FHA Excess vs Surplus Land

[Tiffany Gibbons]

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​

Make sure the septic system is on the same parcel as the house!

 

[Tom D]

juat curious, why isn't an adu called excess or surplus, but land is. big urban, little rowhouse appraiser question. my head refuses no not understand that any added value is value added to the total.

 

[Tiffany Gibbons]

juat curious, why isn't an adu called excess or surplus, but land is. big urban, little rowhouse appraiser question. my head refuses no not understand that any added value is value added to the total.

ADU would be a binary on a model. An ADU can worth nothing if in bad shape or something, a + or nothing, O. You know based on the condition, age, etc. Excess Land can be worth excess if it has a higher and better use as a separate tract. If the additional land that is not necessary to support the improvements is typical for. the area, or even larger or smaller, but not have its own H & B use, It is surplus and can worth different amounts according to utility, access, topography, available services, zoning, HOA rules, etc. You have to do much more analysis IMO to find out the adjustment for surplus land, sometimes people do pay more for a little privacy or a view, but it likely wouldn't generate income like an ADU would or cost as much to maintain. There're not making more land, but not everyone wants an extra large lot. Many other property rights come with land. Just different types of analysis.

 

[Tom D]

liked the words you used. a lot of smartness said.

 

[Tiffany Gibbons]

liked the words you used. a lot of smartness said.

Glad you understood, I was thinking of how we did our land models in assessment work as opposed to the models for different types of improvements. I don't see too many ADUs in my area, just outbuildings and barns, which would either have contributory value or not, based on condition/age, and comps in the area, but the surplus/excess land issue is an everyday issue for me.