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

[Lee Lansford]

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.

Though some will--evidently--give it a try!

 

[Meandering]

Because Fannie is telling you HOW to value and report an extra lot..............

it is a violation of Fannie's own Appraiser Independence Requirements.

https://www.fanniemae.com/content/fact_sheet/appraiser-independence-requirements.pdf

.

 

[J Grant]

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.
.

FNMA _"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. "

Above is not saying treat it like surplus land, they are saying describe the land and its contributory value included in the grid.

It is imo not true that (per your reasoning ) then the entire property is not being appraised at its HBU . Just because one component of land might not be at its HBU as long as encumbered does not mean the entire property is not appaised to its HBU.
The page one on URAR asks wrt to HBU is existing use a yes or a no-o unless the improvement has so little worth it is better off removed for both sites vacant, ( or other such as commercial,) the HBU question on page one would be yes, continue the existing use aka, retain the improvement .

 

[George Hatch]

Principle of substitution. We seek the purple apple as the best comps for our purple apple.

Our direct comps for this scenario are house+extra. That's our starting point. If we can't start there then we need to be considering whether or not there's an adjustment to be applied for any assemblage we may use in lieu of the more comparable house+extra.

Not that complicated, unless/until we start trying to assume the SFR on the single parcel as being the direct comparable when it may or may not be.

 

[glenn walker]

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.

Good luck with that - A Higher up in the ASA -LMAO )

 

[Lee Lansford]

Good luck with that - A Higher up in the ASA -LMAO )

What?

If you are aware of something, please share.

 

[Andrei Fin]

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.

But Fannie Mae never said that you can't check the NO box for HBU in these cases.

And what about the examples where the lot actually fetches more when sold with the property - a marginal lot that provides a valuable amenity to a desirable property, such as beach access, water rights, trout stream etc?

 

[George Hatch]

But Fannie Mae never said that you can't check the NO box for HBU in these cases.

And what about the examples where the lot actually fetches more when sold with the property - a marginal lot that provides a valuable amenity to a desirable property, such as beach access, water rights, trout stream etc?

You know, I'm pretty sure that if you had read that response out out to yourself before you posted it you would have realized that posting it undermines the point you're attempting to make.

If the amenity is valuable that means its value can be weighed against the other alternatives to figure out which is higher. If it's worth more as a feature to the house then that's how we would value it.

 

[Andrei Fin]

No it doesn't. The point I'm trying to make is that HBU may or may not be to sell the parcel separately, however most people here have chosen to turn off their brain after performing just the first test (legally permissible). There is no "one size fits all" approach to these assignments, but that doesn't negate the fact that the second parcel can always be valued "in use" (what value does it contribute to the whole) and that figure applied to the market value of both parcels when sold as one subject property.

 

[Carnivore]

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.

Yes, I agree with your assertion above. I would add something. Those Residential Appraisers who want to break the Strangle hold of AMC Phone Monkey Dot Com24 hr turn n burn assignments must develop a very strong understanding and the application of HBU analysis to take on the better Paying aka Difficult/complex SFR Appraisals assignments. If your doing any legal work, beware your entering a mine field! Opposing attorney will look for anything to discredit you conclusions.

Side Note: This should cause some to turn on their heads. Lee Suggested that in some Markets the Activity is so low that Excess actually can be considered/treated as Surplus. Terrell from Arkansas danced around that a bit himself.

I can think of an area that actually is probably in the type of market. Detroit! after the Auto Industry Collapsed.