2 lots in one appraisal? Please help.

[CaliforniaSD]

I am appraising a property that has one lot with a house and a second lot with a separate APN number. The second APN with no improvements is part of the purchase contract. I am not sure if this lot is developable, I don’t know if there are any restrictions to build, etc. How do I go about appraising this second lot? Should I consider it surplus or excess land? I would really appreciate some input. Thanks!

 

[Terrel L. Shields]

Should I consider it surplus or excess land?

If a separate APN, then it appears to be excess and has a separate value from the improved lot.
Check zoning (if none then you're good to go) to see if you can develop it.

Now. The real question is who is the ultimate lender or backing the lender. FNMA? FHA? VA? "Conventional" is not an answer. If secondary market they have specs on whether or not the second lot is included.

FHA

Excess Land. The value of the second lot must be excluded from the final value conclusion of the appraisal and the Appraiser must provide a value of only the principal site and improvements under a hypothetical condition.​

​

FNMA
he table below provides the requirements when the security property consists of more than one parcel of real estate.

✓	Multiple Parcels Requirements
	Each parcel must be conveyed in its entirety.
	Parcels must be adjoined to the other, unless they comply with the following exception. Parcels that otherwise would be adjoined, but are divided by a road, are acceptable if the parcel without a residence is a non-buildable lot (for example, waterfront properties where the parcel without the residence provides access to the water). Evidence that the lot is non-buildable must be included in the loan file.
	Each parcel must have the same basic zoning (for example, residential, agricultural).
	The entire property may contain only one dwelling unit. Limited additional non-residential improvements, such as a garage, are acceptable. For example, the adjoining parcel may not have an additional dwelling unit. An improvement that has been built across lot lines is acceptable. For example, a home built across both parcels where the lot line runs under the home is acceptable.
	The mortgage must be a valid first lien that covers each parcel.

 

[TerryRohrer]

If a separate APN, then it appears to be excess and has a separate value from the improved lot.
Check zoning (if none then you're good to go) to see if you can develop it.

Now. The real question is who is the ultimate lender or backing the lender. FNMA? FHA? VA? "Conventional" is not an answer. If secondary market they have specs on whether or not the second lot is included.

FHA

Excess Land. The value of the second lot must be excluded from the final value conclusion of the appraisal and the Appraiser must provide a value of only the principal site and improvements under a hypothetical condition.​

​

FNMA
he table below provides the requirements when the security property consists of more than one parcel of real estate.

✓	Multiple Parcels Requirements
	Each parcel must be conveyed in its entirety.
	Parcels must be adjoined to the other, unless they comply with the following exception. Parcels that otherwise would be adjoined, but are divided by a road, are acceptable if the parcel without a residence is a non-buildable lot (for example, waterfront properties where the parcel without the residence provides access to the water). Evidence that the lot is non-buildable must be included in the loan file.
	Each parcel must have the same basic zoning (for example, residential, agricultural).
	The entire property may contain only one dwelling unit. Limited additional non-residential improvements, such as a garage, are acceptable. For example, the adjoining parcel may not have an additional dwelling unit. An improvement that has been built across lot lines is acceptable. For example, a home built across both parcels where the lot line runs under the home is acceptable.
	The mortgage must be a valid first lien that covers each parcel.

It is rather telling of FNMA's understanding of "appraisal" that their "rules" in this case require you to consider future legal encumbrances of the subject as essentially equivalent to zoning regulations or building codes or statutes while simultaneously requiring you to apply an assumption that the subject has good and merchantable title (ie, free of those future or existing liens and mortgage requirements as of the effective date of the appraisal, for valuation purposes). The stupid are leading the field!

 

[J Grant]

I am appraising a property that has one lot with a house and a second lot with a separate APN number. The second APN with no improvements is part of the purchase contract. I am not sure if this lot is developable, I don’t know if there are any restrictions to build, etc. How do I go about appraising this second lot? Should I consider it surplus or excess land? I would really appreciate some input. Thanks!

there have been many threads and posts on this exact thing recently see if you can find them. People are burned out answering the same question over and over - see if you can search recent posts they will turn up

 

[PushinValue]

You need to start by figuring out the answers to your questions.

What is the minimum lot build size
What does zoning allow.

Can’t proceed further until you figure those questions out

 

[Tom4value]

You need to start by figuring out the answers to your questions.

What is the minimum lot build size
What does zoning allow.

Can’t proceed further until you figure those questions out

Exactly! “Rule” #1 of USPAP (I put rule in parentheses for the sticklers) is to “define the problem to be solved”. Since the lot is in the P&S, it must be considered. Since you are appraising it in the highest and best use, you need to consider if the value includes the potential to sell of the other lot as a building lot. This would make it a “complex” appraisal but since you (OP) is certified residential you are at least qualified to do it.

If I were you, I would make your client aware of the situation and ask for a higher fee to determine that possibility.

 

[huntercharlie]

A second APN does NOT mean it is a separate legal parcel, so you first need to figure out if you're dealing within one or two legal parcels. I've had properties with eight or nine APNs that are only one legal parcel.

 

[Fernando]

If it's a sale and contract includes both separate lots, then you would do an appraisal together especially highest best use in how having both lots benefit as one purchase.
If refi, you can point out to lender that it's two separate lots and see how they want to proceed.

 

[Charles West]

I am appraising a property that has one lot with a house and a second lot with a separate APN number. The second APN with no improvements is part of the purchase contract. I am not sure if this lot is developable, I don’t know if there are any restrictions to build, etc. How do I go about appraising this second lot? Should I consider it surplus or excess land? I would really appreciate some input. Thanks!

More details are needed. Where in CA are you? Urban, suburban, rural for starter questions. Highly desirable market or low demand just outside Palm Springs type of market?

 

[Terrel L. Shields]

Appraise the improved lot... add an addendum describing the vacant lot, add 3 land sales to support the vacant lot value....add to the report. Sum the two values and report in a separate letter of transmittal.