Fannie Mae and "Multiple Parcels"

[J Grant]

I don't think that is the issue. At issue is how that value is determined.

look earlier in this and the other thread, certain posters insisted it could NOT be done- now those same posters either went quiet or act as if they never said it.

 

[George Hatch]

If there is sluggish/ low demand for vacant lots, then for that build able lot a HBU today may be interim use hold for future appreciation.

That's sometimes the case. And as noted above, sometimes the values and marketability are so low that the extra lot has about the same value when used as a lawn instead of being developed. Another complication which can occur is if the extra lot is actually being used to support the improved property, like when the extra lot is where they put the septic system or a well. Topography can be an issue, too. It's an extra lot and can be built out but the access or the topo itself renders it unfeasible to build. That happens a lot.

And because that is one of the possibilities, Fannie's approach *can* be the most appropriate way to handle certain situations. At issue is whether it's appropriate as a default.

 

[George Hatch]

look earlier in this and the other thread, certain posters insisted it could NOT be done- now those same posters either went quiet or act as if they never said it.

Most comments to that effect are based on the assumption of "maximally productive". Everything else being equal, if the maximum profitability for the lot is to sell the lot off then that is its HBU and its MV; and in that case the same will almost always also be true for the combo.

We shouldn't overlook the wobbler because those happen, too; That is, the situation where the two conclusions are so close that it could go either way. There's an outside possibility that Andrei's 2016 sale is an example of that. It was listed for $313k+$89k and sold basically for that in a single transaction, whereas another 2-lot combo 5 blocks away sold for $350k+$90k to the same buyer in separate transactions and a 3rd pair (involving much larger parcels and house) were sold off separately by the same seller to two different buyers.

I keep saying this: the more accurate default on the situation of the 2-lot assemblage in general isn't "never" but it also isn't "always".

 

[J Grant]

Most comments to that effect are based on the assumption of "maximally productive". Everything else being equal, if the maximum profitability for the lot is to sell the lot off then that is its HBU and its MV; and in that case the same will almost always also be true for the combo.

I said that about the combo MV from post one- I've taken the high road and stuck to the methodology in my posts, but nobody should forget the viciousness from a few who attacked my competence for saying the two could be appraised for a single market value - and that a MV for the lot alone might, in some cases be the same as its contributory value to the whole .

The max productive HBU of the vacant lot alone was always acknowledged.

Agree with you about a never/always default - same as with any other appraisal.

 

[Andrei Fin]

I am contacted by an estate to value a home in an active development market. investors are buying vacant sites and building on them for a profit. the estate wants to know the market value of the property;
if they were to list it for sale what would be the highest price they could get.

Andrew casually flipped the scenario to an estate from Fannie Mae. Why's that? Because he was trying to prove that HBU=MV. But he actually changed MV.

Fannie Mae doesn't want to know the highest price they can get, they want to know the most probable price. And that's why HBU does not equal MV when using their definition. Probable is often but not always the most profitable. Best interest is often but not always the most profitable. Most profitable is just a test of HBU.

 

[Lee Lansford]

....

I keep saying this: the more accurate default on the situation of the 2-lot assemblage in general isn't "never" but it also isn't "always".

Correct you are.

That some folks can't understand this is (almost) amazing.

 

[Michigan CG]

I'm not even an appraiser, just a low level bank employee.

Well that explains a lot.

 

[Lee Lansford]

...

As for my competency, there should be no competency needed to participate in a forum, just a willingness to have an honest discussion. I'm not even an appraiser, just a low level bank employee.

From what you have shared here, we can all understand why it is that you don't understand what is being discussed.

You might want to consider: Having no competency on a topic as you now admit, you might want to read and digest from those who do have competency.

 

[djd09]

they will not change a darn thing. obviously some posters know nothing about affordable housing goals, especially in rural areas where more "multiple" parcels loans probably exist.

do you think a "profit" company cares about h&b. dream on.

 

[George Hatch]

The various aspects of HBU analysis is by far the single most "technical" aspect of appraising that we get questions on in this forum. And that's okay, because that's what hashing this stuff out on a forum is for. Better here among our peers than trying to go it alone on a live assignment. That's why I will bend over backwards to help any appraiser to connect the dots.