Excess or surplus land?

[J Grant]

Your post very clearly states it is a vacant site or a site considered as vacant. The second lot is not vacant. it has a building and if that building has any value, then the site is not "excess" but rather is surplus.

Wrong, the site has a building on it but it is still a legally divisible lot that can be sold, with the building on it !!

FHA has a set of appraisal rules for their loan purpose but that may not make sense outside of that. and in fact be wrong outside of that, they set their rules up as an assignment condition.

 

[Mark K]

Your post very clearly states it is a vacant site or a site considered as vacant. The second lot is not vacant. it has a building and if that building has any value, then the site is not "excess" but rather is surplus.

No, it doesn't. You're adding verbiage not in the definition. This is your opinion/interpretation.

Also, we're apparently discussing two different scenarios. 1) The OP and 2) Excess vs. surplus in general.

In regards to 1) Considering your experience, I can't believe that you've never encountered an excess parcel with improvements of some nature selling separately. I know I've seen it on many occasions, both commercial and residential. A house with two lots and a shed or extra garage on the second lot can easily be sold separately, hence the excess designation. Unless you're saying that until the deed changes hands it is surplus but then it turns into excess upon sale.

I'm speaking more in general terms re: surplus v. excess and their definitions. In regards to FHA or F/F or any of the GSE BS guidelines, they aren't interested in actual appraising, they only want to make loans and its easier for them if appraisers ignore accepted definitions of appraisal practice and just nod their heads like good drones. It seems that the GSEs have convinced/brainwashed a lot of appraisers into believing that their guidelines are sacrosanct.

 

[J Grant]

FHA guidelines and rules apply to their loan program only and relate to their particular loan approval process, how they qualify properties and what they will accept or reject - any of it might not be relevant or even be contrary to regular standards outside of FHA-

 

[glenn walker]

As Good old " Bobbie" once head at HUD HOC used to scream " a 1/2 acre is not land- it's a Lot and now you just have a bigger yard, which has utility value and when combined with the other 1/2 acre you have a property as a whole buyers will like because now they have room for there toys, pools, barns , shops etc. LMAO

 

[Terrel L. Shields]

I can't believe that you've never encountered an excess parcel with improvements of some nature selling separately.

Believe... I have seen lot splits of vacant parcels. Cannot think of one that sold with some secondary building present sold seperately.

Further - as stated - the surplus land cannot be developed if sold separately because it violates the zoning requiring a larger site. Thus, once again, it is surplus land not excess lot. FHA has nothing to do with that.

 

[glenn walker]

Note" Seems many failed to read thread as it said the two parcels are saleslady recorded on "One Deed" and the Property is currently being used as One Combined Parcel- A home and then out buildings- Pole Barn etc on the other parcel. So its highest and best use is it's exiting use as a combined parcels. It simply may have a larger Lot size than some others in the area. In my area in some areas this is very common and typical where owner have main home on one and the abutting parcel is used for all eh other things. A 1 Acre combined parcel is not really Land its really just a home site and extra utility value. It doesnt really matter what you call it because it's what the market ( buyers and sellers ) that determine the best use fot the sites.

 

[Trihard]

Note" Seems many failed to read thread as it said the two parcels are saleslady recorded on "One Deed" and the Property is currently being used as One Combined Parcel- A home and then out buildings- Pole Barn etc on the other parcel. So its highest and best use is it's exiting use as a combined parcels. It simply may have a larger Lot size than some others in the area. In my area in some areas this is very common and typical where owner have main home on one and the abutting parcel is used for all eh other things. A 1 Acre combined parcel is not really Land its really just a home site and extra utility value. It doesnt really matter what you call it because it's what the market ( buyers and sellers ) that determine the best use fot the sites.

The issue is that you have to call it something due to highest and best use analysis and the lender and FHA asking you to put a round peg in a square hole.

 

[Trihard]

Also I will point out if you are using the market as a tape measure for excess land the majority of excess land or any land that is sold will not have a pole barn or any other improvement on. So if you are using the market as your support you should have the majority of excess land sales with a building on it, which I know for a fact is not true.

 

[Terrel L. Shields]

Also I will point out if you are using the market as a tape measure for excess land the majority of excess land or any land that is sold will not have a pole barn or any other improvement on. So if you are using the market as your support you should have the majority of excess land sales with a building on it, which I know for a fact is not true.

Again, if the second lot contains an improvement of value, then by definition the lot is not excess. If a 1930s outhouse lies on it, then its HBU is as vacant land. But no one has indicated if the improvement actually does contribute value to the property (in whole) .. Simply assuming any outbuilding is of no value in the market is a real stretch in any market I've been in.

 

[Trihard]

Again, if the second lot contains an improvement of value, then by definition the lot is not excess. If a 1930s outhouse lies on it, then its HBU is as vacant land. But no one has indicated if the improvement actually does contribute value to the property (in whole) .. Simply assuming any outbuilding is of no value in the market is a real stretch in any market I've been in.

If you guys want to really see if FHA is taking a hard stand on excess land having to be vacant call your HOC and see what they say. The guy that I talked to was really keen on excess land must be vacant. So give them a call and report back here what they say.