FHA excess land questions. Thx.

[Debra]

FHA and new client. They ordered address #xxxx. After I got to the appraisal appointment, homeowner told me that they own 2 lots. The deed dimensions include both lots although it mentions both lot numbers in the description. They are on 2 different tax parcels with 2 different tax/crs maps. The first lot seems to contain the entire dwelling and the septic. The 2nd lot (the one beside it) is vacant (except for a little wood fencing near the front that connects to the fence that runs beside the dwelling). From what I've been reading here and elsewhere, It seems that the 2nd lot HBU is Excess land that could be sold separately with it's current tax parcel, tax map and address listed on it's tax parcel. Zoning the same FResidential. The norm in the area is to have one lot (acre or less) with dwelling but not to have two lots. How do I proceed with this? Should I do the main lot with the dwelling and septic as I normally would do for the FHA appraisal (which is the address that was ordered)? and explain that parcel xxxx is located next door to the subject property and described in the deed as one big lot together with the dwelling lot? Per it's own tax card/map, it is almost exactly the same site size as the dwelling lot. It is not needed to support or serve the improvement/dwelling. It has the same zoning as the dwelling lot and could be sold separately and considered excess land. Therefore, the opinion of Estimated Market Value developed in this appraisal is only for parcel #xxxx with the address of xxxx? Does this sound correct? or would I need it subject to survey? perk? or anything? Is there a HC that I need to talk about? If so, what is the HC? Should I message the new client that this is the case? OR just complete the FHA report and move on? If I acknowledge the 2nd lot, Since not including in value, I wouldn't need to note both the parcel numbers and total size of the 2 lots on 1004 pages 1 and 2? but just do the explaining/commentary? OR just do the address that was ordered? include the subject tax card and map and deed and let them tell me if they even want the lot next door commented on? I've not done one of these before. Thanks for help! I'm distracted. We had 5 tornado sirens/warnings here yesterday and have thunderstorms and tornado watch here now so waiting for another warning to run to "safe spot." ugh.

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[J Grant]

As far as I know, FHA will not finance an excess lot and wants the value of a second lot excluded from the appraisal ( even if the excess/second lot is sold as a package with the subject ). Check with your client and look up the FHA guidelines to verify how to proceed.

 

[CGinMN]

Contact the lender, tell them the second lot isn’t allowed on FHA, but could be included for a conventional loan. Offer to appraise just the improved lot for FHA, or they can switch loan programs.

 

[J Grant]

FHA is what it is. As an appraiser, I am not going to suggest to a lender that their borrower switch loan programs.

I will alert the lender what the requirement is so they are not surprised when the appraisal comes in without the second lot being valued. If they want to cancel or put loan on hold etc they can tell me so-

 

[sputnam]

What you do is you contact your Client, explain the situation, and ask them how they would like you to proceed.

 

[Tom D]

If the lender doesn't need that extra lot value for the refi, or sale price, you're good to go. I hate this type of appraisal cause if you come in much lower, somebody will not be happy, irreguardless of the rules. Not that it matters to some of yous. But, every existential threat should be avoided.

And you better have the exact FHA quote in your report, if you so still choose to do it.

 

[Zoe]

Your H&B use is the subject lot as itself. Forget the second lot. They are described on the tax parcels.

You have identified the 2nd lot is not needed for H&B use.

Forget the 2nd lot.

If your lender want the second lot on the loan, then you can explain. That is like two different appraisals. YOUR H&B use would be second lot sold separately.

MV opinion is only value opinion that requires H&B use analysis.

 

[Zoe]

Don't let them play you.

 

[Zoe]

If lender wanted both lots on the appraisal, I would want more money because H&B use is at root of the problem. You have already determined that the H&B use is both lots NOT being sold together.

You basically have two different appraisal assignments for a MV appraisal.

You pretty much already explained the H&B use was lots be sold separately.