FHA Excess vs Surplus Land

[Gtary]

I have an appraisal that is FHA. The dwelling is located on a separate parcel with 1.13 acres, and they are selling an additional lot with it, separate parcel number, same owners, and is 4.7 ac. Forgive me for being a newly certified appraiser, but is this still excess land? I'm reading that if they have the SAME parcel number and SAME owner, and are not needed to support the current use, then it is excess... but what about if they are two completely separated lots already? Do I include the value in the appraisal?

 

[Dublin ohio]

Not excess or surplus land. It is a separate entity independent of the improved parcel. Regardless FHA states that if excess land it is not considered in the final value

 

[Terrel L. Shields]

It might help stop the 'stips' and complaints by notifying the lender and telling them you will not include the excess lot - and post the 4000.1 quote

Excess and Surplus Land Definition ​

Excess Land refers to land that is not needed to serve or support the existing improvement. The highest and best use of the Excess Land may or may not be the same as the highest and best use of the improved parcel. Excess Land may have the potential to be sold separately. 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.​

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Surplus Land does not have an independent highest and best use and may or may not contribute to the value of the improved parcels.​

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Required Analysis and Reporting.​

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. The Appraiser must include Surplus Land in the valuation. 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 nonconformity in zoning regulations for the remaining improved lot, the second vacant lot is Excess Land. The value of the second lot must be excluded from the final value conclusion of the appraisal and the Appraiser must provide a value of only the principal site and improvements under a hypothetical condition​

 

[Dublin ohio]

It might help stop the 'stips' and complaints by notifying the lender and telling them you will not include the excess lot - and post the 4000.1 quote

Tell them up front and like you said provide them the FHA quote. They can try but really can't argue the point

 

[J Grant]

I have an appraisal that is FHA. The dwelling is located on a separate parcel with 1.13 acres, and they are selling an additional lot with it, separate parcel number, same owners, and is 4.7 ac. Forgive me for being a newly certified appraiser, but is this still excess land? I'm reading that if they have the SAME parcel number and SAME owner, and are not needed to support the current use, then it is excess... but what about if they are two completely separated lots already? Do I include the value in the appraisal?

The contract of sale includes the adjacent 4. acre parcel, but since it is not necessary to support the subject improvement, which sits on 1.13 acres, the adjacent site is not included in the appraisal

I have no idea, of course, what min zoning is - what is it? If it is one acre, the 4.7 acre lot is not needed. If the zoning is 5 areas, then it is needed to support the improvement.

 

[sputnam]

I have an appraisal that is FHA. The dwelling is located on a separate parcel with 1.13 acres, and they are selling an additional lot with it, separate parcel number, same owners, and is 4.7 ac. Forgive me for being a newly certified appraiser, but is this still excess land? I'm reading that if they have the SAME parcel number and SAME owner, and are not needed to support the current use, then it is excess... but what about if they are two completely separated lots already? Do I include the value in the appraisal?

What property gets included in your valuation is a question for your Client.

 

[J Grant]

What property gets included in your valuation is a question for your Client.

That is usually the case, but FHA has a policy against lending on excess land ( an additional site not needed to support the improvement ). The buyer is allowed to purchase it, but the appraiser has to exclude it from the valuation.

 

[Tom D]

lucky if it doesn't have an affect on the sale price.

 

[J Grant]

lucky if it doesn't have an affect on the sale price.

If it affected sale price and our value is below that, having to exclude the second lot provides a clear explanation of why.

 

[Mark K]

Do I include the value in the appraisal?

Determine whether its surplus or excess. After that, FHA is pretty clear on which direction to take after that.

... the Appraiser must provide a value of only the principal site and improvements under a hypothetical condition​

Maybe I haven't had enough coffee this a.m. but why would a HC be necessary? Are they referring to the excess portion of a single, larger site? I don't see the need for HC in the OP's scenario, i.e., two separate parcels.