A different spin on your basic "house and 5 acres".

[Mike Garrett RAA]

Repeat after me...."I can't make chicken soup out of chicken poop!".

I do not accept assignments for a five acre parcel when the recorded property is a 35 or 40 acre parcel even if there is a survey of five acres. Only took 15 responses in this thread to reach the conclusion withdrawing from the assignment was a wise thing to do.

Can you appraise a house on 5 acres when the parcel is, say, 27 acres. Answer...Yes.

Would the appraisal be USPAP compliant? Answer ... Maybe

Would the appraisal be acceptable to the secondary market? Most likely not.

Why was it refinanced twice before? People don't read the report or know the whole story.

To the best of my knowledge...VA, FHA, Fannie Mae, Freddie Mac all will either purchase, guaranty, or insure a loan made on a property of more than 5 acres. It's the individual lender's lending policy that prohibits loaning on more than 5 acres.

 

[Terrel L. Shields]

Can you appraise a house on 5 acres when the parcel is, say, 27 acres. Answer...Yes.

Would the appraisal be USPAP compliant? Answer ... Maybe

Would the appraisal be acceptable to the secondary market? Most likely not.

Yes, you can appraise it but you have to note it being a portion of a larger parcel. No hypothetical involved. You have a survey (recorded or not). You should be able to write a USPAP compliant report...depends upon YOU not the property. Would secondary market (Fannie mae) take it?....so what if they won't? Not my problem.
Repeat after me.... I am not their underwriter. I am not their underwriter. I am not...

Looks to me like if you don't complete the report, vet it with the client, - you just got paid zero for the work you've done.

looks like i was right. You just got paid zip...someone else will do the report and it may or may not go secondary market.

 

[michaelmoran]

Subject: USPAP Q&A valuation of part of whole (Freq Asked Questions #114)

Per review of Frequently Asked Questions #114, please give comment.

Our Retail Line of Business’s Consumer Lending Center provides home equity loans originated thru our branches. Our policy does not accept residential properties in excess of 10 acres. They are ineligible collaterals with the exception below. Appraisers are confused on our valuation request. Fannie Mae has made addressed this area in their lending policies.

Can we receive two valuations (the whole and with only 10 acres) without violating USPAP in this case? How would this be reported within the appraisal? Would the 10 acre portion require a specific legal description?

Appraising the Entire Site of a Property (Announcement 08-30 Page 6 )

Selling Guide, Part XI, Section 404: Site Analysis
The property site should be of a size, shape, and topography that is generally conforming and acceptable in the market area. It also must have comparable utilities, street improvements, adequate vehicular access, and other amenities. Fannie Mae is clarifying that the appraisal must include the actual size of the site and not a hypothetical portion of the site. For example, the appraiser may not appraise only 5 acres of an unsubdivided 40-acre parcel. The appraised value must reflect the entire 40-acre parcel.

One of our vendor’s appraisers was audited recently and this issue was raised. The appraiser explained that it was done at the request of the lender, but the explanation did not satisfy the auditor. The appraiser was not fined, but did receive a warning letter about it. I need to assist our line of business need in this matter. Any help you can provide would be appreciated.

 

[William Rightsell]

Subject: USPAP Q&A valuation of part of whole (Freq Asked Questions #114)

Per review of Frequently Asked Questions #114, please give comment.

Our Retail Line of Business’s Consumer Lending Center provides home equity loans originated thru our branches. Our policy does not accept residential properties in excess of 10 acres. They are ineligible collaterals with the exception below. Appraisers are confused on our valuation request. Fannie Mae has made addressed this area in their lending policies.

Can we receive two valuations (the whole and with only 10 acres) without violating USPAP in this case? How would this be reported within the appraisal? Would the 10 acre portion require a specific legal description?

Appraising the Entire Site of a Property (Announcement 08-30 Page 6 )

Selling Guide, Part XI, Section 404: Site Analysis
The property site should be of a size, shape, and topography that is generally conforming and acceptable in the market area. It also must have comparable utilities, street improvements, adequate vehicular access, and other amenities. Fannie Mae is clarifying that the appraisal must include the actual size of the site and not a hypothetical portion of the site. For example, the appraiser may not appraise only 5 acres of an unsubdivided 40-acre parcel. The appraised value must reflect the entire 40-acre parcel.

One of our vendor’s appraisers was audited recently and this issue was raised. The appraiser explained that it was done at the request of the lender, but the explanation did not satisfy the auditor. The appraiser was not fined, but did receive a warning letter about it. I need to assist our line of business need in this matter. Any help you can provide would be appreciated.

It is not a violation of USPAP to appraise just 10 acres of a larger tract...its FNMA that doesnt want it done that way. An appraiser can appraise 10 acres if they invoke a HC/EA...assuming its credible and reasonable to do so. And assuming the report is not destined for FNMA. And yes, the 10 acres would require a specific legal description in order to meet the requirement for identification of the subject property in that report.

As for reporting....that could be one report...or two reports. No reason both values cannot be opined in one report....although if it were me I wouldnt do it on a form...I'd do a narrative.

If a parcel is over 10 acres that leaves you (as a lender I assume by the policy stated) in between a rock and a hard place. It cant go FNMA with less than the whole included...and if you wont house it, then you have to reject it per your policy of no collateral over 10 acres.

Just my .02...

todd

 

[Bamba]

I don't want to open a new thread since subjects are somehow related...house on 5 acres...but with a twist...

"For properties with a parcel size greater than 5 acres, the following guideline will be used:

The first 5 acres will be considered for the primary site; half of the remaining acres should be valued as excess land and included in the appraised value; remaining acreage will be commented in the addendum (in the lines that it has zzz value but at the request of the lender the value is not included in final appraised value)"

Anybody ran into this?

 

[timd354]

I don't want to open a new thread since subjects are somehow related...house on 5 acres...but with a twist...

"For properties with a parcel size greater than 5 acres, the following guideline will be used:

The first 5 acres will be considered for the primary site; half of the remaining acres should be valued as excess land and included in the appraised value; remaining acreage will be commented in the addendum (in the lines that it has zzz value but at the request of the lender the value is not included in final appraised value)"

Anybody ran into this?

I have never run into that one, but it is clearly an unacceptable assignment condition and I would turn down any assignment with this condition.

 

[Mike Garrett RAA]

Ok, my turn. IN MY STATE, a 35 or 40 acre parcel cannot be subdivided down to a smaller parcel without complying with subdivision regulations. In most cases it is not practical, cost efficient, or even physically possible.

Sure an appraiser can appraise a segment but would that be misleading to the intended user? I think so. Back to the famous ... "it is what it is". Appraise it that way and stay out of trouble!

 

[narizona]

Ok, my turn. IN MY STATE, a 35 or 40 acre parcel cannot be subdivided down to a smaller parcel without complying with subdivision regulations. In most cases it is not practical, cost efficient, or even physically possible.

Sure an appraiser can appraise a segment but would that be misleading to the intended user? I think so. Back to the famous ... "it is what it is". Appraise it that way and stay out of trouble!

amend brother, i had the same condition but in reverse. lender wanted me to include an one acre parcel next to another with the mh on one acre owned by the same person. i told him that this would be two appraisals. one with the mh on it and the other just land/parcel. and if they didn't like that i told them go to the assessors create a plottage, then if its within zoning, i can do it as one property. will they didn't like that. thay said this is a assignment condition, and they do that all of the time in georgia. i told him that i can do the report but then it would be a hc report that homer (the owner) will creta a plottage, and nobody would buy the loan , from them. he again told me that they do that all of the time in georgia. i told him if i did the report as they wanted it, i'll not do it. he ask why not again. i then said to him, "it is what it is" and told him look lets say you loan homer the money on these properties. then lets say homer sells off the other one acre parcel, then lets say homer goes into foreclouser. guess who they'll go after. "o" mr. appraiser why did you mislead us on your report that this wasn't two separte reports? and your answere is. thats how they wanted it to do the deal. he then told me they find somebody else. i said fine have a good day.
sorry about any spelling was up late.

 

[Terrel L. Shields]

the appraiser may not appraise only 5 acres of an unsubdivided 40-acre parcel. The appraised value must reflect the entire 40-acre parcel.

Please note. If you have a SUBDIVIDED parcel, legally done so, then there is not a single 40 acre parcel. There are 2 parcels. Appraise only an identifiable parcel and you are totally complying with Fannie mae. The fact the owner has adjacent property is not an issue, even if the adjacent parcel by its nature affects the value. So if you have 80 acres and legally subdivide it into 5 acres and 75 acres. The 75 being a poultry farm and the 5 acres being a dwelling, then appraise the 5 acre tract as a perfectly legal 5 acre parcel. The fact the chicken farm may affect the value only means you address that issue. You have no obligation to address even the ownership of the other parcel unless the two parcels are sharing a well or driveway.

 

[Stone]

Please note. If you have a SUBDIVIDED parcel, legally done so, then there is not a single 40 acre parcel. There are 2 parcels. Appraise only an identifiable parcel and you are totally complying with Fannie mae. The fact the owner has adjacent property is not an issue, even if the adjacent parcel by its nature affects the value. So if you have 80 acres and legally subdivide it into 5 acres and 75 acres. The 75 being a poultry farm and the 5 acres being a dwelling, then appraise the 5 acre tract as a perfectly legal 5 acre parcel. The fact the chicken farm may affect the value only means you address that issue. You have no obligation to address even the ownership of the other parcel unless the two parcels are sharing a well or driveway.

That is what I always understood.