• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

HBU Excess Land Created By A Hc Assemblage

Status
Not open for further replies.

ZZGAMAZZ

Elite Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
The assignment is for estate planning purposes; and per the client the intended use is to determine market value of a residential lot improved with a SFR and an adjacent vacant residential lot, the two of which will need to be assembled by virtue of a HC (of which the client has been notified and is amenable).

Although nothing is for certain, and the answer will be revealed as the result of due diligence, is it logical to assume that the hypothetical lot will include excess land comprised of the vacant lot, and that HBU will be to split the hypothetical lot into its current, actual components?

This seems too straightforward, and logical, and things usually are not what they appear at first glance. I'll figure it out eventually but desire insight from more experienced professionals.
 

Fred

Elite Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Virgin Islands
This seems too straightforward, and logical,
Not to me. If you client owns two pieces of real estate, what is the reason you can't appraise them one at a time?
 

Brad Ellis

Senior Member
Joined
Feb 7, 2006
Professional Status
Certified Residential Appraiser
State
California
zz,

Steven brings up a salient point. Usually (not always) the value of the additional lot if truly usable/buildable would be higher than if it were combined. Whether or not all or part of it would become excess land is a function of that specific market.

But I'd still be going back to the client asking why it should be done as if combined? Perfectly OK to do it with the HC but I'd sure want to know why.

Most trusts are better off with the higher value- especially QPERTs. For estate planning the norm is to want the higher value since the property would pass to the heirs at its then current (hopefully, for the heirs, higher) value.

Seems like time to have a chat with the client over that. Probably some stuff that none of us knows exists.

Brad
 

ZZGAMAZZ

Elite Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
The order instructions--partially verbal and partially written--were to appraise the two parcels as though they were combined into a single parcel, on two retrospective dates.

I didn't realize that I could/should query the client about his rationale for seeking what appears to be value based upon plottage. The client (property owner) identified himself as a relatively saavy estate investor and indicated that the intended use was "for estate purposes" and I wasn't aware that I might drill down for further details.

It's interesting that both lots are in a relatively small, erudite incorporated city where the typical min lot size is 20,000 sqft. Both of the subject lots are 20,000+; and results of the retrospective search for similar improvements on 1 acre parcels, based upon the assemblage, appear to reveal a marginal increase in cumulative value relative to the value of the vacant parcel as vacant as a separate lot--confirming Brad's gut feeling.

I have completed only 1 similar prior assignment, in which a MB sought to combine 2 two adjacent lots with a HC--in my opinion so the cumulative value would be lower so he could buy-out his siblings without them being aware of the impact on value of the HC.

I try to educate my clients as often as possible but in this case I felt like I might be prying into confidential information if I asked additional questions about the reason for the assignment.

Thanks all.................however, back to the OP: If a HC is based upon combining two lots that conform to the legal minimum, would the HBU often be what actually exists, because they were created in order to be conforming?
 

CCAAMO

Senior Member
Joined
Sep 17, 2007
Professional Status
Certified General Appraiser
State
California
You said it was for estate planning purposes but it sounds more like a loan where you need to combine both lots because there is not enough value in one for the loan, and it is usually when one lot has a home or business so its not a raw land appraisal. My advice is be very, very careful.
 

ZZGAMAZZ

Elite Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
CCAAMO: Did you pay my monthly insurance premium yet? See you on 06/17/08...
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Gama ... sounds like you are being lead down a path for some reason. I would seriously question the estate representative as to the reason for combining the lots. First off ... its not the way the lots exist as of the date of your inspection (and I do understand that you can use an HC to solve this problem). Secondly if its truly for estate planning purposes, establishing a value of both parcels would be of great benefit to the estate in my opinion separately rather than together. Finally, I would ask the estate representative for clarification in writing so as to cover yourself. You are definately being instructed to appraise something contrary to that which exists and I would need to know the reason for doing so before I would do it. There may in fact be reasons, but read closely the reasons for use of a Hypothetical Condition and share that with your client.
Best of luck on this one. Honestly ... something smells a bit fishy.
 

ZZGAMAZZ

Elite Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
Confirmed. Will do so ASAP. Thanks.
 

ZZGAMAZZ

Elite Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
Project proceeded with clarification/confirmation from client.

Because the lots are assembled for the sake of the report, should the report address the potential for the lots legally to be combined via a conditional use permit? I discussed this issue with the city and have a fair understanding of the process, but don't know whether I should be concerned with this issue becuase the lots are already combined as far as the report is concerned.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Project proceeded with clarification/confirmation from client.

Because the lots are assembled for the sake of the report, should the report address the potential for the lots legally to be combined via a conditional use permit? I discussed this issue with the city and have a fair understanding of the process, but don't know whether I should be concerned with this issue becuase the lots are already combined as far as the report is concerned.


Gama .. why are the lots combined for the sake of the report?
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks