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

[George Hatch]

Questions involving HBU analysis are among the most common technical questions we get on this forum, second only to what the specifics are of Fannie's policies.

The CGs have to have a working understanding of HBU because it comes into direct consideration on a large percentage of all our assignments, and certainly in all of our SR2-2a reports. IMO most of the SFR appraisers would also have a similar working understanding of HBU if they were actively dealing with it in all their SR2-2a reports. We tend to learn what we need to learn in order to complete our assignments.

 

[glenn walker]

A HUGE part of


Quoting from the Selling Guide? I believe YES. Good. The Selling Guide gets it right.

HOWEVER, the advice in the recent Fannie pronouncement gets it wrong. Hence, why it is that Fannie will (as I have been told by a person who has a link to a person at Fannie) issue a "clarification" on this matter.

That was Fannies December-2019 Update- I have not seen any revision in the last 30 days and if so what was it ? Because re-wording-it they may just be playing semantics, to make the appraisers feel better.

 

[glenn walker]

Questions involving HBU analysis are among the most common technical questions we get on this forum, second only to what the specifics are of Fannie's policies.

The CGs have to have a working understanding of HBU because it comes into direct consideration on a large percentage of all our assignments, and certainly in all of our SR2-2a reports. IMO most of the SFR appraisers would also have a similar working understanding of HBU if they were actively dealing with it in all their SR2-2a reports. We tend to learn what we need to learn in order to complete our assignments.

George you are correct biggest confusion I see in reviews is residential appraisers automatic assumption that if a residential property is Zoned Commercial that is its H & B Use. They do not think through the process but in all fairness I did not learn it as a appraiser but from brokering and dealing with commercial and industrial properties , and located sites for smaller developers. Many properties fall between the cracks and now we see many cases of Commercial zoned properties getting variances to build income and senior developments. Also many small commercial lots that have 75-80 year old homes on them, but rent for $1,800 to $2,000 a month and often those old legal non-conforming properties are better than dealing with a City Like LA to build a small office that rents for about the same rate.

 

[George Hatch]

George you are correct biggest confusion I see in reviews is residential appraisers automatic assumption that if a residential property is Zoned Commercial that is its H & B Use. They do not think through the process but in all fairness I did not learn it as a appraiser but from brokering and dealing with commercial and industrial properties , and located sites for smaller developers. Many properties fall between the cracks and now we see many cases of Commercial zoned properties getting variances to build income and senior developments. Also many small commercial lots that have 75-80 year old homes on them, but rent for $1,800 to $2,000 a month and often those old legal non-conforming properties are better than dealing with a City Like LA to build a small office that rents for about the same rate.

Eggzaxtly - you learned by doing. We know what we do.

 

[Lee Lansford]

Questions involving HBU analysis are among the most common technical questions we get on this forum, second only to what the specifics are of Fannie's policies.

The CGs have to have a working understanding of HBU because it comes into direct consideration on a large percentage of all our assignments, and certainly in all of our SR2-2a reports. IMO most of the SFR appraisers would also have a similar working understanding of HBU if they were actively dealing with it in all their SR2-2a reports. We tend to learn what we need to learn in order to complete our assignments.
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That was Fannies December-2019 Update- I have not seen any revision in the last 30 days and if so what was it ? Because re-wording-it they may just be playing semantics, to make the appraisers feel better.

There will be a "clarification" coming. Wait.

 

[George Hatch]

Maybe not. Fannie has left the unresolved hanging chad before.

 

[Lee Lansford]

Maybe not. Fannie has left the unresolved hanging chad before.

Per a "higher-up" to another "higher-up", "clarification" is coming.

 

[George Hatch]

Let's just say I wasn't at all satisfied by Fannie's clarification on C#23 and intended user.

I have the ultimate level of confidence in the technical competency of our man at Freddie but these orgs work by committee and I don't know where exactly lie the limits of his authority to make the final call all by himself. I don't know, but I assume he's probably still on probation in terms of his employment, and may yet to have established his ability to exercise his will with the iron fist. If such a position can even exist at a GSE.

 

[Lee Lansford]

Let's just say I wasn't at all satisfied by Fannie's clarification on C#23 and intended user.

I have the ultimate level of confidence in the technical competency of our man at Freddie but these orgs work by committee and I don't know where exactly lie the limits of his authority to make the final call all by himself. I don't know, but I assume he's probably still on probation in terms of his employment, and may yet to have established his ability to exercise his will with the iron fist. If such a position can even exist at a GSE.

My comment is based upon recent communication between a higher-up with ASA and that person's communication with whoever is that person's contact at Fannie.

 

[CANative]

If the hypothetical sale of the subject includes an extra lot, and you determine the lot represents excess land yet treat it like surplus land, then the extra land is not be appraised at it's HBU and since it's part of the whole, then the entire property is not being appraised to its HBU.

You can't have your cake and HBU it too.