Appraisal Multiple Lots

[Terrel L. Shields]

vacant parcel has a market value of $300K (for a 60' x 140' site)

You could buy all the vacant lots in my town for that and have change left over.

 

[Lee Lansford]

You could buy all the vacant lots in my town for that and have change left over.

It is for reasons such as this--there is no "one size fits all" correct way to approach this--that the appraiser has to know what he/she is doing when considering this challenge. I have also experienced situations in neighborhoods in Chicago where a theoretically buildible vacant parcel has no value--it has no Market Value--other than to a neighbor who might pay a few bucks in to have more "green" space (always in danger of becoming a dump-site). It is a situation such as this where I would have no problem whatsoever in providing one opinion of value (as the H&B Use of the vacant parcel is as green space to the neighboring improved parcel).

 

[Lee Lansford]

There are two challenges in this assignment:
1. Valuing the property as requested. However, that challenge has been addressed. That challenge is an appraisal-development problem.
2. Reporting the value on the pre-printed form. I think the challenge here is how to report it on a pre-printed form that has with it a significant expectation that the market value identified at the bottom of page 2 is the value of a single site with its residential improvement.

It seems to me that the easy way to do that is to use the form's reporting options to report the expected components.

• The majority of the pre-printed form is going to be dedicated to valuing the site with house. I'd report this value at the bottom of page 2 because it is a value that needs to be reported and it is the value that is expected to be reported in that space (land + improvements, single-site).
  
• In the addendum, a separate valuation of the 2nd, vacant lot. I report this in the addendum.
• In the addendum, the bulk value is analyzed. This is what the transaction represents; a SFR and a separate lot, being sold together. I report this in the addendum.

I don't have a problem in the section above the value indication on pre-printed page two of summarizing the values. But I'd elect to report the SFR on the line-indication.

The lender has everything they need and everything is USPAP compliant.
No one can misunderstand what has been done because it is all explained in the report.

If we didn't have a form that had a specific expectation for its use, then we wouldn't be worrying about it. We do. We want to be sure that we don't unintentionally confuse anyone. So, report what's expected in the sections where it is expected and supplement the reporting of what's not expected in the addendum. A few sentences in this section...

View attachment 35950

... adequately communicates what the story is for the value at the bottom of page 2. The rest of the report needs to adequately explain in detail what the valuation and reporting process is.

I'm sure there is more than one way to skin this cat. But that's how I would do it (and I'd advise my client that's how I'm doing it).

Good luck!

For those of you who are struggling with this--look at what Denis did to solve the problem! Again, the vacant parcel adjoining the improved parcel has its own H&B Use and the market considers each parcel individually. Give a Gold Star to Denis!

 

[J Grant]

• For those of you who are struggling with this--look at what Denis did to solve the problem! Again, the vacant parcel adjoining the improved parcel has its own H&B Use and the market considers each parcel individually. Give a Gold Star to Denis!

With respect to you and Denis, he did provide an opinion of market value for the bulk purchase ( $350,000 as he stated it in his exhibit) . He decided to put the OMV of bulk ourchase in comments on bottom of SC page and in addendum, but he still developed a market value opinion for it.

D-"In the addendum, the bulk value is analyzed. This is what the transaction represents; a SFR and a separate lot, being sold together. I report this in the addendum."

Since he did develop a OMV for the house as improved and the adjacent lot sold together as a bulk /package , why not put it on bottom of SC page since that fulfills the assignment from client, and report the other 2 value opinions on the addendum?..

 

[Lee Lansford]

delete

 

[Lee Lansford]

Denis, in his post #52, did provide 3 opinions of value...all clearly noted. Notice that he did NOT "lump" together the vacant parcel + improved parcel and pretend that they were one in order to offer one opinion of value.

 

[Lee Lansford]

With respect to you and Denis, he did provide an opinion of market value for the bulk purchase ( $350,000 as he stated it in his exhibit) . He decided to put the OMV of bulk ourchase in comments on bottom of SC page and in addendum, but he still developed a market value opinion for it.

D-"In the addendum, the bulk value is analyzed. This is what the transaction represents; a SFR and a separate lot, being sold together. I report this in the addendum."

Since he did develop a OMV for the house as improved and the adjacent lot sold together as a bulk /package , why not put it on bottom of SC page since that fulfills the assignment from client, and report the other 2 value opinions on the addendum?..

Denis did NOT confuse the Bulk Transfer with being the same thing as lumping-together the two as though one and calling it "Market Value"...big difference.

 

[J Grant]

Denis did NOT confuse the Bulk Transfer with being the same thing as lumping-together the two as though one and calling it "Market Value"...big difference.

But he DID provide an opinion of market value for the Bulk Transfer...in his post attachment 13582, "Market value of the two properties combined ( bulk value ) $350,000"

The additional 2 value opinions are not the issue. .

 

[Terrel L. Shields]

As far as I am concerned, the lots are likely equal and "as if vacant and available for its highest and best use" have identical HBUs. As improved, obviously one has an "as is" value different from the other but the lots and their values remains just that, a lot and both lots are residential and almost certainly of equal value. Since the vac lot has historically been used as a part of a larger parcel, is sold as a unitary holding, and appraised as such, then it is one property. That's my story and I'm sticking to it until someone can prove to me that having two lots for one property in that market isn't common, is in fact, rare, and readily divisible under local law. Having to survey, and get approvals to sell off that lot is not "as is" but "subject to."

 

[J Grant]

The question for the bulk property, is the overall HBU as improved? Imo it is, since the improvement adds value to both lots, and both lots are encumbered by one mortgage lien... even though the second lot (if split and sold alone ) could have its own HBU...as part of the package, the HBU for the whole is as improved.... unless support is shown the house contributes so little value it is better off demolished -( which is not the case for the example ).