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

[glenn walker]

Worst part of this thread is owners and sellers and buyers rarely don't know if they have something that has a Higher or Better use but some appraiser shows up and overrides market action and buyer and seller motivation often believing he/she knows better than all the real market participant. Yep I took a H & B use course from speedy online USA but I have have never done a lot split, developed a parcel of unimproved land, have no idea what entitlements may have to be pre-paid to City or County but make lots and lots of hypothetical assumptions. Truth is there is no sidle answers to the Fannie Guideline except any additional adjoining lot must not be buildable, and essentially surplus, so how often would this situation change the H & B use annalists for the Subject ? Not too often unless you get lucky and a City or County wants to purchase it for a easement or to widen a road and you extort them through an-emmint domain proceeding and get the highest price possible "V " A fair market value, plus its a tax free sale .... BINGO -- Now that's a winner : )

 

[J Grant]

Worst part of this thread is owners and sellers and buyers rarely don't know if they have something that has a Higher or Better use but some appraiser shows up and overrides market action and buyer and seller motivation often believing he/she knows better than all the real market participant. Yep I took a H & B use course from speedy online USA but I have have never done a lot split, developed a parcel of unimproved land, have no idea what entitlements may have to be pre-paid to City or County but make lots and lots of hypothetical assumptions. Truth is there is no sidle answers to the Fannie Guideline except any additional adjoining lot must not be buildable, and essentially surplus, so how often would this situation change the H & B use annalists for the Subject ? Not too often unless you get lucky and a City or County wants to purchase it for a easement or to widen a road and you extort them through an-emmint domain proceeding and get the highest price possible "V " A fair market value, plus its a tax free sale .... BINGO -- Now that's a winner : )

The bold above is false..
Please post, again , the sections from fannie you did earlier. A lot DIVIDED from the subject improvement can not be build able lot however an adjoining lot can , since they did not state an adjoining lot must not be buildable )

 

[Lee Lansford]

Worst part of this thread is owners and sellers and buyers rarely don't know if they have something that has a Higher or Better use but some appraiser shows up and overrides market action and buyer and seller motivation often believing he/she knows better than all the real market participant. Yep I took a H & B use course from speedy online USA but I have have never done a lot split, developed a parcel of unimproved land, have no idea what entitlements may have to be pre-paid to City or County but make lots and lots of hypothetical assumptions. Truth is there is no sidle answers to the Fannie Guideline except any additional adjoining lot must not be buildable, and essentially surplus, so how often would this situation change the H & B use annalists for the Subject ? Not too often unless you get lucky and a City or County wants to purchase it for a easement or to widen a road and you extort them through an-emmint domain proceeding and get the highest price possible "V " A fair market value, plus its a tax free sale .... BINGO -- Now that's a winner : )

I see that you understand, BUT, unfortunately the words in Fannie's recent newsletter mucked it up by asserting that an additional parcel--EXCESS to the improved parcel--and one thus having a H&BU separate & distinct from the improved parcel could be "lumped-in" (value-wise) with the improved parcel for a single opinion of "value" (which the article actually described as "value in use").

Effort is being made to get this resolved.

 

[J Grant]

Here is a real life example. In 2018 I appraised a hypothetical (new construction) home. The owners bought two parcels so their kids cold have a big yard. The Highest and Best Use is CLEARLY for the second parcel to be developed with a single-family home.

The lender said they needed both parcels valued as one and I told them no. Had a long discussion with the Chief Appraiser and in the end he told me he had been doing this for 30 years and learned something new.

View attachment 42948

He learned your reasoning for saying now, however other appraisers could appraise the 2 as one , ask George Hatch and Greg B. (since you reject what I say- they both said it can be done in this thread with similar /fannie example )xample )

Where is the USPAP edict that 2 parcels must each have the same HBU in order for them to be appraised as one ? (there is none - if it exists, paste it here please . ) The combined parcel needs to have its own HBU opinion developed, the latter half of this thread has posts from competent appraisers talking about how that can be accomplished

 

[Lee Lansford]

He learned your reasoing for saying now, however other appraisers could appraise the 2 as one , ask George Hatch and Greg B. (since you reject what I say- they both said it can be done in this thread with similar /fannie example )xample )

Where is the USPAP edict that 2 parcels must each have the same HBU in order for them to be appraised as one ? (there is none - if it exists, paste it here please . ) The combined parcel needs to have its own HBU opinion developed, the latter half of this thread has posts from competent appraisers talking about how that can be accomplished

Yeah...but...those competent appraisers are not agreeing with you. Just so you know.

 

[J Grant]

Yeah...but...those competent appraiser are not agreeing with you. Just so you know.

They did, ask them.
The "agreement" is the combo of vacant site and house /improvement can be appraised under a single MV opinion and then how to go about it, covered extensively .

 

[Michigan CG]

The "agreement" is the combo of vacant site and house /improvement can be appraised under a single MV opinion and then how to go about it, covered extensively .

Sure it is possible ONLY if the vacant site is deemed to be surplus land or if H and B determines that improving the parcel would not be the highest and best use at this time.

 

[Eli]

If you spell it out, JGrant is right. Exposure time could be different but not if you explain they are to be sold "as if " one parcel. Once again "use value" vs "market value" is key. Exposure time is key. Hypothetical is key also. See, in some scenarios, the vacant lot could be worth more than the improved site. No way to stereotype it.

 

[George Hatch]

He learned your reasoning for saying now, however other appraisers could appraise the 2 as one , ask George Hatch and Greg B. (since you reject what I say- they both said it can be done in this thread with similar /fannie example )xample )

Where is the USPAP edict that 2 parcels must each have the same HBU in order for them to be appraised as one ? (there is none - if it exists, paste it here please . ) The combined parcel needs to have its own HBU opinion developed, the latter half of this thread has posts from competent appraisers talking about how that can be accomplished

It's not that they can or cannot be appraised as one. That isn't an argument anyone has made. It's that the vacant parcel can sometimes have a mv of its own to a completely different set of buyers who are using completely different comps for comparison, and simply treating that parcel as additional land area to the improved parcel doesn't always reflect its MV in the market.

If there are different values depending on the terms of sale then one will be higher and the other will be lower; and that lower cannot be considered the MV for those property rights.

This just goes back to the clarity of providing separate values and then if the client wants the value of the assemblage then add that in. The resistance to that suggestion is coming from appraisers who for whatever reason don't want to do the additional work.

 

[J Grant]

It's not that they can or cannot be appraised as one. That isn't an argument anyone has made. It's that the vacant parcel can sometimes have a mv of its own to a completely different set of buyers who are using completely different comps for comparison, and simply treating that parcel as additional land area to the improved parcel doesn't always reflect its MV in the market.

If there are different values depending on the terms of sale then one will be higher and the other will be lower; and that lower cannot be considered the MV for those property rights.

This just goes back to the clarity of providing separate values and then if the client wants the value of the assemblage then add that in. The resistance to that suggestion is coming from appraisers who for whatever reason don't want to do the additional work.

I always agreed with the additional work part , as well as a separate value for each , then one value for the whole...not an easy assignment but doable .

What indeed is "market value" for this combo is the question....(the other will be lower; and that lower cannot be considered the MV for those property rights)- since market value as defined is the most probable price ( not the highest most probable price ) why can not a "lower" price also be the market value in some cases ? Such as when the two are conveyed together sees a lower $ amount as the most probable price market returns for the lot component..

I know you enjoy debating theory as much as I do! The most probable price is not a rote average, it is whatever end of the range the market credibly supports. Sometimes the most probable is the lower, other times the middle , other times the higher price.