Fannie Mae and "Multiple Parcels"

[George Hatch]

Fun and giggles, but why does H&BU not consider if 2 parcels can be legally combined with as much consideration that as 2 entities that may have a higher value? The remaining question, regardless of USPAP doctrine, is where is the public trust undermined in this scenario? Is infringement on property rights in the Public Interest? Isn't the scenario presented an infringement? Isn't the OP suggesting that a lender can not lend on a property fully supported (or more) by market value, due to a USPAP dictated H&BU protocol that is not one size fits all and never was intended to be?

That is one of the possibilities in HBU analysis when there are multiple parcels. It is just as incompetent to make an unsupported assumption of "always" as it would be to assume "never".

It's not the conclusion that speaks to the competent result; it's the performance to get to that result that's important.


I was just talking with one of my peers who is working on an industrial zoned parcel in one of the suburbs in SoCal. His subject is located next to the boundaries of a 11-parcel assemblage that was recently created in order to yield a 20-acre site that would support a 600,000sf distribution building. The average price of the transactions which comprise that assemblage was something close to 30% higher than what any of those parcels would have sold if sold to an individual buyer. That makes all of those transactions dissimilar to his subject, which is being valued as a single parcel under typical conditions of sale. Conversely, the comps for such an assemblage would consist of other large parcels, not the smaller parts which comprise the whole.

 

[Mr Rex]

As is never versus "could be". If it was/is a real issue to the largest lender in the world, the edict would have said, if the 2 parcels can be legally be combined, then it must be so before it goes forward. Do you hear the "God" in that? Why I keep harping on Appraiser "Gods" whose heads are way too damn big.

 

[Lee Lansford]

Basing a HBU analysis of real estate on homeowner actions? Because they make up the market?? What do we need an appraiser/appraisal for? Just ask the owner what they want/need/intend to do. I've said it too many times, you are a giant black hole of suck on this forum. You constantly troll threads and often don't even acknowledge what's on the thread. CanNative told you earlier to spend more time reading and less time replying to threads on another thread TODAY. Just stop posting, how about that? You hijack every thread I've read on this forum, the 2nd place top poster is in that spot from replying to your nonsense on this topic. For the last time, you did this to my thread on the same topic over a month ago, just go away, you are not an expert and have been proven WRONG by folks with credentials. That to anybody with their head in open air above their shoulders should be enough to chill out on replying so much. Not to you, it's fuel for your fire of ignorance. Thanks for all of your contributions but if you could please STOP I think the forum would benefit.

You understand the issue. There are but a few in this (and the other) string who can't grasp the correct way to approach this particular appraisal problem.

 

[George Hatch]

As is never versus "could be". If it was/is a real issue to the largest lender in the world, the edict would have said, if the 2 parcels can be legally be combined, then it must be so before it goes forward. Do you hear the "God" in that? Why I keep harping on Appraiser "Gods" whose heads are way too damn big.

If you can demonstrate - using live sales data - that "could be" is a possibility then blowing it off solely because the client told you to ignore it does not make it right.

As I say, the premise that appraisers are dictating what the lenders can do is complete horesht. That's not what is happening. All the appraisers are saying is that they don't have the discretion to call the apple an orange simply because the lender told them to and it's a really big lender they can't get away with disputing.

If you want to test the principle then swap out the variable. If the client told you to ignore the physical condition would you do that and call the result the "MV of the as is"? Of course not. OTOH, if the client has plans/specs to support a "subject to" upon which you could reasonably base an HC then concluding to the "MV of the subject to" does not somehow become an example of appraiser GODs dictating terms to their users. It's just the appraiser disclosing what the number does/doesn't mean.

Lender wants the house+5 even though the subject property rights appraised consist of a 40-acre parcel. Do we just roll over for that or do we make the effort to ensure that the number on the bottom line relates to the property rights appraised?

"what the lender wants" is not one of the assumptions in the definition of HBU. Or MV.

 

[Mr Rex]

As heads grow larger, opinions grow narrower, and the Public Trust is affected how? Come on Lee, lets hear all the negative consequences other than an antiquated USPAP H&BU edict that I guarantee will be changed accordingly as part of the upcoming update, as they need something to remain relevant bi-annually...

 

[Mr Rex]

If you can demonstrate - using live sales data - that "could be" is a possibility then blowing it off solely because the client told you to ignore it does not make it right.

If the market data is so strong that the 2nd lot has a H&BU separate, then why hasn't it sold? Has the market spoken?

 

[Carnivore]

That is one of the possibilities in HBU analysis when there are multiple parcels. It is just as incompetent to make an unsupported assumption of "always" as it would be to assume "never".

It's not the conclusion that speaks to the competent result; it's the performance to get to that result that's important.


I was just talking with one of my peers who is working on an industrial zoned parcel in one of the suburbs in SoCal. His subject is located next to the boundaries of a 11-parcel assemblage that was recently created in order to yield a 20-acre site that would support a 600,000sf distribution building. The average price of the transactions which comprise that assemblage was something close to 30% higher than what any of those parcels would have sold if sold to an individual buyer. That makes all of those transactions dissimilar to his subject, which is being valued as a single parcel under typical conditions of sale. Conversely, the comps for such an assemblage would consist of other large parcels, not the smaller parts which comprise the whole.

Interesting! I was just reading through the link that i think goes to your post while reading it I came across this quote below right up front early in the document.

https://www.appraisalinstitute.org/assets/1/7/GoingConcern_Presentation_8_17_2011.pdf

"Interagency Guidelines released December 2010: Each appraisal must contain an estimate of market value, as defined by the Agencies' appraisal regulations. The definition of market value assumes that the price is not affected by undue stimulus, which would allow the value of the real property to be increased by favorable financing or seller concessions. Value opinions such as "going concern value," "value in use," or a special value to a specific property user may not be used as market value for federally related transactions. An appraisal may contain separate opinions of such values so long as they are clearly identified and disclosed. "

 

[J Grant]

Interesting! I was just reading through the link that i think goes to your post while reading it I came across this quote below right up front early in the document.

https://www.appraisalinstitute.org/assets/1/7/GoingConcern_Presentation_8_17_2011.pdf

"Interagency Guidelines released December 2010: Each appraisal must contain an estimate of market value, as defined by the Agencies' appraisal regulations. The definition of market value assumes that the price is not affected by undue stimulus, which would allow the value of the real property to be increased by favorable financing or seller concessions. Value opinions such as "going concern value," "value in use," or a special value to a specific property user may not be used as market value for federally related transactions. An appraisal may contain separate opinions of such values so long as they are clearly identified and disclosed. "

There is an opinion for market value for the property ( property consisting of the 2 parcels , one an improvement ). There is a separate opinion of value in use for the vacant lot, as its interim use as long at it is encumbered with the improvement.

 

[Mr Rex]

As noted earlier, Fannie has long said H&BU is as improved (not as vacant as USPAP indicates), The latest clarification simply indicated that 2 lots with improvements on one are eligible as one and should be considered as one. I wonder if DW needs an assistant over at Freddie?

 

[J Grant]

You understand the issue. There are but a few in this (and the other) string who can't grasp the correct way to approach this particular appraisal problem.

What is the "correct way" ? Since the thread has gotten so layered, repeat it please your opinion of the correct way in simple form so people can agree or disagree with it...