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Appraising 2 separate parcels included in the same contract

jturner01

Thread Starter
Junior Member
Joined
May 13, 2008
Professional Status
Certified Residential Appraiser
State
Florida
Sorry, I have not completed one like this (not sure I have ever gotten one like this), but have a one acre home that has been placed under contract and within the contract it included the lot next door. Is this a situation in which I disclose what I did (lot size, etc) or is this 2 separate assignments?

Thanks for the help!
 

Mark K

Senior Member
Joined
Jan 27, 2004
Professional Status
Certified Residential Appraiser
State
Indiana
First, determine the H&BU. If the second lot is buildable and there's a market for it, it should be valued separately. You should contact your client to see how they want it handled if separate. You can do two appraisals in one report if acceptable to the client.
 

Andrei Fin

Junior Member
Joined
Aug 30, 2017
Professional Status
Certified Residential Appraiser
State
California
Fannie Selling Guide is as follows, but also check with client first.

Multiple Parcels Requirements

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.
 

Michigan CG

Moderator
Staff member
Moderator
Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
What is the Highest and Best Use of the second parcel?
 

jturner01

Thread Starter
Junior Member
Joined
May 13, 2008
Professional Status
Certified Residential Appraiser
State
Florida
What is the Highest and Best Use of the second parcel?
Both are low density residential 1 acre of land per home-site. They both sit on a highly traveled road with some commercial properties located within 2 miles of the property, however as they are currently configured, a single family home is the only use.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
first of all what is the controlling regulations? FHA? Then 4000.1 applies. Fannie Mae? Then Fannie Mae Selling Guide applies. Or an inhouse loan which falls under IAG (USPAP compliance at a minimum). There is no issue including the second lot value in a bank report (IAG). There are guidelines in FHA. And @Andrei Fin laid those out above. And by "basic zoning" this doesn't mean they have to be exact but that land from both zoning designations should be selling for roughly the same.
 

jturner01

Thread Starter
Junior Member
Joined
May 13, 2008
Professional Status
Certified Residential Appraiser
State
Florida
Terrel, it is conventional.
 

Andrei Fin

Junior Member
Joined
Aug 30, 2017
Professional Status
Certified Residential Appraiser
State
California
Don't take this as gospel, but Fannie Mae has said that they'll accept HBU marked NO if it results from a second buildable parcel. I'm assuming they don't see much downside risk in this scenario.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Terrel, it is conventional.
Anything not FHA, FmHA, or VA, is "conventional". That doesn't tell me if it is a GSE or in house regulated bank. Not all loans, not all Mortgage loans, go thru Fannie or Freddy, and there is where the rules vary between the selling guide and the IAG.
 

Michigan CG

Moderator
Staff member
Moderator
Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
If the second parcel is worth more by itself than if combined with the improved parcel then we have a Highest and Best Use issue. No lender is going to lend when the Highest and Best Use BOX is checked NO for the two parcels being valued together.
 
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