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H & B use

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Lanny A Freng

Sophomore Member
Joined
Nov 28, 2006
Professional Status
Certified Residential Appraiser
State
Minnesota
Got a call for a divorce appraisal. Older Farm house sits on just under 5 acres of Land 1/2 mile south of a very well developed commercial area, target, home depot, large grocery store, strip malls etc... he paid $94K back in 1989 and tax assessor has the property at $243K for 2008. He was telling me on the phone that a 10 acre parcel of land across the road sold for 1.1 million 3 years ago. He is in an area that has had several housing/townhome developments put into the north of him between him and the commercial area. There are other developments surrounding him but they are not as dense and some are older. He said he would be interested in 2 different appraisals, one as it sits, and one as a possible developable piece of land. If this piece of land can be developed which I am waiting to hear back on, with the townhome/new const. market as crappy as it is up here, how can one appraise it as a tract of land to be sold to a developer when it could take years before the market rebounds enough to have the demand to start throwing these developments up again. I am not a general certified so I wouldnt be touching the development appraisal as that would be a commercial appraisal (I would think) but I am just curious about that scenario. As for the "as is" appraisal, I havent looked yet but can only guess that there is a lack of similar comps being this was built in 1880 and most of the area around it is suburban development. Is this even worth attacking for the money, how crappy is my appraisal gonna look when I have nothing real good to compare it to? should I walk from this or run?
 

stefan olafson

Senior Member
Joined
Apr 2, 2003
Professional Status
Certified General Appraiser
State
North Dakota
Lanny,

I'd be particularly careful in defining your scope of work on this one! If this is a divorce related appraisal, I'd only provide an "as-is" opinion of value. You have to develop your highest and best use prior to doing the appraisal to determine if in fact it's land ready for development or if there is a waiting period. If there is a waiting period you may have to discount that H&B use value to todays value.

Sounds like he is fishing for two values, one for his purposes and one for his soon to be ex wife and her attorney.

I'd write a narrative with a whole bunch of information and charge a well earned fee.
 

The Warrior Monk

Moderator
Staff member
Moderator
Joined
Mar 30, 2005
Professional Status
Certified General Appraiser
State
New York
Given the contentious nature of divorces and that the property needs two be appraised under two scenarios, at least one of which (and maybe both) requires the skills of a GC, it is best to leave it to a GC. The reasonableness of a zoning change has the potential of becoming an issue in both reports. HBU can turn out to be something other than one building parcel that can be improved with a SFR, which is important to the development of the report under either scenario.
 

Lanny A Freng

Sophomore Member
Joined
Nov 28, 2006
Professional Status
Certified Residential Appraiser
State
Minnesota
yeah I am in agreement that there are two appraisals that need to be done. I wouldnt comment on the developed aspect, that is above my head. I could do the "as is" SFR residential value no problem provided I can find some comparables. Thanks for the info, I will give him this info and he can decide what he wants to do.
 
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