Most people are not thinking this through, they got stuck on OMG the vacant lot is an excess lot can have a separate HBU -
We all know that so can we move on -IMO, what fannie is fundamentally doing is creating a demand for these properties by extending res attractive rates and terms financing to buy a lot ( along with a house ) These low rates and LTV financing is not avail for lot purchase alone -
If a is truly hot for development we would rarely see a vacant lot sold with a house, and if we did, the buyer would be competing with others for the lot - But most package house and lot sales the market is lukewarm at best for vacant lots - the subject vacant lot sitting there with nobody clamoring to buy it. A seller if try to sell the lot alone might have a market exposure time of years to get a supposed MV price - for example 2 years. ( when I research vacant land sales I frequently find 1-3 years plus as DOM )
But sell the vacant excess lot together with a house adjacent, the fannie financing is a lure for a savvy buyer, thus the seller can sell the lot along with house in 4 months - even if the lot took a 10% hit on sale, what is the time value of money to the seller, selling it faster and not having to pay a separate RE commission to do so ? What is the value of financing to the buyer , is there now a new buyer pool for this lot that would not exist otherwise ? Might turn out the HBU of selling lot is not any better -if it were better, a well informed seller would sell the lot as a stand alone rather than with the house.
MV definition is a well informed buyer and seller, so unless we want to declare the actions of parties in these transactions as those of idiots, the sale is at MV motivated parties.
