FHA Excess Land

[J Grant]

The brief internet research I did (just cause it is an interesting question ) was FHA has no set limit on acreage, but any excess land can not equal more than 30% of the appraisal value ( would make it not eligible for the res loan )

So if 100 plus acres is worth , for example, 4x the house, it won't be eligible. Advise client, see if they want to proceed.

It is possible that would not be the case, but seems unlikely...

 

[glenn walker]

The brief internet research I did (just cause it is an interesting question ) was FHA has no set limit on acreage, but any excess land can not equal more than 30% of the appraisal value ( would make it not eligible for the res loan )

So if 100 plus acres is worth , for example, 4x the house, it won't be eligible. Advise client, see if they want to proceed.

It is possible that would not be the case, but seems unlikely...

Sound like surplus land to me not Excess Land ** Surplus Land refers to land that is not currently needed to support the existing improvement but cannot be separated from the Property and sold off. Since its never been Subdivided that means it cannot be sold off separately and that is good evidence that land values are extremely low and there is no economic feasibility in splitting or subdividing it. Remember just because you can do something doesn't means its ever going to be done and based on your post its a low income area that is more recreational and rural. I would contact lender and advise as it may be better to charge a trip fee and bail on this bad boy unless you have other similar property on large a acreage. If you had a two million dollar home on it then it may not be a land loan but if its an -old small home worth $100,000 its now a Land Loan and not a FHA loan. Sometimes these FHA and VA buyers operate on beer budgets with champagne tastes and if that land was worth any serious money nobody in there right mind would encumber it with a FHA loan..

 

[J Grant]

Sound like surplus land to me not Excess Land ** Surplus Land refers to land that is not currently needed to support the existing improvement but cannot be separated from the Property and sold off. Since its never been Subdivided that means it cannot be sold off separately and that is good evidence that land values are extremely low and there is no economic feasibility in splitting or subdividing it. Remember just because you can do something doesn't means its ever going to be done and based on your post its a low income area that is more recreational and rural. I would contact lender and advise as it may be better to charge a trip fee and bail on this bad boy unless you have other similar property on large a acreage. If you had a two million dollar home on it then it may not be a land loan but if its an -old small home worth $100,000 its now a Land Loan and not a FHA loan. Sometimes these FHA and VA buyers operate on beer budgets with champagne tastes and if that land was worth any serious money nobody in there right mind would encumber it with a FHA loan..

Sorry I mean to say surplus - since it is one huge tract -

I agree it is a land loan lol, 109 acres with a house on one corner -

 

[Terrel L. Shields]

I have to question why anyone needs a reverse mortgage when they can simply sell off 40 acres and poke the money in their pockets...or 80 acres.

As a rural appraiser, I would value the land "as if vacant and available for its highest and best use" - that is the book answer. And unless land is a lot cheaper than it is here, it's gonna be one whale of a house for the land not to be worth more than 30% of the house value...or the overall value. Optimistically, my own home is hardly worth 20% of the value of my farm.

I would call the client and have a nice chat about the obvious.

 

[alebrewer]

If the OP can't find any sales of properties with current use of SF AND on similar sized tracts, is it possible that the market is saying that might not be the highest and best use?

 

[glenn walker]

If the OP can't find any sales of properties with current use of SF AND on similar sized tracts, is it possible that the market is saying that might not be the highest and best use?

The reason its still 100 acres is it has no higher or better use but if they can get a reverse mortgage
and Mom & Pop can get some income and they plan on dying on the worthless Ponderosa .

 

[alebrewer]

The reason its still 100 acres is it has no higher or better use but if they can get a reverse mortgage
and Mom & Pop can get some income and they plan on dying on the worthless Ponderosa .

possibly - or it could be that mom & pop just never sold any of it off... when doing a H&BU analysis, I always look at market participation to see if there is demand for the subject's use 'as improved'... of course, interim use could potentially be the current H&B use...

 

[glenn walker]

possibly - or it could be that mom & pop just never sold any of it off... when doing a H&BU analysis, I always look at market participation to see if there is demand for the subject's use 'as improved'... of course, interim use could potentially be the current H&B use...

When you placing a 30 year FHA reverse mortgage on a property the interim use until you die can only be its existing and current use until your both are either dead or in nursing homes. : ) LMAO

 

[alebrewer]

When you placing a 30 year FHA reverse mortgage on a property the interim use until you die can only be its existing and current use until your both are either dead or in nursing homes. : ) LMAO

I love your colorful view of everything.

 

[sputnam]

Once again.... As the appraiser, it is none of your business whether a property you've been asked to appraise will be eligible for any particular loan. That is the Lender's responsibility.