Land Appraisal Only?

[John Connell]

I received a vacant land appraisal order for a lot that I understand is being used as collateral for a new manufactured or modular home ( not sure which one ). The vacant land is owned outright by the current borrowers. Is it common for a lender to only require a land appraisal for this type of transaction? I can appraise the lot no problem ( I would assume it would be noted as a refinance ) but would have to decline the order if there is more to it as I don't appraise manufactured housing. Am I missing something here and getting into a mess?

 

[CANative]

Reading between the lines, but what I think may be happening is the borrower wants to build a new house on a different lot and needs money. They own the lot that is the subject of your assignment and intend to use it as collateral for a construction loan on their other project.

If that's the case, then this is just a land/lot appraisal. I've done these a couple of times. Routine.

Talk to your client and find out for sure.

 

[John Connell]

Thanks for the quick reply. Yes - I'm still getting/will get some more clarification from the lender. Will it be a problem appraising this if I find out that there is only this one parcel involved?

 

[Steve Owen]

Is it common for a lender to only require a land appraisal for this type of transaction?

No, it is not common, but I have seen it happen before. Note that Fannie will not loan on land, so it won't be going secondary. However, a bank that wants to make a loan and keep it in house can do this... private investors could also do it.

Looks to me like your client is interested in the underlying value of the lot. I don't see any problem with doing it... but, others on here may have more experience in this sort of thing. I've only run into it a couple of times where they wanted a vacant land appraisal for a property that was going to be improved. I have, however, done several lot appraisals for banks wanting to use the lot as collateral for other loans.

 

[Couch Potato]

At one time I did work for a local manufactured home dealer. They always wanted a "land only" appraisal. The dealer knew the "value" of the new manufactured home and only needed confirmation of the value of the land to do the deals. They were not looking to sell loans to the secondary market, The made good money on them.

 

[Mr Rex]

Ditto Mr Meyers. The manufactured dealers are having such a hard time selling manufactured loans on the secondary market that they have gone back in time to the days when they loaned on the Real Estate, the land, and the Manufactured home as personal property, like a car loan. The lender on the home is often a subsidiary of the manufacturer. So they make a ton on the house up front and drag it off the lot if it goes belly up. It is becoming more popular now, and will likely continue as the manufacturers can't help themselves from peeing in their own Wheaties.

 

[Lee Lansford]

What's the problem?

If you are competent to undertake the assignment ("appraise vacant land"), accept the assignment and move on.

 

[John Connell]

Thanks

Thanks gentlemen -

Yes - Greg/Mike that is exactly the case here. It took a couple of calls but that is how the deal is structured. The broker explained they already "know how much the home is worth" and just need the lot appraised. Lee - no problem, just wanted to establish the scope was clear and appropriate before accepting the assignment.