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

[George Hatch]

HBU...can actually be more than 1 single use. Period. There are interim uses. There are uses as is, or as if vacant. Two lots identical zoning. Both legally permissible. As is both are the most productive use, feasible use, ( no cheating with what could be in some scenario of future development) and maximally productive use of each lot. Their HBU is identical. NOTHING in the test of HBU says anything about the nature of the improvements. In my opinion the HBU is their current use. The fact one lot is improved and one is not is meaningless. The vacant lot is not impaired by not having improvements. The improved lot likewise is not so impaired that the value is less than the value "as if vacant."

So in the example Andrei has given, where I have identified vacant parcel sales data showing that there's another $100k in it for the seller if they sold the vacant lot off separately - in that example would you say the lower price is a reasonable expression of MV for that property in its market segment?

Andrei appraises these parcels at $440k and I appraise them at a total of $540k. Which of us has an unsupportable value conclusion? It ain't me because I have the apples-to-apples comps that support those values.

 

[Lee Lansford]

So in the example Andrei has given, where I have identified vacant parcel sales data showing that there's another $100k in it for the seller if they sold the vacant lot off separately - in that example would you say the lower price is a reasonable expression of MV for that property in its market segment?

Andrei appraises these parcels at $440k and I appraise them at a total of $540k. Which of us has an unsupportable value conclusion? It ain't me because I have the apples-to-apples comps that support those values.

But...but...you know what you're doing.

 

[Terrel L. Shields]

I have identified vacant parcel sales data showing that there's another $100k in it for the seller if they sold the vacant lot off separate

Left unsaid is if you have underestimated the impact upon the parent property. USPAP allows us to appraise multiple tracts. That does not mean you have to have a discount for having multiple parcels. One economic unit is that. Neither the deed nor APN must dictate the property be treated into individual parts. Summation may have to be considered, but you are attempting to value one economic property by summation, or I don't understand your argument.

 

[George Hatch]

Why would it be unsaid? How many times have we appraised existing SFRs that are located next to a vacant parcel, and how often have we EVER made an adjustment for that?

And to be clear, I am not valuing the property by summation. I don't know if the property will sell at the sum of the retail prices or at a higher or lower price (relative to another SFR on a single lot of similar size) as a result of the assemblage.

What I do know is that I have seen examples where the assemblage was worth more than it's parts (not extremely common), where it was worth the same as its parts (which in my experience is pretty rare) and where it was most commonly worth less than it's parts. And on that basis I always look before I leap to a conclusion.

 

[Eli]

Left unsaid is if you have underestimated the impact upon the parent property. USPAP allows us to appraise multiple tracts. That does not mean you have to have a discount for having multiple parcels. One economic unit is that. Neither the deed nor APN must dictate the property be treated into individual parts. Summation may have to be considered, but you are attempting to value one economic property by summation, or I don't understand your argument.

Don't waste your breath. Stereotypes don't work. Give me a 1,000 examples and I'll prove it. On the other hand, it would be hard to guess how many appraisals FNMA has accepted with varying degrees of application of recognized methods and applications of appraisal practice.

 

[Terrel L. Shields]

FNMA has accepted with varying degrees of application of recognized methods and applications of appraisal practice.

I am not worried about Fannie Mae's use of "recognized methods and applications", it's the ones they create out of whole cloth without regard to USPAP that concerns me. Not that I do FNMA work anymore, but I run into people who are convinced Fanniespeak trumps USPAP, and in some ways, I guess it does...that SOW thingy where they can create all sorts of issues, and to top it all off, their minions seem to delight in creating their own obstacles and asking for "corrections" after the report is submitted.

 

[Andrei Fin]

So in the example Andrei has given, where I have identified vacant parcel sales data showing that there's another $100k in it for the seller if they sold the vacant lot off separately - in that example would you say the lower price is a reasonable expression of MV for that property in its market segment?

Andrei appraises these parcels at $440k and I appraise them at a total of $540k. Which of us has an unsupportable value conclusion? It ain't me because I have the apples-to-apples comps that support those values.

Not only is your value NOT supported, but it is FORCEFULLY REFUTED by the market (actions of buyers and sellers) three times over. The fact that you cling to your overvaluation on the basis that HBU=MV, and the entirety of market participants are uninformed, is really pathetic at this point, especially since nobody ever asked you to value a vacant parcel.

 

[George Hatch]

The subject's prior sale refutes nothing because no one sale makes or breaks.

MV is not 1 seller + 1 buyer. That's realtor-speak, not appraiser-speak. I have *multiple* sales of each component which say otherwise. You need a pattern which will completely override the pattern
I've already identified. One sale by itself won't cut it.

Meanwhile and IRL, I've got 3 very different land appraisals to perform in the next week, none of which you are qualified to appraise. One is an assemblage and there will be a bulk sale valuation scenario, and the other two involve large tracts of unmapped land suitable for SFR subdivisions. Of course, I'll also be writing a detailed HBU analysis of each one of them, like I always do. So you just stick to your 1004s and I'll continue to do all the rest.

 

[Andrei Fin]

The subject's prior sale refutes nothing because no one sale makes or breaks.

MV is not 1 seller + 1 buyer. That's realtor-speak, not appraiser-speak. I have *multiple* sales of each component which say otherwise. You need a pattern which will completely override the pattern
I've already identified. One sale by itself won't cut it.

First, nobody ever asked you to value each component, you've failed to properly develop the scope of work.

Second, the components of the subject property are adjoining and sold with same effective date, which you have failed to prove with a single comp. You've failed to identify the characteristics of the subject property.

Third, it's not a one off. It's the owner since 1992, who sat on the vacant lot through red hot markets instead of selling off or developing it; he then sold to the buyers in 2016 who kept the lot for value in use until 2018; they then agreed to sell the home to me, who also planned to keep the vacant lot for value in use; but we backed out, and yet another buyer came along, and the second parcel is still just sitting there for value in use. You would think if hundreds of thousands of dollars were sitting on the table, then one of the many brokers or agents at least would have stepped in and bought the property. But no, everyone is a moron except for George in Carlsbad! Honestly this is such a stupid discussion that I am starting to think you're jerking my chain.

 

[George Hatch]

How is it a failure to develop a SOW when I have *included* everything you did (albeit more competently since I actually looked for house+extra sales) and then *added* the other valuation scenario you never even considered? I did everything you did, and then some.

Your subject's own sales history shows that the previous broker was more savvy about the potential than you are. If I were you I'd give some consideration how that occurred.