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Help needed on an order 7.5 acres

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timindp

Thread Starter
Member
Joined
Jul 6, 2007
Professional Status
Certified Residential Appraiser
State
Florida
I have an order and need some insight/help. The subject property is as follows: TWO HOMES ON 7.5 ACRES ONE HOME 3 BEDROOMS 2 BATHS THE OTHER 3 BEDROOMS 1.25 BATHS
How would you handle this type of property? It is zoned RA, each home has a different address, but cannot be found on title, only the parcel of land is on title and contains an APN #.
Seems like the highest and best use for this property would be a vacant land, but some appraiser did the appraisal 2 months ago and did it as a duplex. There probably are no duplex comps within 10 miles.
Feedback is welcomed.
 

ccooper

Junior Member
Joined
Mar 9, 2002
Professional Status
Certified General Appraiser
State
Missouri
I see the duplex logic. Obviously, he or she was not able to find 2 SFR's that sold on one parcel.

Another option would be to appraise as SFR and make adjustments for "mother in law" quarters???? Really weak idea also.

If I owned the property, I might look into the possibility of splitting the parcel in half and marketing the properties separately, which might maximize value potential when I sold them. Here, you need to contemplate your scope of work and hypothetical conditions. Obviously, if this is for a loan "as is" then this is not the direction you want to go in unless it is in your scope from the client. If it is for the owner (i.e. estate valuation) then you might discuss this hypothetical with them if that will become the future route.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Which Governing Municipality?

Example: In NY State, similar properties with two dwellings are fairly common outside of urban markets. Here in the Hudson Valley they are Classified as R-280, i.e. multiple single family dwellings on a single lot.

Depending on the specific local municipality there are usually attendant USE restrictions including, but not limited to: owner occupied primary residence plus ancillary family occupied/non-rental second dwelling on a single NON-subdividable lot; others may allow subdivision into two parcels with zoning/use restrictions/requirements for septic and wells....etc. In such cases, legal two family income properties are NOT comparable.

In other municipalities, the second dwelling MAY be rentable to non-family individuals. As always, it Depends.......

Be glad to try and assist via online info........
 
Last edited:

VolcanoLvr

Senior Member
Joined
Oct 30, 2003
Professional Status
Certified Residential Appraiser
State
Washington
Is your assignment for a conventional lender? If so, the standard forms can be used. If not, use a GP or AI non-lending form, depending on what you have in your software package.

What are the current uses of the two dwellings, i.e., are they being lived in by unrelated people, or is the second dwelling occupied by a family member related to the primary dwelling occupant/owner?

The Duplex Form (1025) can be used if one of the dwellings is being rented by an unrelated party to the owner. (Could also be a family member renting, but determine if rent paid is market based or partially a gift.)

If properties are occupied by family only and not rented, you can use the 1004 Form, and check the ADU box. Then give an adjustment for the second dwelling on the bottom of the grid. You should also have a strong statement in the report that the ADU is not used for rental purposes. Cite the borrower for this info.

Select comps based on the property use...i.e., if a rental property, choose duplex type properties. If just used as an ADU, choose comps with 2 dwellings on a site.

You may have to widen your search distance, and possibly go back in time. Just document what you did, including market statistics for time/location adjustments.

Also....you may want to talk with your client about this first, once you do prelim. research to find comps. Let them know in advance what you will be reporting to see if that will be peachy with them. They will appreciate the 'heads up' rather than getting a wierd report after the fact.
 

timindp

Thread Starter
Member
Joined
Jul 6, 2007
Professional Status
Certified Residential Appraiser
State
Florida
its for a conventional loan. The 2 units on the land are rented out to other families. So, the owner, whom doesn't live there is collecting rent on both properties. And actually there use to be a 3rd dwelling on the land, but it burned completely down and has not been re-built.
so, I am leaning towards a 1025 form then, 2 unit.
 

VolcanoLvr

Senior Member
Joined
Oct 30, 2003
Professional Status
Certified Residential Appraiser
State
Washington
There's no 'leaning' necessary!

Use the 1025 Form.

Use what ever comps you can find that have similar building design (2 abodes on one dirt), or just use std duplex properties.

Likely as not, the excess (or surplus) land is not a contributing factor to the income derived from the rentals, unless of course it's used as an income producing pasture. But the site size may impact the Sales Approach.

So do a bit more digging and select similar comps.

One more thing....since you are 'licensed', and from your post, I'm guessing you have not done many duplex/income producing properties.....you may want to partner up with a Certified Res or Cert. Gen'l in your area who have more experience with these. (I know a CR in Carlsbad who might be able to help, but she is south of Orange Co.)

Print a blank 1025 Form, and then read every line on every page before doing the inspection.
 

timindp

Thread Starter
Member
Joined
Jul 6, 2007
Professional Status
Certified Residential Appraiser
State
Florida
Thanks for the input. I have done countless duplex/income properties in the past. I am very familiar with the 1025 form and the appraisal process. I appreciate all your help and input
Thanks
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
Sounds like you may be in a Single Family Residential zone where the multi-family use is not permitted.

I just had a similar report. Two manufactured houses on a 2 acre lot. Zoning was AS-1 which allows SFR 1 unit per acre. As a two family the property is a non-conforming use but as a one family with ADU it does conform. If it were a two family and one of the units were left vacant for 90 consecutive days or 180 days out of the year, or if it needed more than 50% of the assessed value in renovations, it would not be permitted to remain. Oddly, though, considered as a SFR ADU and all that disappears. Therefore, the way I saw it, the highest and best use by matter of degree in legality, was the SFR ADU.

Well, the underwriter disagreed. Supposedly it went all the way up the chain and the head underwriter in this national company agreed with the first underwriter (as underwriters are prone to do) and I had to reappraise the property as a two family. But the good news was, because they believed I appraised the property correctly the first time but they wanted it the other way for risk investment purposes, at least I got an addiitonal fee. The multifamily I wrote was very difficult because as I wrote it it was only more and more apparent that the 1025 was the wrong form.

So, my point in all this is, before you choose which form to use, put the order on hold, write a letter of explanation to the lender describing the property in detail, they may have opinions, and reasons for those opinions, that are different from your own.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
I have an order and need some insight/help. The subject property is as follows: TWO HOMES ON 7.5 ACRES ONE HOME 3 BEDROOMS 2 BATHS THE OTHER 3 BEDROOMS 1.25 BATHS
How would you handle this type of property? It is zoned RA, each home has a different address, but cannot be found on title, only the parcel of land is on title and contains an APN #.
Seems like the highest and best use for this property would be a vacant land, but some appraiser did the appraisal 2 months ago and did it as a duplex. There probably are no duplex comps within 10 miles.
Feedback is welcomed.


Highly doubtful.
 
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