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

[J Grant]

How to list a house and adjacent empty lot? (incentive, documentation, agent) - Real Estate -Brokers, appraisals, development, lease, investing, relocation, apartments, houses, condos, values, mortgages, loans... - City-Data Forum

What are the advantages and disadvantages to listing a house and second lot either together or separately? Here is the situation: I have a residential

www.city-data.com

Above from an owner of one of these properties considering listing - the listings I see on MLS are usually for a house with opportunity to buy the adjacent lot, and in land section on MLS the lot is listed with opportunity to buy the lot next door. The owner does not "have" to sell them together, thus if they do sell together to one buyer there is usually only a small discount .

 

[George Hatch]

"Sometimes"

 

[George Hatch]

We wouldn't be in this state if Fannie had to use an appraisal form that was designed by appraisers. If these guys had grown up considering and explaining their HBU conclusions on every assignment it wouldn't be like trying to learn Russian at the age of 80.

Fannie's appraisal policies do not operate in its own universe.

 

[Red Flint]

Market Value in Use is Not an Oxymoron - Counselors of Real Estate

In real estate appraisal, "Market Value in Use" assumes the property is sold in combination with other assets as a group. A special-purpose property will only bring its market value in use if it is sold together with other assets as part of a going concern.

www.cre.org

above relevant to the topic, by an MAI.

Here is the relevancy of the article:
A special-purpose property is, “A property with a unique physical design, special construction materials, or a layout that particularly
adapts its utility to the use for which it was built.” Schools, churches and clubhouses are commonly
thought of as special purpose properties, but the above definition is broad enough to potentially include even
retail, office or industrial properties that have design features specific to a particular tenant.

Actually a good read for those complicated subjects like car dealerships, golf courses, or hotels with considerations of use value and value in use.

 

[Lee Lansford]

This is a perfect example of not understanding the issue. It has never been about not being able to appraise what they want. It isnt hard to understand what they want. It isn’t even unreasonable what they want - it absolutely is. What doesn’t work is checking the box and saying it is market value no matter how much you want it to be that simple. Doing it within the confines of form world is the problem. You and Grant and others can pretend it is market value, but that doesn’t make it so. You can’t mix the two but call it one. You can absolutely value it, but checking the box isn’t accurate.

But, here’s the thing: as George has pointed out before, it is highly unlikely you’ll ever hear about it. Nobody who’s hiring you cares it isn’t right, and they’re hardly going to call you on doing what they asked. That’s why I’ve largely stayed out of this. But, it doesn’t take a super appraiser or USPAP god to understand the problem. It really isn’t that difficult. So carry on, just don’t pretend it is market value unless you have a new definition that allows for value in use as part of it.

This thread has been enlightening to me in illustrating how many people actually don’t spend time performing actual HBU analysis.

I once shared the following to a woman whose teenager--a rebellious sorts and not having done well in school--was on the upswing with a good attitude and best exemplified by how the teenager was now doing so well in school: "It's amazing how good the teacher is when the student is ready to learn!"

There you have it. Some are not ready to learn.

 

[J Grant]

Another lecture about how others need to learn - -if we removed the condescending lectures the thread would shrink by 2/3. If I was hogging the thread, apologies for that, but I was attempting to address the issues . In fairness Lee did address the issue -sometimes ) The path to look smart on this board is never offer an opinion how to solve the actual appraisal problem of a topic, instead make snide remarks.

Where is Stone's offering of how he would approach this appraisal?

 

[George Hatch]

Another lecture about how others need to learn - -if we removed the condescending lectures the thread would shrink by 2/3. If I was hogging the thread, apologies for that, but I was attempting to address the issues . In fairness Lee did address the issue -sometimes ) The path to look smart on this board is never offer an opinion how to solve the actual appraisal problem of a topic, instead make snide remarks.

Where is Stone's offering of how he would approach this appraisal?

The "problem" in this thread isn't that the appraisal situation is beyond anyone's grasp. The problem is that the same people who are arguing the advice to work the problem without resorting to the easy button are the same people who will mindlessly copy/paste someone else's solution if we just hand it to them. That's not an actual solution to the appraisal problem, it's a hack; and the person who takes that hack and uses it like a hack is not learning how to work their way through these problems.

The appraisal process is the only real solution. We are always going to run into new-to-me situations that need solving, and the only actual solution is to work the problem. I run into new-to-me situations, too; and I have to go back to the basics to solve those problems just the same as anyone else. That's why it is not snark when we tell you to analyze the market and develop the opinion prior to committing to an opinion.

The appraisal problem in question comes down to basically two alternative value conclusions:

What's the value of these parcels if sold separately in individual transactions, either to the same buyer or to different buyers?

What's the value of these parcels if sold together as a 2-parcel assemblage? Because the most comparable transaction for a 2-parcel assemblage would be a property with the same legal and physical attributes.

The shortcut of taking a single parcel SFR sale and simply applying a lot size adjustment without even looking to see what happens with 2-parcel assemblages is not responsive to the question of what the value of the assemblage is when compared to SFR on a single large lot.

 

[Stone]

Another lecture about how others need to learn - -if we removed the condescending lectures the thread would shrink by 2/3. If I was hogging the thread, apologies for that, but I was attempting to address the issues . In fairness Lee did address the issue -sometimes ) The path to look smart on this board is never offer an opinion how to solve the actual appraisal problem of a topic, instead make snide remarks.

Where is Stone's offering of how he would approach this appraisal?

It is Lee's thread - you realize that, right? People explained many times over why it was an issue and how they would approach it. You "hogged" it by just repeating variations of your same points over and over with more cries to have someone prove they were right (that happened from many people even if you don't believe it) and for people to prove it or state how they would do it (that also happened many times).

If you don't understand how I'd deal with it, that explains to me that you aren't paying any attention to what others are posting as most of us are on the same page.

If that doesn't meet your expectation of what I should post, my apologies. But, I have no desire to follow you down a thread further - I long ago stopped doing that here when someone is just playing the repeat themselves or move the goal post game.

 

[J Grant]

if you don't understand how I'd deal with it, that explains to me that you aren't paying any attention to what others are posting as most of us are on the same page.

Classic evasion ! you refuse to post how you would deal with it, then accuse me of not understanding how you would deal with it -Too funny.

Terell said it can be done with a single MV opinion, as did others - G Hatch said it could be appraised as one MV opinion ( sometimes ) and Can Native posted the similar from Denis email. (with complex nuances how (...What page are you on Stone - you refuse to answer again, really funny , since a non answer can not be criticized nor analyzed nor responded to .

Some here insist the assignment can not be done in one MV opinion and must be two separate appraisals. I understand their reasoning, but it is a decline assignment since the client needs a single MV opinion.

Everybody here recognizes it is a complex assignment, needs to be worked through the steps and that the excess land has it own separate HBU btw.

 

[Andrei Fin]

You can absolutely value it, but checking the box isn’t accurate.

Market value is the most probable price for the typical buyer/seller and it is baked in to the sales analysis. If a lender want to accept the HBU checked NO then who are you to argue?

You can absolutely value it, but checking the box isn’t accurate.

Which box? We've already agreed that HBU should be checked NO in most cases.