Hypothetical Condition

[heelsfan]

I am working on an appraisal for a bank in which the builder purchased a lot in November that has since been subdivided into three lots. However, the bank wants the current value of the single parcel that was purchased in November. Can I complete the report based on a hypothetical condition that the lot was not subdivided? Thank you all in advance for your input.

 

[Terrel L. Shields]

Well, it is contrary to what exists assuming you are valuing it as of the date today. If you are doing a date in November, then it wasn't contrary to what existed as of the date of appraisals. You might mention that it will impact the value in the future or some such.

 

[KHS445]

Be sure to mention in your highest and best use analysis’ (if true) that dividing the lot as done by the current owner results in a greater market value that the value of the subject as a single unit. But based on a client imposed condition you have valued the land as a single unit.

 

[J Grant]

The subject as a single unit had the potential to be subdivided, which added to its value - yes to a HC sounds like the way to go.