Appraising A House Without Land

[Darrel Clark]

I have been asked to give a value to a small house without the land. In doing this, am I obligated to follow USPAP? If so, what is the property interest being appraised?

 

[Michigan CG]

What is the intended use of the appraisal? Who is the intended user of the report?

 

[Meandering]

Is the land leased?

Here you can lease land from the state and build a house.

is the land owned by a party other than the homeowner?

How is title to the house and land being held? That will tell you how to address the rights you are appraising.

Right to occupy the building?

Right to rebuild the building?

Right to lease out the building?

Right to sell the building?

Rights of ingress and egress, water and sewer and other utilities

You need the legals for the property,

And DO NOT USE A Fannie Mae form.

.

 

[CANative]

Yes. You have to follow USPAP if you're doing this assignment in the role of appraiser. See SR 1-2(e)(v) and read FAQ 182 in the 2014 USPAP.

Answer MCG's question and that my help with figuring out the property interest.

 

[Darrel Clark]

The appraisal is to be used in settling an estate between family members. There are multiple buildings on one legal description – but that doesn’t matter. The owners want an approximate value for the house – no land included. I believe several of the family members put their labor and materials into constructing this little house and just want to know an approximate “as is” value, totally excluding the land. So, if this does not include land, it is not real estate. Must be personal property?

 

[Tim The Enchanter]

So, if this does not include land, it is not real estate. Must be personal property?

That was my thought.

 

[CANative]

Personal property? lol

 

[Meandering]

if this does not include land, it is not real estate. Must be personal property?

NO!

The house is attached to the land it is real estate by definition.

You are appraising the divided interest of the entire property, as this building only, separate, from the overall real estate.

Your subject property is house X described by the tax assessor's property record card, excluding land and the balance of the property.

Your value is most likely "value in use", or use value, as it most likely can not be sold without the land, and depending on construction may not be movable (note, there are some homes that do get moved) as a residence, assuming continued rights of ingress and egress over the land to the house,

 

[Terrel L. Shields]

Appraise it as Real estate - the land value is zeroed out for a purpose. The purpose is to estimate the contributory value of the building to the property. You are valuing part of an estate - the improvements. It is a partial interest. Use a cost approach. Use a sales approach. Adjust out the land value in your comps if you cannot find one that is on leased land or something similar. But if you do find one on leased land, you still have to value the impact of the leasehold as well. We have a lot of commercial property on RR land and the railroad charges a monthly lease fee for the land.

 

[George Hatch]

We do not appraise properties. We appraise property rights.

In the case you're describing the property rights that go with "just the house" may or may not even be marketable. Partial interest appraisals are a real niche specialty.