Appraisal Multiple Lots

[Lee Lansford]

The sales contract is for subject house sold with with adjacent lot, and assignment from client is to provide a OMV for subject house together with adjacent lot ( and provide a second value opinion for the vacant lot . ) Therefore, the OMV on SCA should be for thee subject and vacant lot as one package $ amount, with any other value opinions as additional value opinions .

Either an appraiser believes they can develop an opinion for market value for subject and the vacant lot as a package, or not. If they feel they can not, then they should decline the assignment.

The overall HBU for assignment as a package sale is as improved, since the subject improvement contributes to value . The vacant lot as part of package has an interim use of hold for appreciation, which does not conflict with the package HBUt as improved. If subject were a wreck or a small cottage tear down it would be different, but that's not the case. . The fact that the adjacent lot has potential to be separated and if done would have its own HBU is disclosed , therefore assignment results are not misleading. . .

The vacant parcel is separated from the improved parcel. There is neither excess nor surplus land here. There is no appraisal "as a package"--where the one value is represented as Market Value--for a regulated lender where Fannie requirements are understood to be in place. The OP seems to be pretty clear that these are 2 distinct properties and the vacant parcel is ready to sell for development right now.

 

[Terrel L. Shields]

OP - "The vacant lot is adjacent to the improved lot."
I read it this way...

vacant parcel is separated from the improved parcel.

 

[J Grant]

The vacant parcel is separated from the improved parcel. There is neither excess nor surplus land here. There is no appraisal "as a package"--where the one value is represented as Market Value--for a regulated lender where Fannie requirements are understood to be in place. The OP seems to be pretty clear that these are 2 distinct properties and the vacant parcel is ready to sell for development right now.

FYI: Fannie Mae Multiple Parcel Requirements (Seller’s Guide B2-3-04):

• 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.

Op post I am appraising a property that is being sold with an additional lot. One lot is improved with a single-family residence and the other lot is vacant. The vacant lot is adjacent to the improved lot

 

[Lee Lansford]

OP - "The vacant lot is adjacent to the improved lot."
I read it this way...

By "separated" here, I mean that it is its own legal entity and has its own (separate from the improved parcel) H&B Use.

 

[Lee Lansford]

FYI: Fannie Mae Multiple Parcel Requirements (Seller’s Guide B2-3-04):

• 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.

Op post I am appraising a property that is being sold with an additional lot. One lot is improved with a single-family residence and the other lot is vacant. The vacant lot is adjacent to the improved lot

Understand, but...the vacant parcel has its own individual H&B Use. Fannie Mae is not going to purchase a mortgage of vacant land.

 

[J Grant]

Understand, but...the vacant parcel has its own individual H&B Use. Fannie Mae is not going to purchase a mortgage of vacant land.

But Fannie's policy is per above they will lend on an improvement with an adjacent vacant lot as part of the lien ( mortgage)

 

[Michigan CG]

But Fannie's policy is per above they will lend on an improvement with an adjacent vacant lot as part of the lien ( mortgage)

As long as it does not have its own Highest and Best Use. They WON"T lend on a property if the NO box is checked.

 

[Lee Lansford]

But Fannie's policy is per above they will lend on an improvement with an adjacent vacant lot as part of the lien ( mortgage)

Fannie--and all regulated lenders--also require that the collateral be appraised for Market Value. Yes, just because Fannie would so lend (as you describe here) in CERTAIN INSTANCES (e.g., the vacant parcel does not have a separate from the subject H&B Use does NOT mean that they would lend in the situation at hand.

 

[Terrel L. Shields]

mean that it is its own legal entity and has its own (separate from the improved parcel) H&B Use.

Both are residential with same zoning? legal use? utility? maximally productivity... ??

 

[Lee Lansford]

Both are residential with same zoning? legal use? utility? maximally productivity... ??

That seems to be what the OP is saying.

I have had situations in local neighborhoods where the adjacent (to the parcel that is improved) vacant parcel has a market value of $300K (for a 60' x 140' site) and an appraiser who tried to combine the two as though one in order to satisfy the lender (a regulated lender; Fannie rules; lender must have opinion of Market Value) request of 'Oh, can't you treat it as surplus land?" would be lucky not to lose his/her license or at the least have a published discipline against his/her license. No one is paying +$300K for my lawn to mow .