Fannie Mae and "Multiple Parcels"

[George Hatch]

Fannie Mae says that in order to include the second parcel it must have identical zoning to the first, so how is it that the HBU is different?

HBU as if vacant is very nearly irrelevant to the appraisal of a property with an existing use. What counts is "HBU in as is condition" whether the property has existing improvements or not.

HBU in the current condition of an existing SFR is not the same as the HBU of the current condition of the lot.

The requirement to analyze HBU isn't some optional or arbitrary requirement which exists purely because it's an item on a checklist. The analysis serves a critical purpose. The whole purpose of performing an HBU analysis is to identify the basis upon which the property is most likely to be sold as a means of identifying which properties it competes with in the market.


When marketed separately, each use will have a completely different set of buyers and sellers, operating with vary different motivations, measuring value using very different units of comparison and being valued with vary different types of comparables. There's usually zero overlap between the two market segments involved.

 

[J Grant]

Fine.
1st, give 2 opinions of MV, one for the improved parcel and the second for the vacant parcel.

agree, yes, I said this from post one

2nd...If you want to label a single opinion of "value" for the two as Value in Use as an opinion in addition to the two MVs, no problem.
Value in Use does not require the appraiser's opinion of H&BU.

I would not label the single opinion of value for the two as value in use, it is an opinion of market value- ( value in use only pertains to the role of adj lot for purpose , not to the whole)

3rd, all three opinions of value can correctly be communicated in one report.

Agree on the third.

 

[CANative]

I have a copy of this in my appraisal files. I refer to it often.

http://websterappraisals.com/wp-content/uploads/Cover-Article-Spring-15-TAJ_ExcessLand.pdf

 

[CANative]

Carnivore had it right regarding excess land and developers in a hot market.

The difference between surplus and excess land contribution can be indistinct in a balanced market and of no difference in a slow market after one considers all the discounts that would need to be applied to excess land.

 

[Mr Rex]

The lenders are required to use appraisals based on MV. They can ask for additional types of values as an extra but they still need MV.

Can you opine a MV?

 

[Mr Rex]

Given some of the reasoned and seasoned responses, USPAP is parallel to an over bearing HOA.

 

[J Grant]

GH- The whole purpose of performing an HBU analysis is to identify the basis upon which the property is most likely to be sold as a means of identifying which properties it competes with in the market.
When marketed separately, each use will have a completely different set of buyers and sellers, operating with vary different motivations, measuring value using very different units of comparison and being valued with vary different types of comparable. There's usually zero overlap between the two market segments involved.

Finally, we get to what it would be to actually appraise a property like this- identifying the buyer pool for a house and adj lot and the market exposure estimate. True, it might be a smaller buyer pool and thus have longer DOM. In that respect it s similar to other niche market properties.

However, wrt each use will have a completely different set of buyers and sellers, operating with vary different motivations, , perhaps not so much -there is more of an overlap between the two in recent years. Traditionally, the res RE market was owner occupant purchase with a small "other" group of flippers/investors. But in recent years, res properties are being acquired more as investments or for multiple uses, such as people running AIr Bn B, and the increase I see in investment purchases who buy to rent out. Plus amateur flipper wannabes...

The amateurs who want to get in on the action and maybe flip a property once a year or two... Turn on the TV and see programs like "Property Brothers" and "Flip This House". A property like this can appeal to that set of buyers. Remember, this is a fannie loan, professional flippers usually pay cash, plus unknown if loan has owner occupant purchase requirements. And there are other buyers who would like to have the lot to build on one day...why not, with favorable low interest payments on it? What a great opportunity for some, to live in the existing older house as they build dream home on the vacant lot, then sell the older house and pay off the mortgage with the sale, move into the new house. Sweet...

 

[Mr Rex]

I take it that you are not familiar with the FAQs that accompany the USPAP?

Specifically, #176 VALUE IN USE FROM FEDERALLY REGULATED LENDER.

Also, #211 APPRAISING TWO LOTS AS ONE.

As to #211, I've had conversation with the member who was primary--understanding that nothing comes from the ASB lacking many eyes on it--on that little nugget. Give it a read and take it to heart. If you properly digest it, just like the hokey-pokey it will turn you around . Seriously.

I guess the brain trust @ Fannie Mae, the largest residential mortgage participant in the world missed the FAQ or doesn't agree with one appraisers interpretation of it. I'm pretty sure the upcoming USPAP 2022 revision has a change in the update....

 

[Mr Rex]

As to my "perturbance" , you may want to conduct some additional research to gain understanding on this issue.

Suggest: Open your copy of the current USPAP.

Accompanying USPAP are the "USPAP FAQs".

Turn to #176 VALUE IN USE REQUEST FROM FEDERALLY REGULATED LENDER,

See #211 APPRAISING TWO LOTS AS ONE

BTW, if it matters, yes, I have had conversation with the person who was primarily (understanding that these things don't pop-up based upon one person's whims) responsible for the writing of #211.

Or, are these more "Appraisal Edicts"?

I got USPAP. FAQ 176 is type of value and citation of source. 211 is Adjustments in Sales Comparison Approach. Swing and miss, Get off my yard whippersnapper! How sad when old folks lose their sharpness...

 

[Andrei Fin]

The whole purpose of performing an HBU analysis is to identify the basis upon which the property is most likely to be sold as a means of identifying which properties it competes with in the market.

In the multiple parcel situations I have personally seen (and I was actually in contract on one myself) the second parcel was sold in the market upon the basis of value in use. Go figure.