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

[alebrewer]

To those engaged in thoughtful discussion about this issue - sorry for running out of steam trying to read through the BS on the thread, but I think I'm hearing fair consensus that, if a property has excess land (either land that can be, or already is separated and can be sold off separately), H&B would be to do just that, so we shouldn't include the value of that lot in an MV estimate of value. Is that right? What about the scenario where there are two separate parcels, but the determination is that one parcel is simply surplus land (let's say due to it being landlocked), and that the combined size of the two parcels is typical for that market. Heck - it might not even be surplus - it might have significant value. In that case, you could provide an MV estimate of value including both parcels, correct? The agencies will allow encumbering two (or more) parcels under one loan...

 

[Lee Lansford]

"H&BU analysis...H&BU analysis...H&BU analysis..." repeat after me. If the H&BU an an adjacent vacant parcel is as additional "green" space for the improved parcel, well, that's that. If the H&BU of the vacant parcel is for immediate development, no, the two are not combined as though one. Now, if you ask (don't!) one person following this thread what's the proper approach, you will receive an incorrect "one size fits all" response.

 

[J Grant]

Jgrant

Your making me pull from my Army Instructor Pilot days....

I used to do this for Students pilots AND even operational pilots when they struggled with a Particular Aerodynamic (which can be very complex).

Small visual error on example three, house is sitting equally on center line

One and two are the subject assignment ( not three, it is not surplus land ) . Putting a vacant dividable lot on to a deed of a house does not change the fact that the HBU of a vacant lot can be sell for building (if feasible, etc to do so )

In your example one, you called the vacant lot Ready for development. Here it sits, ready for development - but how long has it sat there , how many decades? IF HBU on TODAY's eff date was sell it, why isn't it for sale or in contract? Since it is not, and often a number of vacant lots often sit there for years, an interim value in use is applicable to those lots - owners are holding them vacant, waiting to build on them or sell them at a more optimum time. Again, see post 138, the dictionary of RE says market value ( $ amount ) can be same for value in use and HBU .

 

[J Grant]

"H&BU analysis...H&BU analysis...H&BU analysis..." repeat after me. If the H&BU an an adjacent vacant parcel is as additional "green" space for the improved parcel, well, that's that. If the H&BU of the vacant parcel is for immediate development, no, the two are not combined as though one. Now, if you ask (don't!) one person following this thread what's the proper approach, you will receive an incorrect "one size fits all" response.

Please read my posts for what I actually said, I never said the two are combined as one. The adjacent lot, as of eff date, is an adjacent lot that can be sold. IT remains so for its HBU /value in use analysis, and then the appraiser needs to do a HBU for the property being appraised, consisting of a house/improvement on its site and the adjacent vacant excess lot.

Which is why I asked the question in post 132,

 

[alebrewer]

"H&BU analysis...H&BU analysis...H&BU analysis..." repeat after me.

Not sure who what was directed at? Repeating H&BU analysis doesn't really answer the question, Lee?

 

[J Grant]

To those engaged in thoughtful discussion about this issue - sorry for running out of steam trying to read through the BS on the thread, but I think I'm hearing fair consensus that, if a property has excess land (either land that can be, or already is separated and can be sold off separately), H&B would be to do just that, so we shouldn't include the value of that lot in an MV estimate of value. Is that right? What about the scenario where there are two separate parcels, but the determination is that one parcel is simply surplus land (let's say due to it being landlocked), and that the combined size of the two parcels is typical for that market. Heck - it might not even be surplus - it might have significant value. In that case, you could provide an MV estimate of value including both parcels, correct? The agencies will allow encumbering two (or more) parcels under one loan...

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.

read this and apply...the HBU value of a vacant May or may not be equal to the MV (in a $ amount. ) One would need to reconcile the HBU and value in use and explain it - some here refuse to believe it can be done.

 

[Mr Rex]

"H&BU analysis...H&BU analysis...H&BU analysis..." repeat after me. If the H&BU an an adjacent vacant parcel is as additional "green" space for the improved parcel, well, that's that. If the H&BU of the vacant parcel is for immediate development, no, the two are not combined as though one. Now, if you ask (don't!) one person following this thread what's the proper approach, you will receive an incorrect "one size fits all" response.

What constitutes "immediate"? Developers knocking on doors? What is the absorption rate relative to available inventory marketed for sale versus a subject with a separate lot not offered for sale? It is almost like the appraisal of the separate lot should be performed as a "taking" in some folks determination of the H&BU tests.

 

[Lee Lansford]

Please read my posts for what I actually said, I never said the two are combined as one. The adjacent lot, as of eff date, is an adjacent lot that can be sold. IT remains so for its HBU /value in use analysis, and then the appraiser needs to do a HBU for the property being appraised, consisting of a house/improvement on its site and the adjacent vacant excess lot.

Which is why I asked the question in post 132,

Nonsense.

Following your advice you would combine a conforming parcel with SFR improvements set upon a 60' x 150' in-town lot with the adjacent 80 acre parcel ready for development into a subdivision of 200 SFRs and offer one opinion of MV for the two due to the fact that the lender asked you to do so for a refinance appraisal for a loan that is headed to the secondary market.

I don't want to misrepresent, but, this is what you are asserting.

 

[Lee Lansford]

What constitutes "immediate"? Developers knocking on doors? What is the absorption rate relative to available inventory marketed for sale versus a subject with a separate lot not offered for sale? It is almost like the appraisal of the separate lot should be performed as a "taking" in some folks determination of the H&BU tests.

Either an appraiser is competent to do an H&BU analysis or not. If not, the appraiser should not be appraising.

 

[Mr Rex]

And some appraisers have a God like complex and should not be appraisers.