Got Another Weird One FHA

[BRCJR]

Situation not as uncommon as many may think.

 

[Dublin ohio]

It is not taxed at all or identified as a parcel

That doesn't track with your op

. Based on GIS maps the opposing state does not recognize it as a parcel. One state taxes the whole parcel and if transferred would only needed to be recorded in the one state per state to state jurisdiction agreements.

 

[Xavier Hargrove]

That doesn't track with your op

Yeah, one state taxes it the other does not. There isn't a tax rate to compare between the two states because one state has not assessed taxes.

 

[Terrel L. Shields]

is if it was Oklahoma that it straddled...

Go sooners!

I know a liquor store that straddles 2 states. I know a 130 acre farm where there is one acre in Arkansas that you go thru to get to the other 129. The house is in OK. The one acre was necessary to get access to the farm without driving an extra 5 miles on dirt road.

But if the lender requires you find sales that straddle the line, i would tell them that is an unacceptable restriction upon the judgment of the appraiser and decline the assignment or tell them that this will require a fee of $8,000 and 30 days to complete and your comps may be 100 miles or more away.

 

[sputnam]

Use the sale from 25 miles away to build an argument that the market does not penalize a property for straddling the lines, not necessarily as a comp in the grid.

Agree. The only really, um, challenging parts of the assignment are describing that it's in two states and extracting the market reaction to it straddling the state line.

 

[bsilver]

Along the Vermont / Canada border there are farm parcels that cross between the two counties, and there are buildings that straddle the boundary. The town office building of Norton, VT is a former small grocery (aisle shelves still in place) which straddles the border. The town of Derby, VT has numerous buildings, including residences and an opera house that straddle the boundary. My great-grandmother was born in a house which straddles the border, and her birth certificate has a parenthetical note saying (US side of house).

This is just interesting fun. As to your issue, there is some legitimacy to the client asking for support that the two-state situation doesn't impact value. Support does not necessarily require sales data, though that would be the most convincing. The sale you do have could be compared to a group of non-straddle sales looking for differential. You could also find straddle properties that haven't sold in some time and survey the owners to see if they report that it affected their pricing, ask some brokers what they think, call a few appraisers. If you survey a bunch of participants who indicate they don't think its an issue, have a sale that is within comparable market parameters, and other wise have no data or rational reasoning the issue would affect value, then there's no support for the adjustment.

What would be the reasoning that would push value downward? Is utility affected, is the highest and best use affected? Is tax burden, transferability, or access affected? Is there a legal restriction, say building improvements that straddle the boundary are prohibited, that encumbers the property? If there is no discernable differential that affects the highest and best use, do you even need to support not making an adjustment?

That the portion in the other state isn't recognized for tax purposes doesn't mean it isn't in the other state. Whatever the legal situation as far as taxation of cross-boundary properties is controls. You should be certain what that is, whether by agreements or laws. Report the current tax situation, but remark if it's inconsistent with law. Also, note any differential land use regs, both state and local if any. Does the deed itself reference the property as two parcels or a single entity? Does the boundary create a de facto subdivision? Does the boundary affect future subdivision potential, if any, and does this affect value? Is the land in the other state necessary to support the current use? Is the highest and best use of the improved portion different if the portion in the other state were severed? Same consideration for the unimproved portion? If the answers to these questions are clear, then there really is no reason to analyze the adjustment.

 

[Tom D]

Bsilver, you just talked me out of doing it for what fee? I think the value is committing a crime in one state, if the police come to get you, you jump over to the next door state. Good functional utility i see there.
Your option is to do it, then say there were no such similar comps within 5o miles. The one comp you have, i would put it in #4,5,6 space as support only. What are they going to find, if they send it out for a $300.00 review, or in house. Lenders don't know what's is, or is not out there. That is why they ask. So you tell them in your brilliant report. You didn't say how much ground there was, can some part be ignored.

And being FHA has nothing to do with what they are asking.

 

[Bobby Bucks]

I can think of some buyers who would consider a property straddling two states to be a positive, especially for hunting. It's not about access, I'm referring to those who push the limits with game laws where sometimes a hasty retreat to a safe haven is a godsend. State game wardens rarely have the authority to cross state lines to make arrests for game violations. This goes right up there with hunting dogs that don't bark on posted land usually get premium prices.

 

[Terrel L. Shields]

Yes, but my clients were not idiots enough to want sales of property that straddle the line.

 

[sputnam]

As annoying as the weird ones can be, if you accept and complete the assignments... you will be a better appraiser after. Earlier in my career, I was fottunate to have a mentor/supervisor who never declined an assignment... unless they didn't want to pay enough. I hated it sometimes... but I learned a lot that I would never have learned if I had worked in a shop that only did the normal ones.