a combined property for one value, not appraising them as if they were one.... two properties under a same transaction can have a combined total value, or a combined price in a sale, but they remain per legal purposes divisible properties .

 

[J Grant]

Might be cleaner to see with a different product.

A seller sells two cars to a single buyer, the buyer takes out one loan that covers both cars for one purchase price.

Did that transaction merge the 2 cars into becoming one bigger car? No, it did not. the price was for both cars though. If an appraiser was hired for the lender , the appraised value would be for both cars together as one sale...but they remain 2 cars . And either car has the potential to be sold off in future by itself with a loan payoff/release.