Fannie Mae and "Multiple Parcels"

[Andrei Fin]

The transaction for the HOUSE on Walnut was obviously financed with a conventional SFR loan, so that blows that theory out of the water.

Um the house on Walnut got an FHA loan plus a seller carry for the lot. Typical?

 

[Econobot]

I've got two of these scenarios on my plate and did another last month. I simply won't value two parcels together when they have a seperate HBU... Two of the three scenarios the agents and lender had the transaction split up so I valued the improved parcel and they did their own land appraisal for the vacant lot. The problem is the HBU and I don't care what guideline tells me to ignore that and "value in use". You can determine how you value property but my understanding, based on HBU, does not promote ignoring HBU and valuing them together. It's as simple as that and frankly trying to bring in Fannie guidance into your basic appraisal process is a bad idea. If something needs to be addressed for assignment conditions that's one thing but to ignore the most fundamental concept of real estate in terms of appraisal (HBU analysis) to simply get a product to a lender to close a loan is something I'm not going to engage in. I have encouraged this client to find another appraiser unless the agents are going to amend the contract and remove the 2nd parcel. As previously stated, 2 past scenarios the agents did just that and moved on. In the event that the borrower can't qualify for the house (secondary market) and vacant parcel (local in house lender) well too bad, it's not my problem. Completing an assignment of the two together would seem to only benefit the borrower and that's definitely not something I engage in. I'm sure there is a local homeowner advocate appraiser who will fill in the forms the way they want them. Without reading the countless posts I believe the only appraiser advocating for valuing "in use" is JGrant and that should be an obvious sign to a competent appraiser judging how his/her peer's handle this scenario. It's not peer, it's peers plural and JGrant seems to be all alone on the fannie, borrower advocate island and I see no reason to join her.

 

[J Grant]

if you read every post in the thread esp in latter half,, I am not "all alone", but go ahead and present things that suit your personal agenda.

Every appraiser has a right to decline an assignment. However, (when it applies ) analyzing and concluding the excess land land has a value in use when conveyed together with a house, despite the vacant lot having a separate HBU alone, is not the same thing as "ignoring HBU " nor does it mean ignoring fundamental concepts of real estate and the rest of the soapbox -

 

[Andrei Fin]

I agree with J Grant that if data supports it, you can do it.

In reality the second parcel is worth either:
1. $0 as per FHA. Not likely sorry.
2. Full value as per HBU, vacant site marketed and sold independently. Possible but not probable, given that the owner has to get rid of both adjoining parcels on the same effective date, and this can be tricky due to a number of reasons.
3. Value as #2 but with a discount applied, due to the issues mentioned above. Probable.
4. Value in use, due to the issues mentioned above. Probable.

Whether you go with #3 or #4 depends on choosing the best data for your particular subject.

 

[Econobot]

if you read every post in the thread esp in latter half,, I am not "all alone", but go ahead and present things that suit your personal agenda.

Every appraiser has a right to decline an assignment. However, (when it applies ) analyzing and concluding the excess land land has a value in use when conveyed together with a house, despite the vacant lot having a separate HBU alone, is not the same thing as "ignoring HBU " nor does it mean ignoring fundamental concepts of real estate and the rest of the soapbox -

Ok, since you love to operate under false pretences let me break this down to an elementary level... In valuing (2) parcels together (one SFR and one vacant lot) you check "yes" that the current use is the highest and best? Which in this case would be a vacant, buildable lot next to a seperate parcel with a residence. If you're checking the "yes" box valuing the (2) together aren't you lying or misleading? If the 2nd lot is excess land, it's HBU would not be whatever you claim to be "value in use". The HBU of the additional lot is to build an SFR is it not?? This is the problem, the HBU analysis sends the "value in use" method into the trash can when it's excess land. This must be why everyone I've spoke with on this subject laughs and says Fannie sent out bad advice and wait for the correction. Where are the other appraisers ignoring HBU and doing "value in use"????

 

[Andrei Fin]

Ok, since you love to operate under false pretences let me break this down to an elementary level... In valuing (2) parcels together (one SFR and one vacant lot) you check "yes" that the current use is the highest and best? Which in this case would be a vacant, buildable lot next to a seperate parcel with a residence. If you're checking the "yes" box valuing the (2) together aren't you lying or misleading? If the 2nd lot is excess land, it's HBU would not be whatever you claim to be "value in use". The HBU of the additional lot is to build an SFR is it not?? This is the problem, the HBU analysis sends the "value in use" method into the trash can when it's excess land. This must be why everyone I've spoke with on this subject laughs and says Fannie sent out bad advice and wait for the correction. Where are the other appraisers ignoring HBU and doing "value in use"????

You're late to the thread but I've been saying all along that you check NO for HBU and Fannie has no problem with this (due your own DD but this is personal experience from the lender side).

The issue here is not HBU which everyone has agreed upon but rather Scope of Work. You've been asked to provide Market Value (most probable) for the Subject Property which is two parcels combined under one legal description and loan, having the same owner and they are adjoining. MV of (A+B) not MV of A + MV of B.

 

[J Grant]

Econobot,
Ok, since you love to operate under false pretences let me break this down to an elementary level...

Can you EVER make a post without personal histrionics such as operating under false pretenses and elementary level? Stick to the topic get off the personalities ( if you are capable of it )

In valuing (2) parcels together (one SFR and one vacant lot) you check "yes" that the current use is the highest and best? Which in this case would be a vacant, buildable lot next to a seperate parcel with a residence. If you're checking the "yes" box valuing the (2) together aren't you lying or misleading?

No, how is it lying or misleading? The HBU question page one is yes no for improved - the MV opinion is for the house and lot conveyed together, so unless the house has no more contirbutory value and HBU is demolish the house for 2 vacant sites, the house if continues to contribute means existing use is as is residential, W'e covered countless time an additional analysis of the vacant lot inlcuding its stand alone HB should be included.

If the 2nd lot is excess land, it's HBU would not be whatever you claim to be "value in use".

The 2nd lot of excess land can have HBU as buildable site alone, but when conveyed along with improvement it is an interim value in use as long as it remains encumbered.

The HBU of the additional lot is to build an SFR is it not?? This is the problem, the HBU analysis sends the "value in use" method into the trash can when it's excess land. This must be why everyone I've spoke with on this subject laughs and says Fannie sent out bad advice and wait for the correction. Where are the other appraisers ignoring HBU and doing "value in use"????

See above -

 

[Econobot]

You're late to the thread but I've been saying all along that you check NO for HBU and Fannie has no problem with this (due your own DD but this is personal experience from the lender side).

The issue here is not HBU which everyone has agreed upon but rather Scope of Work. You've been asked to provide Market Value (most probable) for the Subject Property which is two parcels combined under one legal description and loan, having the same owner and they are adjoining. MV of (A+B) not MV of A + MV of B.

That's funny, considering I started an identical thread over a month ago...which like this one was hijacked by JGrant and her endless defense of bad appraisal practice. Thanks for the input though, checking NO on HBU is critical IMO. Agreed that value of A + B is correct, funny part is that the total value of the two generally would be enhanced with individual market values hence the HBU....

 

[Mr Rex]

I'm waiting on the suggestion that the 2nd parcel simply not be included in the value as if it didn't exist, like an unpermitted addition...

 

[Econobot]

Econobot,
Ok, since you love to operate under false pretences let me break this down to an elementary level...

Can you EVER make a post without personal histrionics such as operating under false pretenses and elementary level? Stick to the topic get off the personalities ( if you are capable of it )

In valuing (2) parcels together (one SFR and one vacant lot) you check "yes" that the current use is the highest and best? Which in this case would be a vacant, buildable lot next to a seperate parcel with a residence. If you're checking the "yes" box valuing the (2) together aren't you lying or misleading?

No, how is it lying or misleading? The HBU question page one is yes no for improved - the MV opinion is for the house and lot conveyed together, so unless the house has no more contirbutory value and HBU is demolish the house for 2 vacant sites, the house if continues to contribute means existing use is as is residential, W'e covered countless time an additional analysis of the vacant lot inlcuding its stand alone HB should be included.

If the 2nd lot is excess land, it's HBU would not be whatever you claim to be "value in use".

The 2nd lot of excess land can have HBU as buildable site alone, but when conveyed along with improvement it is an interim value in use as long as it remains encumbered.

The HBU of the additional lot is to build an SFR is it not?? This is the problem, the HBU analysis sends the "value in use" method into the trash can when it's excess land. This must be why everyone I've spoke with on this subject laughs and says Fannie sent out bad advice and wait for the correction. Where are the other appraisers ignoring HBU and doing "value in use"????

See above -

Like you've been told numerous times, please consider taking a HBU class. Is the highest and best use of the subject property as improved the present use? Well lets see, our subject is (2) parcels, one is built out, the other is not. We know the second lot can be built out and that would bring a higher value to that real estate, so the answer is NO...duh The HBU would be to keep them seperate and build out the unimproved land. It's so basic it's ridiculous... But to someone who obviously missed some critical concepts early on it must be challenging to have a method that contradicts what a homeowner or lender wants you to do....