HBU Question

[Valueseeker]

With both of these lots the property is still non conforming due to size. assuming the town would not allow for a variance, the HBU is current use correct?

Lets say though that the bigger lot was legal conforming on its own? that second lot in the box (lower lot) has value if the abutting neighbor wanted it. We don.t know if the neighbor would be really interested but would highest and best use be to sell the second lot to neighbor as the home could stand without it? I rarely come across these so I thought Id ask you folks. Im just not even sure what a property would be worth to a neighbor since he is the exclusive market to that lot.

 

[glenn walker]

Question: Is this an appraisal for a lender or sale ?
* What is the scope of work ?

Find out if there is an existing mortgage encumbering both parcels ? In many of these situations you find the owner at some point encumbered both parcels with one mortgage and if the appraisal is for a lender you need to find out if they are encumbering both parcels with one loan. If you discover both parcels are encumbered then it sounds like a single family home located on an oversized double lot in which the second lot cannot be sold of separately and H & B would indicate you have ( surplus land ) which most likely has some utility value because many buyers like large lots for parking, game courts, guest houses etc and will pay a premium ( minimal lot size adjustment for surplus land )

If you discover the second lot is free and clear and the owners are not encumbering it with another loan your Highest and Best use analysis may change and you may end up appraising the second lot separately and it may be considered excess land ( see below )

Definition of Excess Land :
Excess 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 and is valued separately.”

Hope this helps it can get complicated LOL

 

[Valueseeker]

Thanks Glenn. It is for a lender home equity and I'm sure both lots are on the mortgage but could we say that this was a private sale? In this situation where the other lot isn't buildable but it has value to only 1 neighbor, how does an appraiser form a value? I've just always wondered how this works because argueably they could sell the parcel to the neighbor IF they were interested. So I guess what I need to know is if HBU covers all hypothetical situations that pass the 4 tests? ..maybe that it's already maximally productive?

 

[DJBanas]

Does zoning allow any other use? utility station? cell tower? bus stop? That could lead you to a legal HBU and then you can determine the economic feasibility.

 

[Valueseeker]

Both are zoned residential.

 

[DJBanas]

Both are zoned residential.

Doesn't mean there are not other permitted uses, at least in my area. Need to look at the zoning requirements carefully. Hopefully, they are on-line for you.

 

[nstanbru]

You should find out if the parcels are actually nonconforming. They may have been created prior to the current lot size requirement and if so are most likely "grandfathered". Confirmation should be obtained from the planning department.

 

[Michigan CG]

Find out if there is an existing mortgage encumbering both parcels ? In many of these situations you find the owner at some point encumbered both parcels with one mortgage and if the appraisal is for a lender you need to find out if they are encumbering both parcels with one loan. If you discover both parcels are encumbered then it sounds like a single family home located on an oversized double lot in which the second lot cannot be sold of separately and H & B would indicate you have ( surplus land ) which most likely has some utility value because many buyers like large lots for parking, game courts, guest houses etc and will pay a premium ( minimal lot size adjustment for surplus land )

If you discover the second lot is free and clear and the owners are not encumbering it with another loan your Highest and Best use analysis may change and you may end up appraising the second lot separately and it may be considered excess land ( see below )

How many times are you going to post this absolutely INCORRECT information?

Please read the definition of market value especially where it says CASH.

Mortgage encumbrances on properties have absolutely NOTHING to do with Highest and Best Use.

 

[Michigan CG]

If you have a parcel that is non-conforming and not buildable then 99% of the time the Highest and Best Use is for assemblage with a contiguous parcel which would mean either the neighbor to the right or the neighbor to the left. Find sales of unbuildable parcels. I have about 20 in a database that I have used in the past. They tend to sell for 1/3 to 1/2 the value of a buildable lot in my area.

 

[glenn walker]

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