Excess or surplus land?

[J Grant]

Can't be excess when there are improvements - period. It is surplus to the property.

Is that in any appraisal texts?

Imo, if the improvement is a run-down barn worth little or a small garage, it can be excess- if the lot is worth 150k , the cost to remove an old barn or garage demolition is maybe 2k - if the improvement has a finished house then it is a lot with a house on it -which still can be sold separately, correct?

If it is a costly improvement that straddles both lot lines, then it would not be feasible to divide the sites. That is the only way IMO the excess lot becomes surplus. If the owner has built a 5000 SF hose that straddles both lot lines, for example.

 

[Terrel L. Shields]

FHA guy above said so and TAoRE (pg.212 10th ed.) says either vacant or the improvements have no value. Chances are the building has some value. On 294 the text explains that land for parking, playgrounds, (outbuildings?) are not excess. Only vacant land or where the contributing value for these improvements is zero.

 

[Mark K]

Can't be excess when there are improvements - period. It is surplus to the property.

I've never seen that in any definition of excess land. Are you claiming that having, for example, a detached garage on an adjoining, excess parcel now creates a surplus parcel? I'm doubtful.

In any event, if an appraiser is unable or unwilling to discern the difference between surplus and excess land, is willing to mislead his client, and affix his signature to the report, I honestly don't care.

Its just another example of why, in many cases, a lender is just as well off with an AVM or waiver with F/F and others are heading in that direction.

 

[Terrel L. Shields]

I've never seen that in any definition of excess land. Are you claiming that having, for example, a detached garage on an adjoining, excess parcel now creates a surplus parcel? I'm doubtful.

In any event, if an appraiser is unable or unwilling to discern the difference between surplus and excess land, is willing to mislead his client, and affix his signature to the report, I honestly don't care.

Its just another example of why, in many cases, a lender is just as well off with an AVM or waiver with F/F and others are heading in that direction.

See post above. "The book" says exactly that.

 

[J Grant]

See post above. "The book" says exactly that.

There is no book; somebody answering an FHA hotline question said it, and FHA has some things particular to their program that do not apply outside it. Such as that an excess lot be given no vale

 

[alebrewer]

I've never seen that in any definition of excess land. Are you claiming that having, for example, a detached garage on an adjoining, excess parcel now creates a surplus parcel? I'm doubtful.

In any event, if an appraiser is unable or unwilling to discern the difference between surplus and excess land, is willing to mislead his client, and affix his signature to the report, I honestly don't care.

Its just another example of why, in many cases, a lender is just as well off with an AVM or waiver with F/F and others are heading in that direction.

Haha - such hyperbole is unbecoming, Mark. I seriously doubt an engaging debate about the more esoteric issues revolving around the concept of excess land is what is driving movement to AVM's. And I think you know that as well.

What is driving the move toward alternative valuation models is (IMO): (1) appraiser sloppiness, (2) appraisers' lack of analysis/reporting of analysis as regards the approaches to value, (3) lack of demonstrated support for adjustments, and (4) the fact that - per the folks who are doing high level comparisons of AVM's and appraisals - the statistical difference in quality between the two products is nonexistent...

 

[J Grant]

I've never seen that in any definition of excess land. Are you claiming that having, for example, a detached garage on an adjoining, excess parcel now creates a surplus parcel? I'm doubtful.

In any event, if an appraiser is unable or unwilling to discern the difference between surplus and excess land, is willing to mislead his client, and affix his signature to the report, I honestly don't care.

Its just another example of why, in many cases, a lender is just as well off with an AVM or waiver with F/F and others are heading in that direction.

Imo, its the chicken and the egg- FF is not turning to AVM or waivers due to the incompetence of some; there are competent appraisers around, but if their fees do not profit the ACM system or they many not always hit a number so they may not be engaged. Waivesr, AVM's are about control of values and profiteering, those products can not answer wrt excess land and complex issues and thus those orders get routed to have an appraisal done

 

[Terrel L. Shields]

There is no book; somebody answering an FHA hotline question said it, and FHA has some things particular to their program that do not apply outside it. Such as that an excess lot be given no vale

The "book" the "appraisers bible" has always been AI's "The Appraisal of Real Estate"...

its the chicken and the egg-

When we have a system of lowest bidder aka the AMC system then by default we get the highest percentage of low quality reports. You get what you pay for, nothing more. The quality of the average AMC chosen appraiser is likely lower than the average quality of the available pool of appraisers on their list. The quality appraiser gets much less work because they demand adequate compensation. Mortgage brokers did the same looking simply to make the deal work and were willingly paying more for favorable outcome. AMC's not so much. Only salaried bank loan officers had incentive to pick the top appraisers because they were not on commission and bonuses often depends upon low defaults since they are lending the banks money, not selling a loan to Fannie.

 

[Mark K]

See post above. "The book" says exactly that.

Nothing about improvements here.

 

[Terrel L. Shields]

Nothing about improvements here.

View attachment 81695

Your post very clearly states it is a vacant site or a site considered as vacant. The second lot is not vacant. it has a building and if that building has any value, then the site is not "excess" but rather is surplus.