Second Lot on VA Purchase

[Basically Rectangular]

I am dealing with this exact scenario. The subject includes five parcels, two of which are adjacent to the subject, currently vacant, and have a separate highest and best use as a buildable lot. This is for a purchase, the seller had no intention of splitting off the two lots.

From reading earlier posts on this thread, I am seeing that I should check the "No" box under Highest and Best Use and explain, that makes sense.
I am stuck at how to deal with these two parcels in the sales comparison approach. I am not sure if I should include them as part of the subject site size since they have a different contributory value (and can be split off). Their value is greatly diminished as part of the subject as compared to if they were separate. However I am not sure that I should exclude them either.

 

[J Grant]

I am dealing with this exact scenario. The subject includes five parcels, two of which are adjacent to the subject, currently vacant, and have a separate highest and best use as a buildable lot. This is for a purchase, the seller had no intention of splitting off the two lots.

From reading earlier posts on this thread, I am seeing that I should check the "No" box under Highest and Best Use and explain, that makes sense.
I am stuck at how to deal with these two parcels in the sales comparison approach. I am not sure if I should include them as part of the subject site size since they have a different contributory value (and can be split off). Their value is greatly diminished as part of the subject as compared to if they were separate. However I am not sure that I should exclude them either.

Is this being done on a URAR form ( because it has a specific HBU question, as improved/yes or no on page one) If mark NO, then what is the alternate use? Demolish the dwelling? That the house t can only be sold with one lot and not include the other lots? People have to have a basis to back up their reasoning.

URAR the page one HBU question is for the whole property being appraised. We develop an estimate of value /HBU for a lot or lots to develop an opinion of HBU for whole property . So if you marked
If you choose to mark NO for HBU, then you can not include the extra parcels in your value because you are saying the HBU as improved is to exclude those parcels .

We can't have it both ways. -

 

[Lee Lansford]

I am dealing with this exact scenario. The subject includes five parcels, two of which are adjacent to the subject, currently vacant, and have a separate highest and best use as a buildable lot. This is for a purchase, the seller had no intention of splitting off the two lots.

From reading earlier posts on this thread, I am seeing that I should check the "No" box under Highest and Best Use and explain, that makes sense.
I am stuck at how to deal with these two parcels in the sales comparison approach. I am not sure if I should include them as part of the subject site size since they have a different contributory value (and can be split off). Their value is greatly diminished as part of the subject as compared to if they were separate. However I am not sure that I should exclude them either.

Let me ask this: It is clear by market evidence that there is demand for the 2 vacant parcels as building sites? I ask because there are neighborhoods where vacant parcels have a zoning that allow for development but where no demand exists.

 

[Basically Rectangular]

Yes. New construction is happening in the neighborhood.
The subject's street runs parallel to and is one street over from main Street in the historic center of town, so this is a desirable area.

 

[Basically Rectangular]

The two parcels do not apparently even have to be split off from the main lot because they already have separate parcel numbers, just the same owner.

 

[Lee Lansford]

The two parcels do not apparently even have to be split off from the main lot because they already have separate parcel numbers, just the same owner.

Give us some round numbers: What's the MV of each of the two vacant parcels? And...before someone goes off on a tangent...the fact that one seller and one buyer are "grouping" these parcels is not the market per the person to whom I am responding . 2nd question: From what you have shared, the market would definitely separate the 2 vacant parcels from the SFR improved parcel(s), right?

 

[Basically Rectangular]

Working on the land values.
Yes I believe the market will separate the two lots. I'll send more info.

 

[Lee Lansford]

Working on the land values.
Yes I believe the market will separate the two lots. I'll send more info.

Some of these situations are tricky in that it's easiest (for all of us) to arrive at an appropriately supported conclusion when the market evidence is strong in one direction for the other. The bottom-line is THIS: To include an adjacent parcel along with the SFR improved parcel for a single opinion of MV, you have to had come to the conclusion (via market evidence) that the H&BU of the vacant parcel is for assemblage with the improved parcel. A vacant parcel's H&BU may be its long-time and prospective "interim" use as the neighborhood is in that part of the cycle where there is virtually no demand for development of vacant parcels.

 

[J Grant]

Trying to analyze what "the market" would do wrt to the vacant lot or lots ( aside from the subject buyer purchasing the assemblage) -if there is present demand for the lot as a buildable site, , why the heck hasn't it gone to contract as such? If the owner of that lot could get more $ for it as a vacant lot, why aren't they doing that ? Why would an owner take less $ for a vacant lot, just so a buyer could combine it with their house?

One needs to estimate MV for the lots separate and then how much they are comprising of the purchase price , is the $ amount similar these lots contribute, or less, or more $ than they are worth as vacant. I Wrt to assumption the lots are worth "substantially more" as vacant/severed - if true, why would a well informed seller take less $ for them as a package? If there was really enough active demand, then a buyer for the assemblage would have to match the price of other buyers to get the lots.

Interim use - optimum use is hold the vacant lot to build on or sell at a future date-

PS I am not disagreeing with Lee,- for the OP, the value of the lots should not be generic assumption -

 

[Basically Rectangular]

Not all property owners are savvy, nor do they always care to maximize the HBU of their property, especially if dealing with an estate that just wants to cash out.