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

[Andrei Fin]

And that's fine, both in the conclusion you have come to as well as the manner in which you have developed it. You have exposure and experience with these property types in this area, enough to have developed the informed opinion.

But if you lacked the exposure to one or more of these elements then you would have to take the steps to cover that. You wouldn't simply rely on a "fannie will accept" edict.

I liken this to Fannie's 6 month/1-mile guideline. I can't count how many times I've run across appraisals where the appraiser did like Andrei did earlier in this thread and ran a search off those maximum parameters and took the top 3 or 6 sale prices to present as their comps. But using those outer maximums as your default is not what a professional appraiser does. We work from closer to further; from more similar to less similar until we find enough comparables to do our thing. We don't get any more dissimilar to our subject than we absolutely have to in order to identify the prevailing trends.

Working from closer to further until you get good enough is not a smart move it's just laziness. You limited your search to an arbitrary 15% GLA, do you think buyers are limiting their search like that? GLA is not the major factor in the market; the factors are generally ranked in descending order of importance on the URAR (although it varies case by case) with GLA ranking medium and location ranking first. I can't tell you how many times an appraiser missed the best comp because it was outside of their GLA search yet was similar in more important ways. People who do this are usually following archaic Fannie Mae instructions that even Fannie has abandoned. A good comp search should begin with an overview of all homes sold in the competing market and then whittle away. If puzzle pieces are still missing then you can expand out or back.

 

[George Hatch]

LOL. Here's the cert the appraiser is signing:

7. I selected and used comparable sales that are locationally, physically, and functionally the most similar to the subject property.


That means that in order for your "lazy" characterization to fit, your comp selection has to be obviously more similar to the subject overall than mine. Which you are not going to be able to accomplish by using the less proximate and less similar comps just because their sale prices can be adjusted to a higher adjusted value indicator.

I always work from the inside-out; never from the outside-in. I also never search by price. That's why I'm seeing things you didn't see.


I already posted earlier in this thread the 5-yr sales analysis for the geographic area as well as the 5-yr sales analysis for my market segment. I'm looking at way more data than you're accustomed to looking at.

 

[Carnivore]

Interestingly right I have an assignment of a SFR improvement on a single SFR Legal Site It is Zoned R-25. I have already concluded the HBU is its present and Current Highest and Best Use as Improved. This subject only has one site. Imagine if this subject has not just one adjoining 2nd site , but several Similar Sites that are vacant. It could be another one on its other side, but possibly several directly behind the subject primary Site with Improvements. In Other words an Additional Five Extra Sites.

For discussion assume that this is the Case in this Thread! The owner wants to get a new mortgage on His House/Site and include all the other sites. You have the 1004 Assignment. Same exact Problem as the Title of the Thread Suggest. This one only aggravates the assignment and really illustrates the Problem in Spades. House and its Site, plus five additional and Equal Size Sites. In this specific assignment, land use is changing as the city grows. Assignments are always market Specific so everyones AO could be reallt different from mine.

This link is the Zoning for my Subject: http://arcgisserver.lincolncounty.org/ftp/Lincolnton_Zoning/R-25.pdf

This is the Subject: https://arcgisserver.lincolncounty.org/lincolntonzoning/ You may not get what I have, so in the search enter the Parcel number 23022

I think my Point is pretty Clear. You can't just off-offhandedly treat this like FNMA is suggesting.

 

[Econobot]

If--following, say, your evaluation and knowledge of the market--the buyer for each of the two individual parcels is not one who would buy the two together, how might there be a single opinion of MV? Again--if this what the market tells the appraiser although one person elects to go against the market.

Second, if it is merely a matter of appraising each parcel for its individual MV and adding the 2 together--Why do that? Why not instead provide the client with 2 opinions of MV (one for each parcel)? Why would the "MV" of two properties be the sum of the 2 (particularly when the market tells us that the buyer for one is not the buyer for the second)?

If...if the market tells the appraiser that that the vacant parcel's H&BU is to remain vacant and is only of value (as additional "green" space to a neighboring improved parcel, "explain, explain, explain" and include the vacant parcel as surplus in the MV of the improved parcel.

There is no "one-size fits all" answer to the problem...but, that is what Fannie's recent advice is to the appraiser. Hence, problem. Therefore, Fannie is working on a "reconsideration" of their recent advice. Stay tuned.

Agreed but it's still not surplus as it can be sold....the critical is explain explain explain document and so on. The user needs to see how and why you valued this set of property rights the way you did.

 

[Lee Lansford]

Interestingly right I have an assignment of a SFR improvement on a single SFR Legal Site It is Zoned R-25. I have already concluded the HBU is its present and Current Highest and Best Use as Improved. This subject only has one site. Imagine if this subject has not just one adjoining 2nd site , but several Similar Sites that are vacant. It could be another one on its other side, but possibly several directly behind the subject primary Site with Improvements. In Other words an Additional Five Extra Sites.

For discussion assume that this is the Case in this Thread! The owner wants to get a new mortgage on His House/Site and include all the other sites. You have the 1004 Assignment. Same exact Problem as the Title of the Thread Suggest. This one only aggravates the assignment and really illustrates the Problem in Spades. House and its Site, plus five additional and Equal Size Sites. In this specific assignment, land use is changing as the city grows. Assignments are always market Specific so everyones AO could be reallt different from mine.

This link is the Zoning for my Subject: http://arcgisserver.lincolncounty.org/ftp/Lincolnton_Zoning/R-25.pdf

This is the Subject: https://arcgisserver.lincolncounty.org/lincolntonzoning/ You may not get what I have, so in the search enter the Parcel number 23022

I think my Point is pretty Clear. You can't just off-offhandedly treat this like FNMA is suggesting.

That there are a few folks--appraisers who should know better--that don't grasp this concept is truly amazing.

But, there is good reason why it is that Fannie is to issue a "clarification" (retraction as in "faggit about it" would be better) regarding their recent bad advice.

 

[Lee Lansford]

There's nothing wrong with a lender asking for a value in use, nor in an appraiser providing a value in use when that's the request.

But doing one thing (value in use) and calling it another (market value as defined) is dishonest and unethical regardless of who the user is.

Some think that the definition of MV is whatever they want it to be.

 

[Lee Lansford]

Agreed but it's still not surplus as it can be sold....the critical is explain explain explain document and so on. The user needs to see how and why you valued this set of property rights the way you did.

Actually an adjacent vacant parcel (having a H&BU separate from the SFR improved parcel) is neither surplus or excess to the adjacent SFR improved parcel where the SFR improved parcel is compliant (without the vacant parcel) with law and the market.

 

[nstanbru]

eally? I almost never see listings where the sale of one is contingent on the other. IF that is true, then it is , but how many listings cite that vs listings where it does not? You are making a rote decision nationwide for how sellers behave with these properties

Maybe it's area specific, but I see them very frequently. Some listings have statements similar to what George posted. Others are even more stringent such as a listing comment "must be sold together...", which I see very often.

 

[gregb]

Former Copley estate bought by Doug Manchester is back on the market

For decades, a 32-acre La Jolla hilltop estate was the home of Copley Publishing head James Copley and his wife, Helen, owners of The San Diego Union and Tribune newspapers. Their son and heir, David Copley, took up residence after they…

www.sandiegouniontribune.com

"But a new chapter in the “Foxhill” estate diary begins this month as it was re-listed for sale. The 8-acre main home and guest house, located at 7007 Country Club Drive, carries an asking price of $25 million. (Manchester purchased it for $17 million.) The adjacent 24 acres (with two developable lots, of 4 acres and 1.5 acres, respectively) are offered separately for $12 million. A third listing proposes the entire 32-acre estate for $37 million."

 

[Eli]

I have seen lots where the H&B use is only to be sold with house. You can't give them away. I have seen houses and 2 lots where you couldn't give them away. It cost more to demolish the house than the vacant sites are worth. In that scenario, the H&B use is to hold the property most times. A mentor of mine taught me that a long time ago. Sometimes, the highest and best use of a property is to hold it. That is just one scenario where the highest and best use might be to hold the property. But it is an example. A totally opposite scenario could be true like in situation where change is occurring.

Again, they are throwing H&B use out the window with a "use value" definition. Exposure time not required either with "use value"