2 lots in one appraisal? Please help.

[J Grant]

1. I would never appraise a buildable site as surplus land. I would tell the lender that is not an acceptable appraisal practice, unless as you say they want it to be a HC.
2. I‘m just saying that lenders often have various reasons for why they don’t want something done; whether those reasons are credible or not is beside the point.

The point of my post was to wonder why lenders who do want it included also don’t see the possible or potential pitfalls. Yes, they want to make loans, but as we know they often aren’t very discriminating.

Because they are greedy and do not care.

 

[PushinValue]

As I was thinking about this thread and a lender encumbering a vacant site with a house; What happens if the homeowner in the future builds say a garage on the lot line or something; essentially making it one site? This is actually what I did at one time. That would then make it a one site property. Therefore, it is technically possible when that happens for the overall value of the property to actually go down if the final site value is significantly less than when there were 2 separate sites. And as I was thinking about this, it may be why some lenders want that extra site valued as surplus land, even though at the time of the report the extra site wasn’t surplus land. Maybe they have been burned in the past by such a scenario. Just thinking out loud here. Anyone ever come across something like this? In my 26 years it hasn’t happened, but it must have occurred.

Yes, I had an assignment with 2 lots, 2 legal descriptions, but there was an encroachment of a major improvement on to the 2nd lot. HBU was assemblage due to the legal issue caused by the large storage structure (legally not permissible to build on the second lot as a stand alone property until the encroachment issue was cured). If they could be sold separately, there was 100-200k left on the table...

 

[PushinValue]

1. I would never appraise a buildable site as surplus land. I would tell the lender that is not an acceptable appraisal practice, unless as you say they want it to be a HC.
2. I‘m just saying that lenders often have various reasons for why they don’t want something done; whether those reasons are credible or not is beside the point.

The point of my post was to wonder why lenders who do want it included also don’t see the possible or potential pitfalls. Yes, they want to make loans, but as we know they often aren’t very discriminating.

Never? What if you had a 1 acre improved 4000' custom SFR with a vacant 1 acre in the rear. The rear lot is buildable, but would require an easement through the front improved site. Further analysis could easily reveal the rear lot is surplus due to the adverse impact from building a second home in the rear along with an easement.

There are a number of other instances where a buildable lot could be considered surplus land

 

[Airstream]

Never? What if you had a 1 acre improved 4000' custom SFR with a vacant 1 acre in the rear. The rear lot is buildable, but would require an easement through the front improved site. Further analysis could easily reveal the rear lot is surplus due to the adverse impact from building a second home in the rear along with an easement.

There are a number of other instances where a buildable lot could be considered surplus land

That is not a buildable site if it needs an easement and doesn't have one. I have yet to see a landlocked site built on.

 

[ZZGAMAZZ]

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.

I had an assignment recently that included a septic tank on the adjacent parcel included in the purchase, though none of the agents or anybody knew about it.

I had another one recently that included two adjacent acre+ parcels that had been deeded together, and that consequently could be included in one refi appraisal/loan.

I had another one in which one parcel only was included in the refi although the water well for the property was located on the adjacent parcel also owned by the borrower but being leased.

 

[Airstream]

I had an assignment recently that included a septic tank on the adjacent parcel included in the purchase, though none of the agents or anybody knew about it.

I had another one recently that included two adjacent acre+ parcels that had been deeded together, and that consequently could be included in one refi appraisal/loan.

I had another one in which one parcel only was included in the refi although the water well for the property was located on the adjacent parcel also owned by the borrower but being leased.

1. A septic tank on an adjacent parcel doesn't make it surplus land. That can easily be fixed with an easement.
2. Two sites that are sold together and put on one deed don't make that adjacent site surplus land.
3. And a well on an adjacent site doesn't make that site surplus land. Again an easement takes care of the issue.

I've had all of those situations. And if that parcel can be sold separately it is not surplus land.

The only clear times I really consider it surplus land is if it requires an easement on the present subject's site and it is not part of any legal. Thus making it essentially unmarketable without the other parcel. Or if there are so many improvements on the second parcel that are essential for the subject no one would consider buying it as a second parcel. Generally in the latter situation those parcels should be joined together by one APN.