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

[George Hatch]

Analyzing for the effect on value, if any > not analyzing . I don't understand why anyone would consider this a controversial approach to appraising the property.

 

[Mr Rex]

I donno. They've managed to pretty much do that for 30 years.
The ideal improvement for a site is not a given for that site. HBU relates to here, now, today. Not what is ideal. And, at least in my neck of the woods, 99% of these lots sell (be it surplus or excess) with the houses whether 1 tax card, or 20; whether 1 deed or 2; and they sell for their value to the property. Value in use is a nothing burger. And the properties do not have to be appraised separately, nor treated in isolation from each other. And, the ideal comp is another house with a similar site size. The buyers here look at these as a part of the site and the idea of trying to arbitrage some value out of the lot never enters their mind...and that I surmise is largely because they figure a new house next to their old one is not a plus for their property value. If you borrow money on 2 lots, then later sell the vacant lot, the money goes to the lender and (likely) they make you reappraise and redo the loan. Not much incentive to sell unless your LTV is really low, since you see nothing of the proceeds.

But Terrel, you and I live in "Flyover" country, clinging to our guns and religion, and all the land we can afford...

 

[Terrel L. Shields]

all the land we can afford...

The meanest thing my daddy did was leave me a farm...thank goodness I had a brother to take half of it. Then we got dumb and bought more...and no one in the family knows what to do with it since we are all too busy to raise cows or till it...and we don't want a stinking greenfield subdivision in our backyards.

 

[glenn walker]

Uncle Billy says just check the freaking- yes box, and explain that until the goofy homeowner gets some money , that adjacent parcel will continue just sitting there for 30 years or until loan gets paid off . the appraiser drives- bye 20 years later and guess what . Homer & Marge are sitting on the front porch talking about the weather and how someday, they will build their dream home. Mean-while their two Millennial sons, use the surplus land to park and live in their 35 foot motor home, dreaming of the day they pay off their student loans, so they can build a real house on the lot.

 

[Lee Lansford]

Uncle Billy says just check the freaking- yes box, and explain that until the goofy homeowner gets some money , that adjacent parcel will continue just sitting there for 30 years or until loan gets paid off . the appraiser drives- bye 20 years later and guess what . Homer & Marge are sitting on the front porch talking about the weather and how someday, they will build their dream home. Mean-while their two Millennial sons, use the surplus land to park and live in their 35 foot motor home, dreaming of the day they pay off their student loans, so they can build a real house on the lot.

Fannie's recent pronouncement--a great error--treats each situation with a "one-size-fits-all" approach to the appraisal problem. Each situation, of course, is different. Thus, Fannie's great error when it comes to appraisal.

 

[Mr Rex]

Fannie's recent pronouncement--a great error--treats each situation with a "one-size-fits-all" approach to the appraisal problem. Each situation, of course, is different. Thus, Fannie's great error when it comes to appraisal.

As opposed to USPAP's one size fits all current gospel? If I had to pick which one made more common sense from the broadest view, its the fat chick and not the elite "intellectuals" declaring that the ideal is all that is allowed. Period. End of sentence. Off my lawn. We are smarter than the market. This is just how its always been done etc etc etc.

I was listening to sports talk radio yesterday and the host also happens to be a licensed attorney. He said that in his first year of Law School, it was hammered into them that "It's always been this way" is not a defense and the worst defense. Go figger...

 

[George Hatch]

As opposed to USPAP's one size fits all current gospel? If I had to pick which one made more common sense from the broadest view, its the fat chick and not the elite "intellectuals" declaring that the ideal is all that is allowed. Period. End of sentence. Off my lawn. We are smarter than the market. This is just how its always been done etc etc etc.

I was listening to sports talk radio yesterday and the host also happens to be a licensed attorney. He said that in his first year of Law School, it was hammered into them that "It's always been this way" is not a defense and the worst defense. Go figger...

How do you figure the SOWR to reflect a one-size-fits-all orthodoxy? Just because we refuse to endorse lying about what we're doing in an appraisal report? Aren't half of you guys bitching about the SOWR being too flexible to prevent appraisers from doing BF appraisal assignments? Intellectual consistency much?

Your defense of Fannie in this issue is the equivalent of endorsing the lie because it's Fannie that's asking you to do it.

HBU is 100% about observing and reporting the market. As opposed to completely ignoring the market on the basis of "fannie will accept". Conversely, Value in Use is about ignoring at least some aspects of the market, as opposed to keeping an open mind about the market and adhering to what's actually happening in the market. Both have their applications, but in the same breath it's dishonest and unethical to say one thing (MV) and do another (VIU). And its *especially" dishonest and unethical to do it to bias the results of the appraisal to favor the user - as in "being conservative to protect a lender". Lying to favor a lender isn't any more virtuous than lying to favor a borrower or loan originator.

IRL, if the assignment is about VIU then allow us to call it that. Truth in advertising - that's Fannie's remedy.

 

[Mr Rex]

Immediate, ideal... Any of those defined in USPAP? Has the OP offered any insight into "immediate"? I understand the strict interpretation of H&BU, but you and Lee as the head cheerleaders against the Fannie Mae announcement happen to live in areas where there is no gray area, its black and white, discrete, concrete etc. I don't know how much of the RE (land) in the US is not concentrated in similar areas but I'd guess its is over 75%. So yes, its one size fits all from the attitude you and Lee are espousing in this thread. How many times over the years have you or Lee suggested that RE is market specific? The definition of H&BU as is leaves a hell of a lot to be desired in over 75% of the RE in the US IMHO. It ain't Rocket Surgery but it damn sure ain't as easy as has been suggested, nor should the strictest definition as is dictate BS requirements over the entire US. They put blinders on race horses for a reason, does going through the USPAP instructor course require blinders from common sense and seeing how things exist in areas not in your immediate field of view?

 

[George Hatch]

I don't know why you're fixated on the likelihood or value of any future development - that isn't the question in an HBU analysis of a vacant parcel. Ever.

Have you ever appraised a vacant lot by itself? If so (And I'm assuming you have), on what basis did you value it? As some hypothetical use subject to completion, or as it sits in its "as is" condition? What comps did you use to value that parcel? Did you use finished homes or did you use other vacant parcels that were in the same condition as the subject as of their date of sale?


If the sales data exist in your market area to support the following conclusions:
Value of SFR on 7500 sf parcel = $380k
Value of SFR on 15000sf parcel = $430k
Value of vacant 7500sf parcel = $160k

Then which is worth more - in the market - as of the effective date"

$430k Value of SFR on 15000sf parcel

or
$380k Value of SFR on 7500sf parcel
$160k Value of vacant 7500sf parcel
$540k Value of the aggregate
less discount or premium for assemblage
$xxxk (to be determined after analysis)

 

[Mr Rex]

I'm not fixated on future development you and Lee are. H&BU as Lee suggests is IMMEDIATE. I love the irony of your use of Santora as your signature. GOD I wish he would pop back up, he would put the current baby back in the crib, but he was and in your current mindset would be excoriated as a heretic particularly because he chose his own H&BU with a GSE related entity job. Much like DW chose his H&U.