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10 acres only, again . . .

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Tater Salad

Thread Starter
Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Missouri
I received a request (again) for subject + 10 acres only out of a 40 acre parcel--as a drive-by, no less.

We declined, stating that we weren't comfortable with a drive-by on 40 acres, even if (or particularly if) they only wanted 10. Over the fax comes the last appraiser's report from 6 months ago, unsolicited, to "help".

Here is my question: this appraiser did a 1004 for a lender, looks great, lots of addendums, lots of credentials, etc.
In the sales comparison, she only valued 10 acres and compared to like sales, with an indicated value of $268k.

No income approach, usual explanation.

Final Reconciliation: $358k as the additional 30 acres has a contributory value of $90k. 8O

So, she valued on 10 only under sales comparison, but final opinion is $358k with full acreage.

Am I smoking something or is she? :silly: Normally, I would have laughed and circular filed it, but all the initials after the name (and she is a former Pres of a chapter of an organization I belong to) and I'm wondering if this is an acceptable practice. I would never do it even if it were, but is it? I'm so confused!
 

Blue1

Elite Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
California
Sounds to me like the appraiser was making the point that the house + 10 acres is worth $268K and that IF the 30 acres were added it would be worth 90k more. However, this gives rise to a couple of questions:

1) Which 10 acres is being appraised? According to new Fannie Mae guidelines, the appraiser should have included a map of the exact 10 acres being appraised.

2) Is the 30 acres a separate parcel? If not what's the cost of separating it from the 40 acres AND is it even possible to do so? These questions have to be answered before giving this "access" land any value in my opinion.
 

Tater Salad

Thread Starter
Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Missouri
Thanks, Blue1--I agree that the division is in question from the git-go.
My question is if the final reconciliation of value can be the value from the sales comparison approach on 10 acres PLUS the contributory value of the 30 acres she was asked not to include.

It just looks misleading to me, as the request for 10 acres is to eliminate what the lender believes is "excess land" in their eyes (legitimately or not).

Her final value opinion is of the full 40 acres.

It just doesn't seem right. Cost approach 361k, sales approach 268k, final reconciliation 268k+90k for 30acres that was left out of sales comparison approach.

If this is acceptable, I just want to know because it would mean that I need to rethink what I thought I knew.

I just finished 30 hours of an income class and my brain is mush, so forgive me if this is a stupid question.
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
When we do a house on acreage where they only want us to value 5 or 10 of the acres, we then consider it a hypothetical appraisal and so state several times in the report that the value may not have any relationship to the actual parcel as presently constituted due to the limitation of acreage considered.

If the lender does not tell you which of the 10 acres to use, then I use the best 10 acres that encompasses the improvements. This is usually a square 660 x 660 parcel that generally carries the highest value in the market. On a typical 330 x 1320 10 acre site, it will be the front half of the site which then gives the homeowner about 65-75% of the value of the whole site in his value. This brings the value opinion of the hypothetical closer to the real value of the whole parcel.

I have been seeing more and more cases where the lender wants me to consider the whole parcel. I have one I'm working on right now (and apprising for the 3rd time in 4 years) that is a 1 bedroom modified chalet on a square 40 acres. The lender says to use all 40 acres in the value.
 

Joe Moore

Junior Member
Joined
Jan 30, 2002
Professional Status
Appraisal Management Company
State
Pennsylvania
"According to new Fannie Mae guidelines, the appraiser should have included a map of the exact 10 acres being appraised. "


Could you reference where this instruction is located in the Selling Guide? It was my understanding that Fannie Mae wants ALL acreage included.

Thanks.

Joe
 

Tater Salad

Thread Starter
Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Missouri
Nobody has an opinion as to whether you can say that the sales comparison shows $268k, but the final opinion is $358k because of the contributory value?

Does anybody else think that the way this was done is misleading?

I'm not looking to hang anybody, just wanted to know if this is acceptable or do you all think it's a little fishy? :?
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
It is not uncommon to have two values in one report. Like in REO's, as is and as repaired, but does the report have some supporting data for the reconciled values? Did she include some sales with large acreage, or land sales in a market grid or addendum?
 

George W Dodd

Senior Member
Joined
Jul 9, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Richard gives a good answer and I would also consider it a hypothetical appraisal.

I don't know about other areas, but in this market the lender will encumber the entire property with the mortgage. So, if you have 40 acres the value is based on improvements and 10 acres, but the mortgage is on everything.

The option out is to get the 10 acres surveyed off and recorded at the Court House.
 

Tater Salad

Thread Starter
Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Missouri
Thanks for replying--

Mel: no supporting data. Just a statement that the final reconciliation takes into account the other 30 acres, with a contributory value of 90k.

The adjusted sales prices are 267k, 269k and 269k. Sales comparison: 268k. Final: 358k. And it's not an REO, nothing in the scope about anything other than the typical finance appraisal (but on 10 acres of the 40 acres only). I thought it looked like an end-around to give the full value to the property when asked for a hypothetical on 10 acres only.

Thanks again to those that responded. I'm just going to stick to my guns and not do them this way, if at all. It looks too misleading to me.
 

Ted Martin

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Kansas
Since when is the sum of the parts the value of the whole.
 
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