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

[Eli]

It will be addressed in the next USPAP update. If you are still teaching, I'll fly up just so I can see the expression on your face.

Fannie will be way ahead of them. However, USPAP will rule. Have to look at motivations from all angles.

 

[Eli]

Think about how many people have switched from private work as an independent contractor to an employee or agent of lenders. That's scary to me in many ways.

 

[Eli]

employee or agent? Think about it. It's like I hire a real estate agent and say I want you to take care of me. They will sometimes. They are obligated to. That don't mean they will take care of me.

 

[Eli]

Fannie is a different ball game. They are the buyer. They have the lender in their pocket.

 

[Eli]

GSE's are comparable to a dual real estate agent. They are both buyer and seller with taxpayer backing. The dual real estate agent don't have the taxpayer backing. A.M.C. 's are similar. Your different as an independent appraiser.

 

[Andrei Fin]

No it does not.

It literally says that the value of an assemblage may not be the same as the sum of its individual components. See my post #588.

"There was a discussion about this topic on the Appraiser's Forum and Denis Desaix MAI, SRA wrote the following:

Reporting two values (two appraisals) in a single report doesn't seem to be an issue as I see it.
The problem is adding the two values together to represent market value of the whole; it assumes there is no bulk discount.

If I am purchasing a house to live in and included in that sale is a separate lot, I'm likely not going to pay retail price for that 2nd lot. I'm going to discount it (especially if my intent is to sell it as soon as the deal closes; I'm going to consider my selling costs of the 2nd lot as well as any holding costs during the period)."

This is exactly what Fannie is saying. The market value of the subject assemblage is the value of the first parcel plus whatever the market will pay for the second parcel when it is sold along with the first.

 

[RCA]

62 posts so far. I honestly don't have time to read through them all. But base my answer on the first two pages of posts:

Some people buy extra land simply to put more distance between them and their neighbors. They may actually also put-up a big red sign on the gate leading to their home - which you likely can't see from the main road: "NO TRESPASSING. GUARD DOGS PRESENT. TRESPASS AT YOUR OWN RISK. [In scribbly handwritting below: TRESPASSERS WILL BE SHOT IF SEEN!!!]"

This is "In Use" value; as we MUST assume normal people don't exhibit or possess this kind of behavior. So, it cannot possibly be Market Value.

See these up in the Sierra foothills, Nevada County, Tuolumne County, etc... And people do get shot at up there.

 

[Lee Lansford]

...

This is exactly what Fannie is saying. The market value of the subject assemblage is the value of the first parcel plus whatever the market will pay for the second parcel when it is sold along with the first.

Yeah, but that is the error that Fannie has in their "one-size-fits-all" approach found in the recent newsletter (they have it right in the Selling Guide). Fannie is working on a "clarification" of the language in the recent newsletter--be on the watch.

 

[J Grant]

post 617: New definition of market value : "what NORMAL people do"...
"Anybody, whom appraisers deem to be not normal is no longer allowed to buy, sell, or own property! "That will be the big fannie reveal...

 

[George Hatch]

It literally says that the value of an assemblage may not be the same as the sum of its individual components. See my post #588.

"There was a discussion about this topic on the Appraiser's Forum and Denis Desaix MAI, SRA wrote the following:

Reporting two values (two appraisals) in a single report doesn't seem to be an issue as I see it.
The problem is adding the two values together to represent market value of the whole; it assumes there is no bulk discount.

If I am purchasing a house to live in and included in that sale is a separate lot, I'm likely not going to pay retail price for that 2nd lot. I'm going to discount it (especially if my intent is to sell it as soon as the deal closes; I'm going to consider my selling costs of the 2nd lot as well as any holding costs during the period)."

This is exactly what Fannie is saying. The market value of the subject assemblage is the value of the first parcel plus whatever the market will pay for the second parcel when it is sold along with the first.

It also says the value may be higher or lower.

The problem I have with Fannie's approach is they're not advocating that the appraiser actually research/analyze the various possibilities before coming to the well-supported opinion; they're saying they will accept what basically amounts to an unconsidered assumption that the additional lot is nothing more than a lawn. Which has led people like you to assume - without even thinking to look at how it works in your area - that the 2nd lot on your subject was nothing more than a lawn even though it is apparently separately marketable and as a $150k+ value all by itself.

If you had done the analysis and come to a conclusion that was consistent with what you found then that would have been the all-pro thing to do. It's not the conclusion itself - in either direction - that poses the problem; it's the manner in which the appraiser came to that conclusion that can be the problem.

I really shouldn't even be framing this issue as being different depending on locale because it can be way more discreet than that. We have examples in this region of different market segments handling this type of issue with different reactions. That's why I *always* have to ask the question and can *never* just assume on autopilot which it's going to end up being.