• 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 this Doubledipping?

Status
Not open for further replies.

William Rightsell

Thread Starter
Member
Joined
Oct 22, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
Howdy folks....need a bit of advice here.

I just completed an appraisal on a single family home for a lender. Done deal.

Some background. The owner owns an adjacent lot which was purchased on the same deed and the lender asked me NOT to include it on the original report. It has its own parcel number and is a seperate buildable lot in a very exclusive neighborhood, so its worth a pretty good penny. As its a seperate lot, I did not include it. No problem. The house is sited completely on the first lot, leaving the second lot vacant and buildable. One snag - the driveway of the existing home encroaches onto the vacant lot by about 4-5 feet. It can be moved to cure the problem, and I addressed this issue in the original report, making a sizeable adjustment to reflect market reaction to having to move the driveway. (Cant move the lot line as the resulting site would be too small per current zoning..etc) I did this because the subject property with house could not be sold as a single lot without dealing with the issue first. They wanted an "AS IS" appraisal on the single lot, so thats what I gave them.

Now the lender comes back and wants to include the value of the adjacent lot in the report also. I can do it (new report, new fee, etc).

My question: If the adjacent site is worth say $150,000 as a buildable lot with no encroachments, and the "ding" for encroachments is estimated to be $25,000, (edit to add: these are totally made up numbers, dont read anything into them) then is it fair to hit the vacant site with this adjustment also? Remember, they want it included now with the "original" report. In that report, I already made the adjustment to the house, as it has to be addressed if sold by itself. The same tho is true for the vacant site - if somebody was going to buy it, they would require that the current owner move the driveway or walk away. So do I adjust this parcel as well? Is that double dipping? After all, as it sits presently it is encumbered.

Remember, I cant make the extraordinary assumption that the work is done if its not and I have to render an "AS IS" report.

Is it fair to make the same adjustment to the vacant site??..or is this hitting it twice? What say you bright folks. Thanks in advance.

todd
 
Last edited:

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Howdy folks....need a bit of advice here.

I just completed an appraisal on a single family home for a lender. Done deal.

Some background. The owner owns an adjacent lot which was purchased on the same deed and the lender asked me NOT to include it on the original report. It has its own parcel number and is a seperate buildable lot in a very exclusive neighborhood, so its worth a pretty good penny. As its a seperate lot, I did not include it. No problem. The house is sited completely on the first lot, leaving the second lot vacant and buildable. One snag - the driveway of the existing home encroaches onto the vacant lot by about 4-5 feet. It can be moved to cure the problem, and I addressed this issue in the original report, making a sizeable adjustment to reflect market reaction to having to move the driveway. (Cant move the lot line as the resulting site would be too small per current zoning..etc) I did this because the subject property with house could not be sold as a single lot without dealing with the issue first. They wanted an "AS IS" appraisal on the single lot, so thats what I gave them.

Now the lender comes back and wants to include the value of the adjacent lot in the report also. I can do it (new report, new fee, etc).

My question: If the adjacent site is worth say $150,000 as a buildable lot with no encroachments, and the "ding" for encroachments is estimated to be $25,000, then is it fair to hit the vacant site with this adjustment also? Remember, they want it included now with the "original" report. In that report, I already made the adjustment to the house, as it has to be addressed if sold by itself. The same tho is true for the vacant site - if somebody was going to buy it, they would require that the current owner move the driveway or walk away. So do I adjust this parcel as well? Is that double dipping? After all, as it sits presently it is encumbered.

Remember, I cant make the extraordinary assumption that the work is done if its not and I have to render an "AS IS" report.

Is it fair to make the same adjustment to the vacant site??..or is this hitting it twice? What say you bright folks. Thanks in advance.

todd


I question the adjustment but be that as it may, you only have to move the drive once not twice. I think one adjustment is correct either against the improved property or against the vacant but not against both. I would think its an improvement with the home, that is the property that should be adjusted.
Frankly I would put an easement on the site overlapping, combine the next drive with this one and solve the issue for NO MONEY. While you may not be able to consider this it is entirely possible to do.
 

stefan olafson

Senior Member
Joined
Apr 2, 2003
Professional Status
Certified General Appraiser
State
North Dakota
I like PE's answer! Combine the driveways and solve the problem with no loss in value to either.
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
2nd lot is not worth nearly 150k -25 as part of the single parcel with the house. MHO. Its now just a bigger site, find comps that have bigger than typical sites that can be split and you will likely find that the additional site as part of the single site, is worth 25-50% contributory vs the value of a buildable separate lot.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
2nd lot is not worth nearly 150k -25 as part of the single parcel with the house. MHO. Its now just a bigger site, find comps that have bigger than typical sites that can be split and you will likely find that the additional site as part of the single site, is worth 25-50% contributory vs the value of a buildable separate lot.



Its not just a bigger site .. its two sites one of which can still be built upon. Larger sites are typically just that larger ... not developable separately.
 

William Rightsell

Thread Starter
Member
Joined
Oct 22, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
2nd lot is not worth nearly 150k -25 as part of the single parcel with the house. MHO. Its now just a bigger site, find comps that have bigger than typical sites that can be split and you will likely find that the additional site as part of the single site, is worth 25-50% contributory vs the value of a buildable separate lot.

Rex,

A bit more info. Its NOT just a bigger site. Its a buildable lot already with its own parcel number and letter on file from the county stating its buildable. Its NOT excess land. The current owner JUST purchased the whole package with the intention of renovating the existing home (which has been done and was the subject of the first report) and then building a house on the adjacent site and selling it. She just hasnt moved the driveway yet, which she states she fully intends to do because she knows she cant sell either one seperately until she does. The MLS lrecords for that for that sale show two listings - one being the house, the other the vacant site. Each had its own price and each had a seperate closing price listed in the MLS. It is not excess land. The value as it sits currently is WAY more than 50% of the value of an unencumbered site.

PE...thanks for the reply...I sorta thought of it as double dipping also, but I was sorta curious when you consider that BOTH really have a problem as they sit currently.

todd
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
You best talk to your client regarding what they are asking of you.

IF the SOW is to include a single opinion of MV for the two parcels...good luck (fyi: I assume that such transfers at not at all that common) in finding data that will indicate the MV of such a combination.

NOW...if the client is requesting TWO (frankly, this would be the only way that I would accept the assignment) separate opinions of MV...an opinion for each parcel...you can "roll" all of this into a single report...but it would remain two separate opinions of MV.
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
Its not buildable separately(as is), it has a driveway on it. That's where your dilemma started. If it was truly buildable separately and you include it as part of the whole package, you have a H&BU issue.
 

William Rightsell

Thread Starter
Member
Joined
Oct 22, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
Its not buildable separately(as is), it has a driveway on it. That's where your dilemma started. If it was truly buildable separately and you include it as part of the whole package, you have a H&BU issue.

Sure its buildable. Why cant I build a house on a lot I own that is encumbered? If it meets zoning and setbacks and I am dumb enough to do it then I can surely do it. It'll just have to be taken care of later on if/when I decide to sell...or maybe not even then if I sell to a dimwit - they may never even know.

Its buildable. (Edit to add - I seriously doubt the city would deny a building permit on a property for which they have recently issued a letter stating the site is a buildable lot.)
 
Last edited:

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Its not buildable separately, it has a driveway on it. That's where your dilemma started. If it was truly buildable separately and you include it as part of the whole package, you have a H&BU issue.


It is buildable separately .. it has an encroachment. Encroachments like this wouldnt stop you from building on it .. just as I stated the drives of this and the next potential house could be combined and the second house built. Problem solved.
 
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