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

[J Grant]

I've haven't been in the business as long as most on here but I understand HBU analysis. Your job is to value in HBU every single time, it's how you develop a credible value, in part by identifying exactly what's there and why...what's the most maximally productive scenario that is also legal, feasible. When the town is pretty much built out with minimal land listings, hard to ignore. But easy to completely n kurt understand if you're only filling in forms. All of this misinformation from a top poster just proves a sad point in that many folks are simply form filling number hitters. Not understanding your basic fundamental point of origin, HBU analysis. Instead it's a discussion about shoveling exactly what the borrower wants into a form to get a form into folder and get pens to paper at closing. Smh folks....when I talked to the latest agent about this basic theory she was vaguely familiar and agreed that with a seperate use which is highest and best only a misleading appraisal would value them together. I'm going to have my plumber run garden hose in the walls of my next house because it's cheaper....this is no different than this guidance. Forget basic industry code, just get r done.....

Wow. Accusing people you know zero about of form filling and number hitting, come back here after a 20 year career see if you last that long. Number hitting what? I spoke out against value pressure in the boom and was engaged after it to review hundred of inflated appraisals in field reviews.

The HBU of this thread has 2 components - the HBU of the total property , which is the HBU we analyze for the valuation of the subject . The subject in this case is a house on a lot and an adjacent vacant lot of excess land. The fact that the vacant lot can have its own HBU if sold separate does not mean it can not be included in a sale or appraised if sold with another property, and then the HBU of the two combined analyzed on its own merit.

Terrel commented on prior thread that appraising two properties sold together does not need 2 separate apparsials, as some here assert. There is no USPAP requirement for that.

 

[J Grant]

I'd like people , esp those challenging ,to answer this question with A or B: I will use one acre lot size for simplicity/assume 1 acre min zoning. This question pertains to the Fannie example >

Subject of appraisal assignment is to value a property consisting of a house on one acre along with the adjacent vacant one acre lot, which is determined to be excess land.

Is the subject property described above ;n

A) A house on a 2 acre lot? or B) a house on an acre lot along with adjacent vacant lot. ?

 

[J Grant]

There are 2 components of HBU on this type of appraisal - the HBU for assignment is the property we are appraising, said property consists of a house on a lot along with adjacent vacant lot. THAT is the HBU for the property we need to establish. If the improvement does not contribute to the sites , then HBU is not existing residential, same as if commerical or other zoning indicates a different use.

Assuming house (improvement) contributes more than if it were removed , what is the issue...some are freaking out because the vacant lot can have its own HBU if sold spearte. Fine, I agree with that...if it were my appraisal I'd provide an additional value opinion for the vacant lot. However, the fact that it can have its own HBU if sold separate does not mean the HBU of the houes and 2 sites is not able to be established, If sold as one transaction, the vacant lot HBU for the transaction is either interim or value in use, since the market /buyers/owner is holding the lot vacant for investment/other purpose, not putting it up for sale on the as of eff date. That is how I see it, ( assuming certain typical conditions) that is how fannie sees it , I assume a few appraisers at Fannie vetted the opinion. If anyone disagrees or thinks it creates an unacceptable assignment condition, then decline that type of assignment. If for any individual property or situation I felt it created an unacceptable assignment condition, I would decline it

Waiting for answers to my above post 132.

 

[djd09]

fannie is filled with contradictions and poor appraisal practices. no surprise here.

 

[glenn walker]

If I receive an-assignment to appraise a single family home that has two separate lots BUT the lender and owner have agreed to combine both parcels into one separate deed that can immediately changes the dynamics of my H & B use analyses because even if I value the separate adjacent lot as VACANT once its combined with the main parcel the value and economic and financial feasibility is usually going to diminish into nothing more than a house with one over-sized lot

I disagree with this. If the adjacent lot remains vacant, and it has a potential own HBU if sold, why would that change just because it is encumbered under one mortgage with the adjacent house and lot ?

I do not see Fannie saying they both have to be on one deed, rather they both have to be encumbered under one mortgage. The owner could still sell the vacant lot as a vacant lot, they would have to get a release from mortgage or payoff at that time..

The fact is today eff date, the current use of that vacant lot is interim value or value in use, since it is not being offered for sale today.

Today there is a house and an adjacent vacant lot. I fail to see how the adjacent lot vacant lot's value diminishes because it will be encumbered under one mortgage - what if the vacant lot were instead owned by partners in a portfolio of other properties? What difference does it make to a buyer ...the buyer is buying one lot and seller will settle their own mortgage/other obligations on sale.

WRONG OUR underwriters and TITLE INSURANCE COMPANIES will NOT insure a blanket mortgage unless both parcels have been included into ONE DEED - The lender has there escrow draw up a new deed including both parcels and the owner- borrower acknowledge that the Subject property is being encumbered by one LOAN. And the borrower also knows they cannot sell off the other parcel unless the LOAN is paid off because Fannie - Freddie-
FHA- VA rarely do partial releases of a portion of the property encumbered and it requires a new appraisal and owner drawing up a new deed taking parcel # 2 out. In my 35 years I have only seen this done one time and it was not on a Fannie-Freddie-FHA where the original loan was included in both the Deed and the security of the asset- I have been personally involved in some of these transactions and truth is -- When a separate parcel becomes a serious upside to sell or develop - YOU pay off the blanket loan and grab your money - In residential it's rare but in Commercial or Industrial you just usd cheap low interest money until the right time : )

 

[J Grant]

Waiting for people to answer my post 132

If a lender does or does not ask to combine on a deed that is a specific lender requirement, the fannie statement only references encumbered under one mortgage.

 

[J Grant]

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

 

[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.

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 ).

 

[J Grant]

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

 

[George Hatch]

Waiting for people to answer my post 132

If a lender does or does not ask to combine on a deed that is a specific lender requirement, the fannie statement only references encumbered under one mortgage.

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