2 Parcels on One Appraisal?

[Pittsburgh Pete]

If you ask me somebody needs to think outside of commercial work and shift gears to residential work. The problems are NOT the same! Your two little words above trigger the use of an HC. You can mock the form concept of reporting over checkboxes, that doesn't alter the fact the appraiser involved could be in violation of modifying a SOW that it is preprinted cannot be modified. Thereby ending up with a misleading report per quite a few state appraisal boards.

In no way is this an HC--it is not contrary to what exists.

Not thinking exclusively as either a residential or a commercial appraiser--merely as an appraiser.

How would valuing the borrowers property (be it one tax parcel or 23 tax parcels) run counter to the scope of work indicated in the FNMA 1004--just read it and reread it and fail to grasp your point. The only sticking point I see is the line prior to SOW that states that "This report is designed to report an appraisal of a one-unit property....." It is a one unit property with excess land (possibly--again dependent on market conditions and market demand).

Would anything change if the property owner combined the two parcels into a single tax parcel? The analysis and the highest and best use would not change!

 

[Pittsburgh Pete]

I'm assuming what's got the CR's riled in this situation is assumption that the loan will be run thru Fannie Mae--that assumption seems to be driving the naysayers.

 

[Dino Layton]

WOW! Thank you all so much for your answers. This was extremely helpful and helped me to clarify my rationale for the matter. I truly appreciate the time spent for my question – and the level of knowledge contained in your answers.

 

[LI-Appr]

My 2 cents is this. If you have 2 parcels which can stand alone and taxed seperately. The second parcel being buildable. You must appraise them seperately. What if this were a sale? Would the seller not want the market value for parcel #2. What if someone sells this as excess land and you appraised it as such. Think of the liability you have to the seller when he sues you. But I am not one of the big guns on here. 2 appraisals.

 

[Lee Lansford]

I'm assuming what's got the CR's riled in this situation is assumption that the loan will be run thru Fannie Mae--that assumption seems to be driving the naysayers.

Either that assumption OR the assumption that the appraisal is to be communicated using Fannie's current form 1004.

 

[Lee Lansford]

In no way is this an HC--it is not contrary to what exists.

Not thinking exclusively as either a residential or a commercial appraiser--merely as an appraiser.

How would valuing the borrowers property (be it one tax parcel or 23 tax parcels) run counter to the scope of work indicated in the FNMA 1004--just read it and reread it and fail to grasp your point. The only sticking point I see is the line prior to SOW that states that "This report is designed to report an appraisal of a one-unit property....." It is a one unit property with excess land (possibly--again dependent on market conditions and market demand).

Would anything change if the property owner combined the two parcels into a single tax parcel? The analysis and the highest and best use would not change!

PP, the OP stated (original post) that the vacant parcel has its own separate H&B Use and valuing the two parcels separately result in a higher (the combination of the 2 opinions of MV) market value than if somehow the two parcels were combined as though the vacant parcel did not have its own separate H&B Use (i.e., considering the vacant parcel as surplus land--which it is not).

What might be the result--if offering a single opinion of MV via "combining" the two parcels--when the appraiser righfully concludes (and so states) that the H&B Use "as improved" is not as it has been appraised?

Lee

 

[Mark to market]

How might that address the question as to "H&B Use as Improved?"

Lee

If they are two separate properties, most lenders out here would require that they be formally joined together before providing a loan. If they are not legally combined then putting them both in one loan would be what is known as a blanket mortgage. H&BU would be a mute issue as technically each piece could be a separate H&BU.

 

[Lee Lansford]

Lee

If they are two separate properties, most lenders out here would require that they be formally joined together before providing a loan. If they are not legally combined then putting them both in one loan would be what is known as a blanket mortgage. H&BU would be a mute issue as technically each piece could be a separate H&BU.

Yo comprendo.

My question was a bit rhetorical as the blanket mortgage is a matter for lending, while the issue of the 2 parcels is an appraisal issue.

 

[PropertyEconomics]

I personally see no issue with appraising both tracts in one appraisal. The assignment conditions call for both to be appraised, both lots have the same highest and best use ... one just happens to be developed to its highest and best use and one doesnt. Explain that.
As far as a discount for one lot having less value .. I dont know if thats true. Were the second lot to be offered for sale, which it can be becuase it is a seperately platted legal lot ... why would it? If your assignment is to consider them as one unit, their might be a value difference and you might could argue that if sold together the second lot would bring less because of various factors .. ie older homes in the neighborhood that no one would want to build a new house, if sold together their would be a bulk discount, etc..

Many are afraid of assignments like this but Ive never understood why. If its an assignment condition, do the report, explain everything, move on. Together they have a market value .. your assignment is to develop a report showing how much that value is supported by market comparisons.

And this is to no one in particular, but any lender that requires a homeowner to join their lots legally, when they have a separate lot that can be constructed upon ... it not only an idiot but they will quickly lose the property owner a tremendous amount of value. In this instance you have excess land ... joining them will result in surplus land that will have vastly less value ... and any appraiser that recommends a homeowner do such should not be an appraiser.
If the lender were to tell them to do it .. Id quickly find a new lender .. this one is an idiot. The collateral as two lots is vastly higher (I do know the market Mr Dino is appraising in) than that of two joined lots.

Lender requirement or not .. Id never recommend it nor would I be part of an appraisal after it was done. The liability of the homeowner one day finding out what they lost as a result of poor advice is great ... run Forrest run.

 

[PropertyEconomics]

My 2 cents is this. If you have 2 parcels which can stand alone and taxed seperately. The second parcel being buildable. You must appraise them seperately. What if this were a sale? Would the seller not want the market value for parcel #2. What if someone sells this as excess land and you appraised it as such. Think of the liability you have to the seller when he sues you. But I am not one of the big guns on here. 2 appraisals.

You can appraise them separately in ONE REPORT .... there is nothing keeping one from doing it in compliance with USPAP. Separate out the values, consider the value of them together .. and move on down the street. Its done all the time and done well.