Fannie Mae's New Highest and Best Use 2020

[Carnivore]

Complicate it even more and assume vacant adjacent site or multiple adjacent vacant sites have a higher MV than the improved site.

Great comment. OK I will complicate it more.... This will put some into a Tailspin and ultimate crash n burn in the form of a what if.

What if the the adjoining Site has a different HBU. also Assemblage just suddenly pop into my head.

 

[J Grant]

Carnivore, my LTV comment had nothing to do with you, nor did my future event comment, it was responding to George regarding an LIV and mortgage comment he made in one of his posts. . I removed your post reference # from my post. BTW I tend to agree with much of what Lee Lansford stated so no idea why you said that.

 

[J Grant]

Complicate it even more and assume vacant adjacent site or multiple adjacent vacant sites have a higher MV than the improved site.

IT';s not complicated there either - if the adjacent site or multiple sites have a higher MV than improved site and find is the improvement does not contribute enough in value to keep as improved, then HBU would be NO. The HBU question on URAR form is yes or no " as improved", and the answer will not always be a generic yes or a generic no. Each appraisal is different as we are aware..

 

[J Grant]

If the subject of appraisal is two properties conveyed together, #32 Cherry Street, ( house and site) with excess lot # 31 Cherry St, the HBU question page one URAR is for the package/assemblage- thus the HBU question page one URAR is for the assemblage of the two properties, as improved, yes or no..( does the house contribute enough to the site + lot to retain as improved )

The question of HBU page one on URAR is not for the vacant lot alone, nor for a vacant lot combined with a vacant site.
That said, a HBU analysis of the vacant lot alone would be part of the SOW, just as we estimate a site value as part of SOW in order to answer the HBU as improved question page one

As with a single property appraisal whether one site or a site and a lot, if worth more vacant/ and/or has a different zoning use it would trigger a NO answer to HBU question as improved.

 

[Lee Lansford]

Great comment. OK I will complicate it more.... This will put some into a Tailspin and ultimate crash n burn in the form of a what if.

What if the the adjoining Site has a different HBU. also Assemblage just suddenly pop into my head.

Assemblage is an option where the H&BU (and this can include the long-term interim use) of the vacant parcel is for assemblage with the SFR improved parcel.

 

[J Grant]

Assemblage is an option where the H&BU (and this can include the long-term interim use) of the vacant parcel is for assemblage with the SFR improved parcel.

That is in fact how I addressed the excess lot when I did one of these appraisals four years ago and the one I did last year as well. I called it an interim use for the vacant /excess lot.

Which still leaves The HBU question page one the URAR as improved yes or no - the above answers the underlying site and lot assemblage, which is valuable in itself to understand.

 

[Carnivore]

That is in fact how I addressed the excess lot when I did one of these appraisals four years ago and the one I did last year as well. I called it an interim use for the vacant /excess lot.

Which still leaves The HBU question page one the URAR as improved yes or no - the above answers the underlying site and lot assemblage, which is valuable in itself to understand.

Last night it all came together in an Epiphany. An epiphany is an experience of a sudden and striking realization. Generally the term is used to describe scientific breakthrough, religious or philosophical discoveries, but it can apply in any situation .

I agree with you and the solution in reporting on the URAR 1004 of Yes or No can be made by additional analysis AND Explanation in an addendum. In these type of assignments it may be relatively easy or it may be very time consuming. It's going to be Market Specific. Fee and turn time will vary greatly. AMC Phone-Monkey Dot Com is not capable in every day operations to understand this and Checker Dude will be totally confused because it is not on the checklist. The lender Clients in many cases may not be happy. Frankly I don't care. It is what it it is. There is no changing that. Will the Checked "No" set off alarm bells. YES! Not my problem. Will this catch the attention of a a review Appraiser. Yes and it should!

I am not going to explain my solution right now. The Clue to what I am thinking is in the FNMA Market Value definition. It will not be a one size fits all solution. The process will be the same the results can and will vary. The major point is in the form of a Question: Is the Report Results Credible? Is it logical and does it meet the Clients needs/intended use? Yes it will. Will they like the results? Again, I don't know and I don't care. Each assignment like this will have different results.

 

[J Grant]

The way I addressed it in the reports I did was along lines of :

" The subject consists of a site and house improvement , 32 Cherry St, together with an adjacent vacant lot, 31 Cherry St. The vacant lot is excess land and buildable. It can have its own HBU as a buildable lot. However, demand at present time seems low for purchasing the lot for that purpose, it has been vacant for years and no indication of offers to buy it per RE agent. The vacant lot acts as a contributory value to the whole and has an interim use of providing additional yard area and green /privacy or to retain for investment purpose "

The HBU checkbox on page one checked YES as improved because the improvement contributed more value than tearing down would have . If it had been reverse, the improvement contributed such a low value that tearing it down for vacant site and lot , then the answer on page one would have been NO.

 

[Carnivore]

The way I addressed it in the reports I did was along lines of :

" The subject consists of a site and house improvement , 32 Cherry St, together with an adjacent vacant lot, 31 Cherry St. The vacant lot is excess land and buildable. It can have its own HBU as a buildable lot. However, demand at present time seems low for purchasing the lot for that purpose, it has been vacant for years and no indication of offers to buy it per RE agent. The vacant lot acts as a contributory value to the whole and has an interim use of providing additional yard area and green /privacy or to retain for investment purpose "

The HBU checkbox on page one checked YES as improved because the improvement contributed more value than tearing down would have . If it had been reverse, the improvement contributed such a low value that tearing it down for vacant site and lot , then the answer on page one would have been NO.

Right, you determined the other site Exposure Time(extracted from the Market) was excessive/very high that no active market was reasonably present. In effect it is surplus site area.

Coincidentally, I have a Fee Quote request from an AMC. The Subject is an Older house on 9 acres of zoned R-1, residential land. They literally are begging me to take it on. They revealed a Fee of $560 and open turn time. I am thinking $1,000 and skittish about that, because I think they will bite.

The SFR Improvement and total site area was purchased in 2018 for $240,000 by a private party. Almost adjacent(small right of way) is a relatively new home subdivision. It has vacant Sites that will continue to be built on(different phase) Its also located just off of a State Road that is being rapidly developed with all kinds of new Commercial. All around this subject are vacant parcels of undeveloped R-1. I Recognize some of the names/owners They all got plenty of Jack to hold these sites for future development.

The Private Party has a name that is directly related to a Builder/Developer.

So I would rather low ball three Cookie Cutter FHA Grade on Slab assignments. I would make the same cash in half the time. LMAO

 

[George Hatch]

Generally speaking, the starting point for any opinion of value of the group of properties being sold together is figuring out their respective values if sold individually. The applicable discount or compounding factor, if any, is useless without an aggregate of the retail values.

The only legitimate way of skipping that is if you have comparables of similar composition, which in this discussion will consist of the SFR+extra. By which I am not referring to an SFR on a single lot of similar size as your subject assemblage. And you really still shouldn't skip the retail valuation because in doing so you are actually missing relevant comparables for each component as a result of not even looking for them.

House+extra totaling 1ac may or may not be equal to house on 1ac parcel. Just the fact that it's possible warrants the research/analysis.