Fannie Mae and "Multiple Parcels"

[djd09]

hold on. a second thread. geez.

"trustful"

 

[alebrewer]

Both .

But, we digress from the issue at hand. Let's not make this one of this strings on AF that goes off into the wild blue yonder.

So sorry if I scared you off, Lee. Please dont feel too intimidated to respond to this thread. I promise I will try to be less direct.

 

[CANative]

I have found a new venue for the term esoteric. Folks on this forum speak as if only the enlightened few are capable of comprehending appraisal concepts. You guys are killing me!

"As an appraiser, you must determine if the additional parcel is excess or surplus land. The main difference is that surplus land cannot be developed separately from the property, while excess land has the potential to be sold separately because it is not needed to serve or support the existing improvements. Excess land is considered “value in use” for the purpose of the appraisal, so the land should be described and its contributory value included in the grid. "

Even if the additional lot can be sold and developed separately there must be a demonstrable market for it as of the effective date. Otherwise, it should probably be treated as surplus land... e.g. a bigger lot.

If there is a market for the additional lot then it should probably be treated as excess land. The most technically correct way to value excess land is to value it separately and not as "contributory value." e.g. two appraisals in the same report. Resist the temptation to combine the two properties into a single opinion of MV.

If the appraiser thinks they can develop credible assignment results of a combine lot transaction through the use of sales of similar then perhaps they might go for it. But in those few cases, it's more likely the subject of the appraisal consists of surplus rather than excess.

If Fannie wants to make proclamations regarding excess land, then they need to be prepared for how excess land should be treated. The old 4150.2 (Chapter 4) spelled it out pretty well.

 

[alebrewer]

As an appraiser, you must determine if the additional parcel is excess or surplus land. The main difference is that surplus land cannot be developed separately from the property, while excess land has the potential to be sold separately because it is not needed to serve or support the existing improvements. Excess land is considered “value in use” for the purpose of the appraisal, so the land should be described and its contributory value included in the grid.

Even if the additional lot can be sold and developed separately there must be a demonstrable market for it as of the effective date. Otherwise, it should probably be treated as surplus land... e.g. a bigger lot.

If there is a market for the additional lot then it should probably be treated as excess land. The most technically correct way to value excess land is to value it separately and not as "contributory value." e.g. two appraisals in the same report. Resist the temptation to combine the two properties into a single opinion of MV.

If the appraiser thinks they can develop credible assignment results of a combine lot transaction through the use of sales of similar then perhaps they might go for it. But in those few cases, it's more likely the subject of the appraisal consists of surplus rather than excess.

That, my friend (and i sincerely mean that), is a well thought out, and thoughtful, response.

 

[andrew81]

the assignment is to develop an opinion of market value which requires an opinion of highest and best use. the HBU analysis may reveal the best use of the additional lot is to hold for future development, or the HBU could be to develop it to the ideal improvement

if it is to hold for future development then its highest and best use is as vacant, therefore the HBU is as improved, (check move along nothing to see here)

however, if it is to develop it to the ideal improvement, then its highest and best use is not vacant, therefore the HBU is not as improved

if vacant is not the highest and best use, checking a box indicating HBU is as improved is misleading

if vacant is not the highest and best use, then valuing it as "value in use" is not its market value.

 

[Michigan CG]

Even if the additional lot can be sold and developed separately there must be a demonstrable market for it as of the effective date. Otherwise, it should probably be treated as surplus land... e.g. a bigger lot.

Absolutely. Highest and Best Use is not as simple as some people think or want to think. An additional lot may have a separate highest and best use but if the marketing/exposure time is insane then we have to consider the interim use also.

I just used a land sale that was on the market for 1,509 days (over four years). It appears that the market did not really want that land four years ago or three years ago or even two years ago. In the last 18 months land sales have exploded and some of the sales I am seeing I would have never predicted.

A farmer split up about 30 acres this year and sold five parcels in 60 days.

 

[Lee Lansford]

So sorry if I scared you off, Lee. Please dont feel too intimidated to respond to this thread. I promise I will try to be less direct.

Whoever told you that you were clever...they were only kiddin'.

 

[George Hatch]

Gentlemen, please.

 

[Lee Lansford]

pretty sure I'm correct - I correspond with his direct reports on CU issues. And even if he was, Pretty sure it's VERY poor taste to post someone's work (or personal) email on this forum.

You forgot to add "in your opinion".

Do we have your permission to share USPS mailing addresses?

 

[alebrewer]

Gentlemen, please.

In general, I'd agree. In this case, however, I disagree, George. It is in extremely poor taste to try to direct appraisers' ire to a specific person - one who works at a companythat already receives much animosity on this forum, no less. Bad form - and yet, not even an ounce of remorse for doing so. I really have no qualms letting claws out for that kind of behavior.