HBU/excess land

[Zoe]

Yeah, Alebrewer made that pretty clear in reply #4 but since the OP didn't specify, I'm assuming that he's interested in what his options are for a lender that wants a realistic value.

If FHA says 'give it no value' then the OP should incorporate a HC. You can't (shouldn't) ignore an item of significant value, pretending it doesn't exist, in order to make it fit into the lender's guidelines without a HC.

If Fannie says 'value in use', then it needs a separate appraisal since the appraisal for Parcel 1 with house is for MV. Having one report with two parcels with two different definitions of value would be confusing at best, misleading at worst.

"Value in use" for an adjacent, second site is probably nothing more than a privacy buffer or location for a garden, a value likely significantly less than a building site.

I agree, but the client dictates that. That is not our problem. If the client wants MV opinion on both sites being sold together, then we can handle that.

Use value requires no H&B use analysis.

Appraiser just needs to get a good handle on that vacant site using MV definition.

If that vacant site is worth more on MV definition than improved site, then you need to adjust in improved site on MV definition.

 

[Zoe]

I have no problem HC.

However, this client is a lender obviously and the homeowner owns both sites at the moment. Always remember we appraise real property rights.

Focus on what you are appraising on real property rights.

If you are doing MV definition, then there is nothing wrong with saying they should be sold separately and this is how it would play out.

If sold together, on MV definition, this is how my opinion works.

Homeowner can help you there.

Homeowner is giving the mortgage.

 

[Zoe]

Motivations are huge in MV definition.

You can add limiting conditions on your opinion of value. They have to be sold together.

Use value is totally different.

 

[Terrel L. Shields]

This sounds like Kamala-speak.

Maybe she worked for Fannie Mae before.

 

[Lee Lansford ASA]

I have a current assignment that I'm hoping to get some advice on. The subject improvement is on a typical sized lot in a neighborhood. There is an additional lot next door that is a viable building lot that has a separate deed and Tax ID#, and could be sold separately. The agent said they were initially going to sell the lot separately, but the sellers decided to include it with the sale of the lot with the improvement on it, and they priced it accordingly (basically what they thought the site with improvement plus the vacant lot are worth). Clearly the additional lot is excess land. I confirmed with the town that the lot could be sold and built on. I explained to the AMC that this assignment will need to be two separate appraisals, one for the lot with the improvement and one for the vacant lot. The lender plans on putting both parcels on one deed if and when the sale goes through. The lender is insisting that both the lot with the improvement and the vacant lot be included on one appraisal. If you were in my shoes, what would you tell them at this point? Can this be done as a hypothetical (in which case the OOV may come back well below the contract price)? Appreciate any feedback, thank you.

I'd walk away as those making the request aren't going to budge.

 

[Zoe]

I'd walk away as those making the request aren't going to budge.

I would probably ask for fee increase.

If their mortgage is on both properties and they want them sold together, it is still like doing 2 assignments.

Double the fee at least.

The marketing time and exposure times could be different if they want them sold separately. But still a good handle on that vacant site has to be determined.

The MV opinion is what causes the problem on H&B use. Only value opinion that requires H&B use.

That is where the problem comes in on MV opinion.

You can state all that in H&B use analysis and say but we have a limiting condition here. These properties have to be sold together at the same time.

I have no problem with HC.

If you tell the bank that and they still want the appraisal with them being sold together, then they are the client.

Make them understand there will be a limiting condition on your requirements and this is how much my fee will increase. Do you want me to proceed?

In final reconciliation all of that would need to be disclosed and in H&B use analysis on MV appraisal.

Okay, you don't want me to proceed. I will send you invoice for my services of what you owe me which is $X.

 

[Carnivore]

This situation is not common but it is also not that uncommon . There may be something being left out. In our rural areas it is not uncommon to acquire an adjacent site for future use, i.e garage/shop. Having said that there could be another reason they have that extra adjacent site. In my county we do not have county wide water or sewer, the soil conditions are such that. septic tank drain fields have to be much larger, so much so that this extra lot may have at least portion of the drain field on that extra site. If that true, it is a game changer. He would need to ask the realtor some questions. i,e Where is the well & septic drain field? OR if he cant get that info on line he would need to go to his county environmental dept and get that info.

I don't like doing these types of assignments because it is a lot of work to determine that extra lot's contributory value to the whole.

So there is a lender involved. Problem is there is also an AMC. I always research potential assignments, especially rural assignments to determine how much work I will have to put into it. In the county it's a lot of work.Odd's are he grossly being underpaid for this assignment.

I wonder, he is working through an AMC. He said that he informed the AMC who in turn, I hope communicated this issue to a REAL underwriter!! Meaning not to a commision based Loan Seller. It's possible this lender may not want to underwrite this. It's about risk analysis .

 

[J Grant]

People are allowed to buy and sell properties as a package with a vacant lot, and appraisers are allowed to appraise it as a package.

For lending purposes, the client needs one value of the package because the lender is granting one loan on the property. Therefore, having two appraisals done is useless for the client, yet we see posts advising to do it as two separate appraisals. That is worthless to the client. Ask your client; they'll tell you. If an appraiser feels unqualified to appraise a package sale, then decline the assignment. The HBU of the whole package is not the same as the HBU of the vacant lot as a stand-alone. Some appraisers seem to think the vacant lot is the appraisal question when it is just a component of the assignment.

If an appraiser feels like they need to develop a value for the lot as vacant, then do so as part of the SOW, but keep in mind when sold as a package, it is the contributory value to the whole now of the vacant lot that is being analyzed.