Excess land with improvements

[Deleted member 142783]

Everything I read about excess land only addresses land (no mention of improvements). The definition appears to only include land…

Can excess land include improvements or even a full single family home?


Land that is not needed to serve or support the existing improvement. The highest and best use of the excess land may or may not be the same as the highest and best use of the improved parcel. Excess land may have the potential to be sold separately and is valued separately.

 

[Carnivore]

Everything I read about excess land only addresses land (no mention of improvements). The definition appears to only include land…

Can excess land include improvements or even a full single family home? Yes


Land that is not needed to serve or support the existing improvement. The highest and best use of the excess land may or may not be the same as the highest and best use of the improved parcel. Excess land may have the potential to be sold separately and is valued separately. True see below

Excess land has the potential to be sold separately and is valued separately”.

Surplus land is defined as “land that is not currently needed to support the existing use but cannot be separated from the property and sold off for another use.

Appraisal of a property with excess land can be challenging - by Steven Spangle : NEREJ

The commercial real estate media source.

nerej.com

These types of assignments can get complicated for a Licensed Residential Appraiser. So much so that you run the risk of getting sanctioned by your state if there is a potential to be commercial.


OK, are you asking the question for a current assignment? If so tell us more about your assignment.

 

[J Grant]

Everything I read about excess land only addresses land (no mention of improvements). The definition appears to only include land…

Can excess land include improvements or even a full single family home?


Land that is not needed to serve or support the existing improvement. The highest and best use of the excess land may or may not be the same as the highest and best use of the improved parcel. Excess land may have the potential to be sold separately and is valued separately.

If the excess lot of X acres has a house on it, and if the lot and house were severed, what would be the value of it? And then what would be the contributory value of the excess lot with a house it sold along with the primary lot and house? Those are the questions to be answered. An excess lot is an excess lot, and while many are vacant, some can have a barn or garage on it and in some cases, a house or guest house on it.

 

[Terrel L. Shields]

If valuing two houses on separate lots but with only one deed, then you have one ownership, and can value it as 2 separate stand alone properties assuming it is legally divisible (which it would have to be to be excess), or you could treat it as one property with a subordinate dwelling (ADU?) or simply value it as a two house property. It would depend upon what the client wants. I have occasionally run into a single property with a single deed that involves two houses. That is especially true on farms. A buyer will buy a farm with an old house, perhaps living in it while building a new larger home, then rent it out or hire a manager or farm hand and let them live there.

On our farm, there was 20 acres plus 3 acres with the house. A poultry barn (long out of use) was on the 20 and the property treated as 23. Behind that was 20 acres that my brother and I owned and in a land swap years ago, I let my brother have that 20, so it became 43 acres with 2 deeds. My nephew then tore down the chicken house and built a new home. To finance it in the secondary market, he had to get a new deed which meant he borrowed on the 40 to build the new house, and the 3 acres was separated (once again after 70 years) so that that dwelling was not on the note, and it was free and clear. He is currently remodeling it for his mother to move in as she has some health issues and lives in a distant town.

Again, the only reason for separating the 3 from the 43 was to allow the 40 and house to go into secondary market. Lending on 2 dwellings is problematic in the FNMA FHA world. So there are 3 taxable parcels. The two 20s are treated as one for the mortgage and the 3 acres is now a stand alone property on both the deed and the assessor's parcel. And the "back 20" is landlocked so is it "excess" or "surplus"?

 

[Deleted member 142783]

If valuing two houses on separate lots but with only one deed, then you have one ownership, and can value it as 2 separate stand alone properties assuming it is legally divisible (which it would have to be to be excess), or you could treat it as one property with a subordinate dwelling (ADU?) or simply value it as a two house property. It would depend upon what the client wants. I have occasionally run into a single property with a single deed that involves two houses. That is especially true on farms. A buyer will buy a farm with an old house, perhaps living in it while building a new larger home, then rent it out or hire a manager or farm hand and let them live there.

On our farm, there was 20 acres plus 3 acres with the house. A poultry barn (long out of use) was on the 20 and the property treated as 23. Behind that was 20 acres that my brother and I owned and in a land swap years ago, I let my brother have that 20, so it became 43 acres with 2 deeds. My nephew then tore down the chicken house and built a new home. To finance it in the secondary market, he had to get a new deed which meant he borrowed on the 40 to build the new house, and the 3 acres was separated (once again after 70 years) so that that dwelling was not on the note, and it was free and clear. He is currently remodeling it for his mother to move in as she has some health issues and lives in a distant town.

Again, the only reason for separating the 3 from the 43 was to allow the 40 and house to go into secondary market. Lending on 2 dwellings is problematic in the FNMA FHA world. So there are 3 taxable parcels. The two 20s are treated as one for the mortgage and the 3 acres is now a stand alone property on both the deed and the

Excess land has the potential to be sold separately and is valued separately”.

Surplus land is defined as “land that is not currently needed to support the existing use but cannot be separated from the property and sold off for another use.

Appraisal of a property with excess land can be challenging - by Steven Spangle : NEREJ

The commercial real estate media source.

nerej.com

These types of assignments can get complicated for a Licensed Residential Appraiser. So much so that you run the risk of getting sanctioned by your state if there is a potential to be commercial.


OK, are you asking the question for a current assignment? If so tell us more about your assignment.

License levels do not apply in CA for non FRT appraisals

 

[Deleted member 142783]

My assignment is for a higher end custom home. It is fairly common (happens a few times a year) where a large SFR is purchased and small portion of the lot is split off and sold months later.

It is rare for investors due to the high price range (very little flipping in the area).

About 50% of the vacant lots of similar size are at some point in the process of a split, but these are lots, not improved sites….

The sales of lots split from an improved property are sometimes sold and the main home is retained. Sometimes both the lot and main home/lot are sold at the same time. It is not highly common for owners to be splitting right before sale

 

[sputnam]

You are appraising property. Property is a bundle of rights. If you are a real property appraiser, then you are (usually) appraising a bundle of rights associated with a parcel of land and, improvements that are attached to that parcel. Of course, excess or suplus land can have improvements.