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

[Terrel L. Shields]

If you're buying both together you're going to pay less for each component.

Maybe... Lots are generally small enough that it might be hard to make the case for an marginal utility argument that a larger lot brings less. I've seen more than one person buy 2 lots to build only on one, but wants the extra buffer. In Bella Vista Village, they frequently pay retail for 2 lots only to use one lot to build and one to site a larger septic field on, rendering it a surplus lot. But it started out as excess.

 

[Carnivore]

The buyers and sellers for SFRs tend to be less sophisticated, but the underlying principles remain the same even if the actual reactions in a given market segment are more muted. If you're buying both together you're going to pay less for each component.

I get that GH. What is actually occurring here is the owner of the properties either does not want to combine both sites on one deed or maybe just maybe the Lender does not care as long as they get the loan. If you legally assemble the two then no problem. Cost is not very high on stuff like that. What the owner did by assemblage he later can de-assemble(sp) them at a relatively low cost.

 

[George Hatch]

"Maybe... Lots are generally small enough that it might be hard to make the case for an marginal utility argument that a larger lot brings less. I've seen more than one person buy 2 lots to build only on one, but wants the extra buffer. In Bella Vista Village, they frequently pay retail for 2 lots only to use one lot to build and one to site a larger septic field on, rendering it a surplus lot. But it started out as excess. "​

So are you suggesting that people will pay MORE for the 2nd lot because it's value as a buffer is higher than its value with a separate use?

All RE is local so I would never say never. I'm pretty sure it wouldn't work out that way in my region. I've seen lots of examples of SFR buyers buying 2 parcels for the one house - they often straddle the lot line but not always. What I don't see is those transactions selling at higher pricing than other assemblages purchased for individual development.


Well, I should take that back - I have seen industrial zoned assemblages selling for more than the values of their individual component pieces. You can't always find industrial tracts near highway access that's large enough to support a 400,000sf distribution warehouse - those parcels sometimes have to be "built". Same with some of the redevelopment activity occurring in the urban areas where they want to build a 50-story building.

 

[Carnivore]

Maybe... Lots are generally small enough that it might be hard to make the case for an marginal utility argument that a larger lot brings less. I've seen more than one person buy 2 lots to build only on one, but wants the extra buffer. In Bella Vista Village, they frequently pay retail for 2 lots only to use one lot to build and one to site a larger septic field on, rendering it a surplus lot. But it started out as excess.

Nope disagree with you. If it requires larger lot to build and have a septic tank then there must be a flaw in the HBU of the first lot.

OR like a mentioned in a earlier post, it was common WAY back in the day to buy a number of 10, 15, 25 ft frontage lots to accommodate a larger house that you can afford or a smaller house. Very common in Old cities in North Carolina.. But zoning was not what it is today.

 

[Carnivore]

"Maybe... Lots are generally small enough that it might be hard to make the case for an marginal utility argument that a larger lot brings less. I've seen more than one person buy 2 lots to build only on one, but wants the extra buffer. In Bella Vista Village, they frequently pay retail for 2 lots only to use one lot to build and one to site a larger septic field on, rendering it a surplus lot. But it started out as excess. "​

So are you suggesting that people will pay MORE for the 2nd lot because it's value as a buffer is higher than its value with a separate use?

All RE is local so I would never say never. I'm pretty sure it wouldn't work out that way in my region. I've seen lots of examples of SFR buyers buying 2 parcels for the one house - they often straddle the lot line but not always. What I don't see is those transactions selling at higher pricing than other assemblages purchased for individual development.


Well, I should take that back - I have seen industrial zoned assemblages selling for more than the values of their individual component pieces. You can't always find industrial tracts near highway access that's large enough to support a 400,000sf distribution warehouse - those parcels sometimes have to be "built". Same with some of the redevelopment activity occurring in the urban areas where they want to build a 50-story building.

I know your talking to me, but I wanted to respond to it anyway

Well i am not saying either way. I guess in Hollywood that might well be the reason for buying a buffer, and they might just well pay whatever it takes.

All Real Estate is Local

 

[J Grant]

I wonder how much the loan itself is a factor in the buyer pool and discount/or lack of one.

GH mentioned property flippers as a buyer for these - perhaps, but "real" property flippers tend to buy all cash , and that brings its own discount. This is a conventional loan, and one assumes an owner occupant loan at that...which means this buyer might have to offer more than a cash purchase flipper or investor to get the property, and also might be willing to pay more if their plan is live in house and hold the lot vs make a quick profit sale perspective of a flipper.

 

[Terrel L. Shields]

If it requires larger lot to build and have a septic tank then there must be a flaw in the HBU of the first lot.

Nope. Either lot is buildable but to put a larger home on the site, you have a complex septic system, or you can buy a lot next door and put a much cheaper system in it. And that is pretty much throughout the whole 22,000 lots + Now there are single lots you can build with plenty of room for the septic; and, unbuildable lots by deliberate design so that the VPs in the company can have free buffer zones around their own homes; there are hard to build lots, primarily steep lots; but every lot is buildable otherwise.

 

[Lee Lansford]

I get that GH. What is actually occurring here is the owner of the properties either does not want to combine both sites on one deed or maybe just maybe the Lender does not care as long as they get the loan. If you legally assemble the two then no problem. Cost is not very high on stuff like that. What the owner did by assemblage he later can de-assemble(sp) them at a relatively low cost.
[/Q

When the owner's actions are contrary to H&BU, what would the appraiser's analysis of H&BU look like?

 

[Carnivore]

bzzzzzzt I got to think about that a moment. Ya got me,

 

[Lee Lansford]

I understand that. For the purpose of valuation the way I have read commentary in this thread they are being "combined" and valued as a whole.

You understand the "double-speak" that is going on.