2 Parcels on One Appraisal?

[Dino Layton]

I am appraising a property with a house on it with a separate parcel adjoined to it. I appraised only the house and the parcel on which it sits. The lender wants the second adjoining parcel on the same appraisal. The 2 lots are deeded together under on loan. I have read all other threads on this site regarding this issue, but I have not found the “WHY” that explains why some would do it and some would not. The lender does not care if highest and best use is something other than appraised together. (Contributory value of additional land is worth less than if sold separately.) The 2 lots have their own legal descriptions, parcel numbers and legal interests. I have never appraised 2 separated lots like this regardless of how they were deeded due to having separate legal interests. Can anyone explain WITH REFERENCES why it would be OK to add the second lot to the appraisal? The AMC asked 5 of their appraisers if they would appraise the 2 lots together – and all said “NO.” The lender asked 3 appraisers if they would appraise the 2 lots together – and they all said “Yes.” I don’t need to hear, “I would do it,” or “I would not do it.” What I need is specific USPAP references or accepted appraisal practice references so that I can proceed with more than just your opinion. I have looked and looked but still find myself at a loss. Thanks!

 

[Pittsburgh Pete]

How about--unity of use, unity of title.

 

[Dino Layton]

What about it?

What about it?????

 

[JTip]

The 2 lots are deeded together under on loan.

The 2 lots have their own legal descriptions, parcel numbers and legal interests.

Are they together or not? There lies the answer.

 

[Webbed Feet]

I bet this was like "Pass it On!"

Ever hear of the game of "Pass It On" played at parties with kids? ... I rather suspect the so-called answers out of the three appraisers (if they really exist) were based on misinformation out of poorly worded and lacking questions poised to them, and their real answers not being returned to you. For the moment, I would avoid the USPAP back and forth battle. My opening shots over their bow would consist of:

- demanding the names and phone numbers of those three appraisers.
- asking if the loan requirements accept a "not highest and best use" conclusion.
- and / or a Hypothetical Condition(s) regarding what the H&BU is or a seller not being knowledgable about the market contrary to the definition of Market Value being asked for. With it kept in mind this invariably will demand the reporting come OFF the Fannie 03/2005 reporting forms!

By the way, and I can't help but make this observation. It sounds like this assignment was screwed up at the very git go due to lack of compliance with the SOW Rule if you knew about that adjacent lot already being on the current recorded deed. If so, all and any of this should have been worked out prior to delivery of any appraisal report at all in the first place.

 

[Webbed Feet]

What about it?????

I agree with what I think is behind you firing this question right back. We reflect the market, not the owner's use or how many deeds there are.

 

[Lee Lansford]

IF the 2nd parcel (the vacant parcel) has its own separate H&B Use and if "combined" (for the purpose of your appraisal as to offering but a single opinion of Market Value) with the improved parcel, the result of the single opinion of MV is LESS than if these two entities were separately valued, how could you possibly (Hint: you could not) "X" (assuming that you are communicating the appraisal via the current Fannie URAR/1004) the box affirming that the "Highest & Best Use as Improved" is the "Present Use"???????

Understand this: when this issue arises, many (and I do mean MANY) appraisers absolutely have no clue as to the correct manner in which to proceed (given what I understand regarding your assignment).

But here...provide us with some specifics (client-type, where is the loan headed?) regarding the assignment. Who is the "lender who does not care" how you are to conduct this appraisal?

 

[Paul Isolda]

"The lender does not care if highest and best use is something other than appraised together"

First, being appraised together is not a highest and best use but more importantly, they may not care what the highest and best use of the vacant lot is but you better. It's your job as the appraiser. When I have come across this it comes down to a few key issues;

Can the 2 properties be transfered independently of each other?
What is the highest and best use of the vacant lot?

If they can be sold separately and the vacant site could be developed I think its a no-brainer that they are 2 separate properties that need to be appraised separately.

 

[Webbed Feet]

P.S.

I've been in this battle many a time. I can legally, in the same county, place two pieces of real estate, five miles apart from each other, on the same deed. Just because they happen to be adjacent doesn't change the market for them. And often in such situations the property owner can get them back on separate deeds with the snap of their fingers, and would NEVER market them for any less than the separate market values of each parcel. So this turns into a debate about what the market for the two parcels really is!

IF the lender is demanding a representation of something other than what the market really is for the two parcels, then the lender is either demanding some other definition of value be used, or is demanding hypothetical conditions be used. Which one are they demanding? That is your clue on how to battle this. Because I am betting they want the Fannie Mae definition of Market Value, and no HC's used because the 03/2005 URAR has a SOW that does not allow such a modification unless you "Subject To" a legal recombining of those lots into one lot. Even then, that would mean they could easily be again "uncombined" almost overnight and would not be at H&BU combined. At bit self-defeating if the loan demands the property be at it's H&BU. If the local jurisidictional authority says that these are two (2) Legal Lots of Record, regardless of being on one deed, and the market would only market these as two separate lots to achieve a H&BU, your lender doesn't have a leg to stand on. What they are really demanding is two separate appraisals reported in one report, a different value be used, or a HC.

 

[John LaBelle]

I agree with Webbed that this is a Sope of Work issue, and I would refer you to AO23 lines 92-119