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

[gregb]

HBU is relative to local market dynamics and existential realities that are largely immune from scrutiny of outsiders.

 

[J Grant]

LL-Where there are 2 parcels--each having its own MV and each with a H&BU separate from the other--the appraiser may certainly opine to Bulk Value or Value in Use when offering an opinion that does not incorporate H&BU.

LL., Curious where besides your view, does this edict come from? Where is the USPAP edict that an appraiser can not opine to market value for 2 parcels that transact together in one price?

 

[J Grant]

You need to get your facts straight.

When using the mortgage lending definition of MV you cannot get to the MV of a property outside of its HBU. What do you think the bolded assumption below means?


DEFINITION OF MARKET VALUE: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions* granted by anyone associated with the sale.


Meaning, buyer and seller know - among other things - what they're doing WRT the property attributes.

Andrei Finn was correct. USPAP says appraiser must develop an opinion of HBU, not that a property must be appraised to its HBU.
Though appraisers will appraise to HBU as an assignment condition or as peer practice indicates/ assignment results demand
.
The above bolded in the MV definition is not an assumption of HBU, it is an assumption parties are making well informed/advised transaction decisions . I bet , outside of RE professionals buying for themselves , the remainder of the vast market of well informed or well advised parties never heard of HBU .

 

[George Hatch]

Think, McFly

The assumption is part of the definition of MV. The content of the assumption is that the parties know what they're doing in this transaction - they know what the property is worth.

If we are to proceed under the assumption that most buyers and sellers of these properties are not well informed or well advised then how can we possibly get to "most probable price"? By assuming nobody knows what they're doing so therefore the market data is unreliable?

 

[Lee Lansford]

LL-Where there are 2 parcels--each having its own MV and each with a H&BU separate from the other--the appraiser may certainly opine to Bulk Value or Value in Use when offering an opinion that does not incorporate H&BU.

LL., Curious where besides your view, does this edict come from? Where is the USPAP edict that an appraiser can not opine to market value for 2 parcels that transact together in one price?

"Got H&BU analysis?"

Understand that incorporating H&BU is fundamental to MV?

Familiar with Standards Rule 1-3 (b)? It's not there as a nicety and then to be ignored.

Now...read carefully here: Of course 2 parcels--one improved, the second vacant and adjoining--may have a single market value because the H&BU (got that?) of the vacant parcel is as "green" space for the improved parcel. And, of course, the vacant parcel may be necessary to support the improved parcel (that is, the improved parcel alone might not satisfy zoning requirements or other requirements). But, this is not why we're here.

 

[Lee Lansford]

Andrei Finn was correct. USPAP says appraiser must develop an opinion of HBU, not that a property must be appraised to its HBU.
Though appraisers will appraise to HBU as an assignment condition or as peer practice indicates/ assignment results demand
.
The above bolded in the MV definition is not an assumption of HBU, it is an assumption parties are making well informed/advised transaction decisions . I bet , outside of RE professionals buying for themselves , the remainder of the vast market of well informed or well advised parties never heard of HBU .

Andrei Finn was correct. USPAP says appraiser must develop an opinion of HBU, not that a property must be appraised to its HBU.
Though appraisers will appraise to HBU as an assignment condition or as peer practice indicates/ assignment results demand
.
The above bolded in the MV definition is not an assumption of HBU, it is an assumption parties are making well informed/advised transaction decisions . I bet , outside of RE professionals buying for themselves , the remainder of the vast market of well informed or well advised parties never heard of HBU .

You certainly have no fear of plowing new ground and going where no one has previously gone.

 

[Lee Lansford]

Andrei Finn was correct. USPAP says appraiser must develop an opinion of HBU, not that a property must be appraised to its HBU.
Though appraisers will appraise to HBU as an assignment condition or as peer practice indicates/ assignment results demand
.
The above bolded in the MV definition is not an assumption of HBU, it is an assumption parties are making well informed/advised transaction decisions . I bet , outside of RE professionals buying for themselves , the remainder of the vast market of well informed or well advised parties never heard of HBU .

Wow. Once again--wow. Incredible.

To be a licensed appraiser as you are and not understand that H&BU is fundamental to market value is shocking. But, that's why this string goes on as it does.

Do a search of the internet with key words MARKET VALUE HIGHEST & BEST USE. Seriously.

This is not a debatable issue.

It is unbelievable--well, at this point I have to say that it is no surprise--that you continue to assert what you do on this issue.

You can certainly appraise without incorporating H&BU, but, don't even think of labeling the value opinion as Market Value.

 

[gregb]

You certainly have no fear of plowing new ground and going where no one has previously gone.

Who is the one taking on fannie with no fear plowing new ground where no one has previously gone?

 

[Lee Lansford]

Who is the one taking on fannie with no fear plowing new ground where no one has previously gone?

That would be a number of us folks.

 

[Andrei Fin]

When using the mortgage lending definition of MV you cannot get to the MV of a property outside of its HBU.

If this were true then why is there a check box for HBU YES/NO on page 1 of the URAR?

HBU has four tests, the text you bolded is not one of them. You yourself said that there are economic considerations beyond HBU. Yes, the appraiser must develop an opinion of HBU. Yes, HBU is fundamental to market value. Yes, in most cases Fannie Mae will not accept a property where HBU is NO. None of that matters to the task at hand.