• 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.

Is A Highest And Best Use Analysis Required For A Review Appraisal?

Status
Not open for further replies.

jns

Freshman Member
Joined
Feb 3, 2018
Professional Status
Certified Residential Appraiser
State
Michigan
I am working on a review report that includes a two-unit dwelling located in a single-family district. The appraiser indicated in the report that the subject is zoned multi-family when it is not. Two-unit is not a permitted or a conditional use. I have yet to speak to the City zoning department as to whether or not the subject is legal non-conforming, but I am wondering in the meantime if a highest and best use analysis is required by a review appraiser. How much is required on my part for a H&BU analysis as the scope of work for a review appraisal?
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
What services are you providing? Are you being asked to provide your own opinion of value (including agree/disagree with the value conclusion)?

If the appraiser made an error in fact about the zoning and its enough to call their HBU conclusion into question, or if they botched the HBU analysis itself because they got the facts wrong in their "legally permissible" or if they have reporting omissions because they didn't adequately explain these issues then those may pose significant concerns to any user of the appraisal, independent of the value conclusion itself. In other words, it may not matter if that number is reasonable if the property can't be insured as a 2-unit for lack of permits or lack of permissibility, and the structure and occupancy might not be rebuildable in the event of a loss.

The value is not the only important piece of info in an appraisal, and sometimes it isn't even the most important info.

No matter what, the report definitely needs to be revised. The appraiser was engaged and is being paid to provide a competent service, and they're not done until the finish the job.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Yes, it's required. Your review is an appraisal.
USPAP does not require a HBU analysis to be included in all apprasals...it is only required when necessary for credible assignment results in developing a market value opinion (See Standards Rule 1-3) and I would dare say that in the context of some review appraisal assignments, it may not be necessary for credible assignment results although I think it is necessary in the situation describe by the OP.
 

jns

Freshman Member
Joined
Feb 3, 2018
Professional Status
Certified Residential Appraiser
State
Michigan
What services are you providing? Are you being asked to provide your own opinion of value (including agree/disagree with the value conclusion)?

If the appraiser made an error in fact about the zoning and its enough to call their HBU conclusion into question, or if they botched the HBU analysis itself because they got the facts wrong in their "legally permissible" or if they have reporting omissions because they didn't adequately explain these issues then those may pose significant concerns to any user of the appraisal, independent of the value conclusion itself. In other words, it may not matter if that number is reasonable if the property can't be insured as a 2-unit for lack of permits or lack of permissibility, and the structure and occupancy might not be rebuildable in the event of a loss.

The value is not the only important piece of info in an appraisal, and sometimes it isn't even the most important info.

No matter what, the report definitely needs to be revised. The appraiser was engaged and is being paid to provide a competent service, and they're not done until the finish the job.
Hello. Yes, I am providing an opinion of value if I do not agree with the stated value in the report.
 

jns

Freshman Member
Joined
Feb 3, 2018
Professional Status
Certified Residential Appraiser
State
Michigan
USPAP does not require a HBU analysis to be included in all apprasals...it is only required when necessary for credible assignment results in developing a market value opinion (See Standards Rule 1-3) and I would dare say that in the context of some review appraisal assignments, it may not be necessary for credible assignment results although I think it is necessary in the situation describe by the OP.
Hello. Thanks for the response.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Hello. Thanks for the response.
No problem.....assuming that the subject property is not legal non-conforming (you definitely need to find that out from the local municipality), then the HBU analysis should be very easy for this one.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
I am working on a review report that includes a two-unit dwelling located in a single-family district. The appraiser indicated in the report that the subject is zoned multi-family when it is not. Two-unit is not a permitted or a conditional use. I have yet to speak to the City zoning department as to whether or not the subject is legal non-conforming, but I am wondering in the meantime if a highest and best use analysis is required by a review appraiser. How much is required on my part for a H&BU analysis as the scope of work for a review appraisal?
(my bold)
Since you stated that you are required, under the review SOW, to develop your opinion of value, then you are required to develop your own H&BU. If you believe that the original work under review is credible (for this component) then you could incorporate that into your analysis. Since you don't, you cannot.
You'll have to do your own... and if it is different than the original work, so be it.

Welcome to the world of reviews. :cool:
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I am working on a review report that includes a two-unit dwelling located in a single-family district. The appraiser indicated in the report that the subject is zoned multi-family when it is not. Two-unit is not a permitted or a conditional use. I have yet to speak to the City zoning department as to whether or not the subject is legal non-conforming, but I am wondering in the meantime if a highest and best use analysis is required by a review appraiser. How much is required on my part for a H&BU analysis as the scope of work for a review appraisal?

There are two separate issues here as far as the review ( I read the thread you are to provide your own opinion of value if you disagree with the OA)

Issue one is the OA has zoning incorrect. So answer that in appropriate section of the review. if a field review it should be section 4 (site).

Under this same site section is the HBU, which begs the question, how can you agree or disagree with OA HBU based on their having the wrong zoning, without developing an opinion of what the correct/best supported HBU is per legal zoning other tests of HBU...

Your opinion of what the correct HBU should be might impact later question of review about comp selection in the OA. Which then leads to the final question, agree or disagree with the value . Which is why the review is one step at a time that builds to the final agree/disagree.

That is the problem with taking on a review- they can start off looking straightforward and turn into quicksand - good luck ! .
 
Last edited:

Rlong

Member
Joined
Jan 31, 2002
Professional Status
Certified General Appraiser
State
Colorado
I do a bit of review (and avoid some too), and you have gotten some good advice. While there might be a defensible position not to develop your own H&BU, even if you declare his zoning incorrect; you’re still going to have to point out that his "written" or "inferred" H&BU analysis is flawed because it does not comply with zoning. And if you’ve gone that far, you might as well do your own analysis (which as pointed out, may or may NOT be a part of your written SOW). But again "throw it in", it may be easier than trying to explain to the state board why you didn't, because the other appraiser (or owner) somehow sees your review and decides to file a complaint because you "ruined their deal".
 
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