Bad advice from Fannie--"Multiple Parcels" from Dec. 2019 'Appraiser Update'

[J Grant]

What is there to answer? You included the answer in your question.

Lol some might not get that...want to hear it from them! Note how quiet they got...afraid to answer a simple question.

 

[Lee Lansford]

Waiting for anyone to answer post 132, a simple question choose A or B....(will check back in AM)

Value In Use Appraisal, Addressed | Elliott & Company Appraisers

Value in use appraisal differs from a market value appraisal in that it does not consider highest and best use, and follows the dynamic of Overholtzer case law.

www.elliottco.com

Value in Use: “The value of a property assuming a specific use, which may or may not be the property's Highest and Best Use, on the effective date of the appraisal. Value in Use may or may not be equal to Market Value, but is different conceptually”. (The Dictionary of Real Estate Appraisal, 6th Edition). The terms Value in Use and Use Value have the same meaning in the dictionary.

Above, value in use may (or may not) be equal to MV -so it is not a conflict in the valuation $ amount appraiser sees supported in market .(for the vacant adj lot ).

I hesitated to respond once again, but...

Through more than 140 posts now various appraisers have pointed out to you the proper way to consider H&BU issues specific to the matter presented in my post that opened this thread. Many times you have been advised as to the err in your approach. I suppose that we all have a blind spot in something in our lives and apparently this is yours.

 

[Lee Lansford]

Lol some might not get that...want to hear it from them! Note how quiet they got...afraid to answer a simple question.
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I think that you will find that the lack of further response to your posts here is summed up quite well in posts 128 & 129.

 

[J Grant]

I hesitated to respond once again, but...

Through more than 140 posts now various appraisers have pointed out to you the proper way to consider H&BU issues specific to the matter presented in my post that opened this thread. Many times you have been advised as to the err in your approach. I suppose that we all have a blind spot in something in our lives and apparently this is yours.

Nice way of avoiding answering the question@ I knew you guys would not answer it, because to answer it correctly negates your argument about the "proper" way to approach this- and not all appraisers agreed on what that was or even stated their opinion of exactly what that was.

 

[J Grant]

I think that you will find that the lack of further response to your posts here is summed up quite well in posts 128 & 129.

Those posts do not in fact offer anything but name calling , nothing about how those people would actually resolve this appraisal problem. That's okay, it speaks for itself that none of you would answer A r B to post 132, so much for proper solving of the problem, because answering that one question correctly is the key step of the appraisal (and HBU )

 

[J Grant]

If you read my posts for content, I opined a HBU of the lot as vacant and of the whole...more than many did here, all they did was name call or talk in platitudes about how developing HBU is critical etc... To their credit, leelandsford and Mich CG did offer their idea of HBU but their idea indicates their answer to my post 132 would be (B) , As if the two lots become one large lot ( they don't )

Per what I posted from the # 138 from Dictionary of RE appraisal and #139 the article on topic, the $ amount of MV and the $ amount of value in use can be the same ( which was my thought on it, mentioned earlier in one of my posts )

 

[Carnivore]

There are two issues with this situation and solutions that have to be addressed or considered.

the first issue is the FNMA Series 1004 is not designed to accommodate this situation

There are several ways to adapt that form to solve the problem at hand.

The problem is the report can not be AS-IS.

The problem is the report can not be AS-IS.

Even if you remove the improvements on Site A, it still does not solve the Problem with Site B.

You could produce a residential URAR 'subject to'! Combining the two sites Legally. You will still have excess land. at this point and the HBU would be its present use. In this situation there would be no problem completing this on a 1004. Determining the contributory value of the excess land would not be easy, but it can be done and the results in all probability will be less than the MV of the 2nd site as a stand alone sale.

Another way is to complete a second report within the URAR as a stand alone appraisal. That ain't gonna fly with them! because the two values ca not be combined and stated at the bottom of page two.

There is another problem that gets injected into valuation Problem. Intended Use of the Appraisal. With this situation of combined sites in excess of what is typical in a Specific Market creates an issue with Exposure Time. You'r potential buyer pool shrinks. The only way to sell the Property in a normal residential market is to lower the Price sufficiently enough to attract a larger set of potential buyers or be just willing to wait and wait and wait for that buyer who thinks like this seller did when they bought the place. Don't underestimate what I just said as it relates to mortgage lending. The intended USER.

George nailed it when he said this looks like a expediency by FNMA. In other words they have said if you dork it our way thats OK, we won't turn you into the State Appraisal Board! Your a team player and this saves us money and time by not going through the motions of combining the two LEGALLY! They know most AMC Phone Monkeys don't have a clue either. We also won't force a Buy Back on all the Lenders. WE BE one big Happy Family.

Lets continue: Is it financially feasible to buy a site that is excess in the Market for a SFR? The average typical buyer who intends to build would not likely do that.

Hope that makes a little more sense to you. If it doesn't well I am going to just sit back and say no more.

AFTERTHOUGHT: Be very careful here. I am not going to cite all the sections of USPAP; But take a look starting with the Ethics Rule. After that puts you in the right frame of mind, then there is something else in USPAP that goes directly to what we are discussing.

FTR, FNMA is stomping all over USPAP with that newsletter

 

[J Grant]

What you said makes sense, I understand your POV, I'll address it below. terming it a "sale" since the SCA in appraisal creates a hypothetical sale

You could produce a residential URAR 'subject to'! Combining the two sites Legally. You will still have excess land. at this point and the HBU would be its present use. In this situation there would be no problem completing this on a 1004. Determining the contributory value of the excess land would not be easy, but it can be done and the results in all probability will be less than the MV of the 2nd site as a stand alone sale.

The sale of the two properties does NOT combine the two sites into one! That is why I asked people to answer my post 132. question The subject property consists of a house along with an adjacent vacant site, conveyed i sale that way. It does not become a house on one big combined site.

Another way is to complete a second report within the URAR as a stand alone appraisal. That ain't gonna fly with them! because the two values ca not be combined and stated at the bottom of page two.

I would if my assignment provide a second market value opinion of the vacant site. Whether it's contributory value to the whole is same as its sep market value to be determined, it can be the same ( see post 138 , dictionary of RE, I posted it separate below ) What "rule" exist, in USPAP that the two values can not be combined and stated at the bottom of page two?

There is another problem that gets injected into valuation Problem. Intended Use of the Appraisal. With this situation of combined sites in excess of what is typical in a Specific Market creates an issue with Exposure Time. You'r potential buyer pool shrinks. The only way to sell the Property in a normal residential market is to lower the Price sufficiently enough to attract a larger set of potential buyers or be just willing to wait and wait and wait for that buyer who thinks like this seller did when they bought the place. Don't underestimate what I just said as it relates to mortgage lending. The intended USER.

Once again, it is not combined sites, it is a house and an adjacent vacant site. I agree, and stated in prior posts, it is a niche market, and would have a limited buyer pool. Many of us appraise niche market properties with limited buyer pools. They do not always sell for lower $ ( though they can). The typically motivated buyer is the buyer pool for a subject property. I appraise 20 $million oceanfront properties. They sell for high $, indeed have a a limited buyer pool, with a long marketing time-of avg 2 years plus. We address market exposure and explain the buyer pool for a niche property.

George nailed it when he said this looks like a expediency by FNMA. In other words they have said if you dork it our way thats OK, we won't turn you into the State Appraisal Board! Your a team player and this saves us money and time by not going through the motions of combining the two LEGALLY! They know most AMC Phone Monkeys don't have a clue either. We also won't force a Buy Back on all the Lenders. WE BE one big Happy Family.

It might be expediency on their part ,or a way to address the issue. But there is nothing "illegal" about selling a house along with an adjacent lot! And if a lender wants to lend on it, so what? If assigned it as an appraisal, it is a complex assignment-, accept or decline.

Lets continue: Is it financially feasible to buy a site that is excess in the Market for a SFR? The average typical buyer who intends to build would not likely do that.

Agree, the "average" buyer who wants to build might not buy such a property, (which makes it a niche property, like other oddball or special or- even very high $ properties become niche markets simply because their price tag excludes so many buyers. If you see adverse marketability for this property in your area, that is part of the appraisal analysis.. In other areas it can find buyers who see it as an opportunity.

 

[J Grant]

Value in Use: “The value of a property assuming a specific use, which may or may not be the property's Highest and Best Use, on the effective date of the appraisal. Value in Use may or may not be equal to Market Value, but is different conceptually”. (The Dictionary of Real Estate Appraisal, 6th Edition). The terms Value in Use and Use Value have the same meaning in the dictionary.

 

[J Grant]

Carnivore, I appreciate your post, we disagree on some aspects, do agree on some - you addressed the topic rather than resorting to insults- thanks !! (some never deal in insults of course )

I did notice you did not answer my question in # 132. Your post indicates you see this as one combined lot. Nobody in fact answered the question, George put it back as a riddle- I suspect his answers wold upset some so he avoided doing so. Answering that question (correctly) is the key to determining how to handle the appraisal .