FHA/combined Lots/excess Land/highest And Best Use

[Dublin ohio]

Just a couple more things that I would consider.

1)From the picture you posted. The location of the pond and current driveway would appear to limit the overall utility of the proposed 3 acre site.What is the minimum easement width and where would it be? Appears that there would be limited areas on proposed site to build on due to location of easement and pond.

2) You mention that it is a rural area. Is there public sewer. If not. You would have to consider whether or not the site would support an on site system. The pond takes up a lot of area. If you have to have a septic with a leach field. Would there be enough suitable area for that leach field? Would think that most health regulations would require a minimum distance from leach field to pond. Just a thought.

 

[Mr Rex]

"They are combined and not platted separately."

"If the subject of an appraisal contains two or more legally conforming platted lots under one legal description and ownership, and the second vacant lot is capable of being divided and/or developed as a separate parcel where such a division will not result in a non-conformity in zoning regulations for the remaining improved lot, the second vacant lot is Excess Land."


"(Since they are platted as 1 parcel would this negate 4000.1?"

Ding ding ding we have had the answer from the OP.

 

[glenn walker]

One parcel where the lot size is typical. Owner is not doing a lot split and anyone that does lot splits understands quickly it's not always easy or even possible. In your case I would not consider this excess or surplus land and the highest and the existing use sounds like the best use. I would make this easy and appraise it as a Manufactured on 5 acres and be done.

 

[hastalavista]

1. Call your local HOC and ask them; the process for identifying excess land for FHA assignments is somewhat unique.
2. While the excerpt from the handbook states when excess land must be identified, IMO, it doesn't say that only under those circumstances does that qualify as excess land. (if you call the HOC and they say, "Yes, only when the lots are already platted can you consider it to be excess", please come back and post that).
3. Before you consider excess land, you need to consider the ideal improvement; i.e., if the site were vacant, would the lots be split, or would someone build a home that warrants a 5-acre site to support it?
4. Always a question to ask when excess land is considered: Are/have any other owners split their lots to create 2- and 3-acre parcels? If yes, there may be demand for such parcels. If not, there likely is no demand.


Good luck!

 

[J Grant]

I don't think it is so much a case of FHA has its own criteria to identify excess land, as much as that FHA is telling its appraisers explicitly when and when not to include excess land in the site in an appraisal for FHA for improved property.
Would you agree with the below example, if appraising to the HUD FHA requirement ? ( from what I am reading they want)

Township X zoning allows dividing a 4 acre site into 2 parcels . Two different houses are being appraised, house A and house B .

House A is on one 4 acre lot comprised of one platted 4 acre site, one owner . House A is appraised for FHA as a house on a four acre site.

House B is on a four acre lot comprised of two platted 2 acre sites, one owner. House B is appraised for FHA as a house on a 2 acre site with the second platted 2 acre site identified as excess land.

In both examples, appraiser still needs to identify HBU, whether the trend is to divide up larger lots and sell or keep houses on bigger lot etc.

 

[hastalavista]

I don't think it is so much a case of FHA has its own criteria to identify excess land, as much as that FHA is telling its appraisers explicitly when and when not to include excess land in the site in an appraisal for FHA for improved property.

I agree that in the excerpt, FHA is specifically telling the appraiser when excess land is triggered. I'm just not sure that it is also intended to mean, "Only under these circumstances does excess land exist" because clearly, that is not the case out in the world.

Would you agree with the below example, if appraising to the HUD FHA requirement ? ( from what I am reading they want)

Township X zoning allows dividing a 4 acre site into 2 parcels . Two different houses are being appraised, house A and house B .

House A is on one 4 acre lot comprised of one platted 4 acre site, one owner . House A is appraised for FHA as a house on a four acre site.

I would agree with you; if I took their description and said, excess land only exists under the FHA definition (separately platted, etc.) then, per the FHA definition, there is no excess land.
However, in real life, there may be excess land.

House B is on a four acre lot comprised of two platted 2 acre sites, one owner. House B is appraised for FHA as a house on a 2 acre site with the second platted 2 acre site identified as excess land.

In both examples, appraiser still needs to identify HBU, whether the trend is to divide up larger lots and sell or keep houses on bigger lot etc.

I have the same problem; if I take the FHA definition and assume that is the only case where excess land exists, then yes; the above is excess land per FHA.
However, in real life, that may not be the case as well.


I don't have a problem accepting FHA's definition for FHA assignments.
I just don't know if FHA's definition is the only way they consider excess land to exist. If it is, then fine (and that really simplifies matters). If it isn't, then there is more to consider. Ergo, my advice:

1. Call your local HOC and ask them; the process for identifying excess land for FHA assignments is somewhat unique.

(my bold)

 

[BRCJR]

What would a dwelling in front of the existing dwelling do to the value of the existing dwelling? There will, most likely, be a privacy loss with a residential dwelling installed on the front potential lot.

 

[J Grant]

FHA is specifically telling the appraiser when excess land is triggered. I'm just not sure that it is also intended to mean, "Only under these circumstances does excess land exist" because clearly, that is not the case out in the world.

I agree FHA can not state only under these these circumstances does excess land exist, rather than that for their appraisal requirements, under X scenario appraise subject on the larger lot and under Y scenario, appraise it on one smaller lot and exclude the second platted lot from the valuation because (under HUD guidelines it is identified as excess land for appraisal valuation purpose)

 

[J Grant]

I have the same problem; if I take the FHA definition and assume that is the only case where excess land exists, then yes; the above is excess land per FHA.
However, in real life, that may not be the case as well.

Yes, in real life, aka the market might see it differently...but if a borrower is applying for FHA financing, then the HUD says report it on appraisal in X manner to comply with HUD FHA requirement ...might be wise to comment on how market might perceive it but to comply with FHA requirements it is handled in X manner on the appraisal)

 

[Michigan CG]

From the link posted: The Appraiser must include the highest and best use analysis in the appraisal report to support the Appraiser’s conclusion of the existence of Excess Land.

Highest and Best Use in this scenario would be for two separate parcels if I am understanding the original post correctly.