Appraiser

[Richard Carlsen]

Which 5 or 10?

Either the 5 or 10 acre parcel specified in the assignment by the client or lacking a specific parcel, as the appraiser defines the hypothetical parcel.

Since these are normally improved parcel appraisals, you would define the parcel as being that part that contains the improvements.

My practice has been that if no parcel is identified, I identify the hypothetical parcel as the one that contains the improvements and most proximates those parcels in the immediate neighborhood.

 

[Richard Carlsen]

I consider a client asking for the value of the house and 5 acres of a 40 acre parcel to be a reasonable analysis since houses on 5 acre or similar size parcels do in fact exist.

It is clear that a lender is a sophisticated user of appraisals and can be assumed to know what information he needs to make his lending determination.

 

[The Warrior Monk]

It is clear that a lender is a sophisticated user of appraisals and can be assumed to know what information he needs to make his lending determination.

It has been my experience that "lenders" that ask for something to be appraised aren't sophisticated, but rather uninformed. Any such request that comes by me is greeted with a quiz, since when the property being appraised does not match being mortgaged it is cause for concern. In 100% of the cases, it turned out the "lender" was wrong.

The appraiser's responsibility does not stop at the word of the person ordering the appraisal.

 

[Richard Carlsen]

David

I totally agree that lenders can be wrong and we need to check on them.

However, using the last 10 acre HC that I did (last winter I think it was), the lender was using a private investor who did not come under any of the rules and regs of the secondary market. I quizzed her closely, requiring her to confirm that the loan was not going to FNMA, Freddie or one of those markets. It was not. This investor had a 10 acre rule. So I did the appraisal on the house, the barns and 10 acres with full HC disclosure in about 3 places in the report. The loan was made and the mortgage was taken for the house on the actual 37 acre parcel. It was a perfectly legal transaction and the appraisal was written IAW USPAP. In this case, the client knew what she wanted and needed in order to make a lending determination and I was able to service the client.

 

[CANative]

Fannie/Freddie do not allow this type of appraisal. Wells, Chase, HSBC, and other major lenders have SPECIFIC instructions to appraise the entire lot when not too long ago they were instructing the appraiser to do "house and 5" type assignments.

If your "house and 5" appraisal is ever put under scrutiny, will credibility stand up against peers and the expectatios of appraisal report users?

 

[Richard Carlsen]

If your "house and 5" appraisal is ever put under scrutiny, will credibility stand up against peers and the expectations of appraisal report users?

I think so. As I stated, they are not done when either Supplemental Standards or regulatory rules prohibit them. Since they are not going to either place, there would normally not be any reason for them to be questioned since other loans within these investors portfolios would be similar. ( I do think it would be safe to assume that none of your reports, Greg would be found there).

Got to go now and meet my bride at the local watering hole for our Friday afternoon date for a small pizza, glass of wine and some locally brewed ale.

Everyone have a good one.

 

[Fred]

Appraisers learn to keep their noses out of other peoples business. When you start concerning yourself with things that are not part of the appraisal assignment, you tend to muddy the waters for the intended use of the report and you extend your liability into areas

As far as I know, not facilitating fraud by basing an appraisal on factual misrepresentations is more a part of the appraisal process than the approaches to value. That is why the authors of the USPAP put the Ethics and Competency Rules ahead of Std 1.

I love the “other peoples business” line. I appraise businesses. I also appraise commercial property, which means getting into the landlord’s business. To assess the collectibility of rents, I get into the tenant’s businesses. In appraising commercial property, I have to get into industry standards for quite a few industries to do residuals on how much they would be justified in paying to acquire a site to do business.

The reason bank employees are forced to get appraisals from supposedly "independent" and competent third parties is that is supposed to be an impediment to mortgage fraud. If an appraiser doesn’t know how the mortgage business works, and will drink whatever Kool-Aid the interested parties will hand them, then their appraisals are less than worthless. They will cause harm.

Over the years, I've done a lot of these

No doubt. The energetic and outcome driven people who work in loan production, have to know how to find the path of least resistance.

 

[The Warrior Monk]

David

This investor had a 10 acre rule. So I did the appraisal on the house, the barns and 10 acres with full HC disclosure in about 3 places in the report. The loan was made and the mortgage was taken for the house on the actual 37 acre parcel. It was a perfectly legal transaction and the appraisal was written IAW USPAP. In this case, the client knew what she wanted and needed in order to make a lending determination and I was able to service the client.

I'm confused...the lender is writing a mortgage on a parcel that exists, yet is having you appraise a property that doesn't exist nor is being mortgaged. Where is the appraisal for the property they are mortgaging?

Since they are not going to either place, there would normally not be any reason for them to be questioned since other loans within these investors portfolios would be similar.

It must be comforting to the investor/depositors knowing that their hard-earned money is being lended out with no appraisal on the property being mortgaged.

 

[Webbed Feet]

Look for comps with similar acreage and market appeal as the subject, and then allocate 10 hypothetical acres for each of the comps in the grid.

In the comment addendum, describe the actual acreages of all the properties, and the contributory value of the land that exceeds the 10 acre hypothetical.

That way, you've complied with the lender stip, but used the comps that best reflect the value of the actual acreage of the subject property.

:new_ukliam2: :new_eggface:

Fantastic! I needed a really good laugh!

Webbed.

 

[Wm. Hattaway]

Quote-Greg Boyd; It took me 4 days to hitch-hike from Saginaw.

Simon and Garfunckel, America