Land Appraisal

[Gobears81]

What exactly is a
and why aren't they ethical?

When I first started appraising and people were told that one has an MAI, they would say Made As Instructed. Kind of a bad joke and one that has understandably died in recent years, but I'm guessing that is what she is referring to

Actually Eminent Domain Market Value can be very different from private party. It is the highest market value number 1

Federal definition:

Market value is the amount in cash, or on terms reasonably equivalent to cash, for which in all probability the property would have sold on the effective date of value, after a reasonable exposure time on the open competitive market, from a willing and reasonably knowledgeable seller to a willing and reasonably knowledgeable buyer, with neither acting under any compulsion to buy or sell, giving due consideration to all available economic uses of the property

Illinois definition:

The fair cash market value of a property in an eminent domain proceeding is that price which a willing buyer would pay in cash, and a willing seller would accept, when the buyer is not compelled to buy and the seller is not compelled to sell. In the condemnation of a property for a public improvement, any appreciation or depreciation in value caused by the contemplated improvement shall be excluded from the consideration of the fair cash market value of the whole property and the value of the part taken.

There was someone on AF posting not too long ago that North Dakota's MV definition is based on the highest price paid - maybe California is as well - but most of the country has a definition that reflects some variant of "most probable price". A recent Appraisal Journal article discussed the definition of market value and the "highest price paid" has some different interpretations, with some viewing it as the highest bidder, which would not necessarily result in a different value than "most probable". Regardless, I don't believe that the OP is inquiring for eminent domain purposes.

 

[Raven59]

I have asked the AMC for clarification-but just can't get straight answer as I feel they really don't understand it either. - If they don't understand what they want and you don't understand what they need, why would you consider this assignment? If you define the intended use and develop an appropriate scope of work, how could the report be misleading? Unless you deliver a report not worthy of belief, how can it be an ethical issue? Keep things simple.

 

[Amy Perkins]

I have asked the AMC for clarification-but just can't get straight answer as I feel they really don't understand it either. - If they don't understand what they want and you don't understand what they need, why would you consider this assignment? If you define the intended use and develop an appropriate scope of work, how could the report be misleading? Unless you deliver a report not worthy of belief, how can it be an ethical issue? Keep things simple.

You could call the owner and find out. Doesn't sound like you even know what you are in for...

 

[Amy Perkins]

When I first started appraising and people were told that one has an MAI, they would say Made As Instructed. Kind of a bad joke and one that has understandably died in recent years, but I'm guessing that is what she is referring to


Federal definition:

Market value is the amount in cash, or on terms reasonably equivalent to cash, for which in all probability the property would have sold on the effective date of value, after a reasonable exposure time on the open competitive market, from a willing and reasonably knowledgeable seller to a willing and reasonably knowledgeable buyer, with neither acting under any compulsion to buy or sell, giving due consideration to all available economic uses of the property

Illinois definition:

The fair cash market value of a property in an eminent domain proceeding is that price which a willing buyer would pay in cash, and a willing seller would accept, when the buyer is not compelled to buy and the seller is not compelled to sell. In the condemnation of a property for a public improvement, any appreciation or depreciation in value caused by the contemplated improvement shall be excluded from the consideration of the fair cash market value of the whole property and the value of the part taken.

There was someone on AF posting not too long ago that North Dakota's MV definition is based on the highest price paid - maybe California is as well - but most of the country has a definition that reflects some variant of "most probable price". A recent Appraisal Journal article discussed the definition of market value and the "highest price paid" has some different interpretations, with some viewing it as the highest bidder, which would not necessarily result in a different value than "most probable". Regardless, I don't believe that the OP is inquiring for eminent domain purposes.

"Severance Damages" aka "consequences" for the remainder. How can you even give a quote for a partial valuation when you don't know if you need a before and after.

 

[Mark K]

Properties that are not subdivided have different utility and value than those that are. Transactions do occur of a whole parcel, subdivisions in progress, and completed subdivisions. These all have different property rights, utility, and value.

Put a 'some' in front of 'Properties....' and I agree. However, oftentimes there is no difference. A subdivision can be as simple as splitting a 10 ac tract into two parcels resulting in the same HBU after.

Also agree that utility and value COULD be different but still am uncertain why the property rights change. If the rights were fee simple before, more than likely they'll be fee simple after.

Recording a deed with a different legal description is not so onerous or extraordinary as to force an appraisal report to be 'subject to' or based on an EA or HC.

 

[The Warrior Monk]

Put a 'some' in front of 'Properties....' and I agree. However, oftentimes there is no difference. A subdivision can be as simple as splitting a 10 ac tract into two parcels resulting in the same HBU after.

Also agree that utility and value COULD be different but still am uncertain why the property rights change. If the rights were fee simple before, more than likely they'll be fee simple after.

Recording a deed with a different legal description is not so onerous or extraordinary as to force an appraisal report to be 'subject to' or based on an EA or HC.

One lot right now that can only be improved with one residence has different utility, and generally different value unless by coincidence, that two lots right now, each of which can be improved with a residence. One lot right now is one lot that can be transferred; two lots right now is two lots that can be transferred. One lot right now can be two lots transferred not right now, but later after the subdivision of the parcel.

Different areas have different requirements pertaining to subdivision of land; some of which is laborious, some of which is not. However, it is not always as easy at writing it on a napkin and recording it. Even in areas with no zoning, other laws and regulations still apply; e.g., various laws pertaining to environmental issues, health department codes (percolation, septic, etc.), and so on.

 

[Gobears81]

How can you even give a quote for a partial valuation when you don't know if you need a before and after.

Pretty sure that the OP isn't dealing with a valuation that requires a before and after value. If he appraises based on a split, the hypothetical smaller parcel is the "whole".

 

[Mark K]

Different areas have different requirements pertaining to subdivision of land; some of which is laborious, some of which is not.

However, it is not always as easy at writing it on a napkin and recording it.

Even in areas with no zoning, other laws and regulations still apply; e.g., various laws pertaining to environmental issues, health department codes (percolation, septic, etc.), and so on.

In many parts of the country its not much more difficult than writing on a napkin. 1.) Order a survey, 2.) prepare a deed yourself if you're the owner (in this state owners can prepare their own deeds) of have an attorney do it, 3.) record it.

I can see where people in heavily regulated states and locales have trouble with this concept but in much of the 'flyover' part of the country splitting land is really not a big deal. What you can do with it after the split is another issue and goes to the HBU analysis.

 

[Deleted member 152047]

In many parts of the country its not much more difficult than writing on a napkin. 1.) Order a survey, 2.) prepare a deed yourself if you're the owner (in this state owners can prepare their own deeds) of have an attorney do it, 3.) record it.

I can see where people in heavily regulated states and locales have trouble with this concept but in much of the 'flyover' part of the country splitting land is really not a big deal. What you can do with it after the split is another issue and goes to the HBU analysis.

My neighbor just subdivided her land and she technically did not need a survey. Just had to record the subdivided parcel's legal description. If you have the parent tract's legal description it would be easy enough to DIY. Or just call up a surveyor and ask them to write out a legal description for a couple hundred bucks.

 

[Carnivore]

Okay Amy, when would anything that you mentioned change the market value of the property?

Eminent Domain- Market Value is the same
Private Party Internal Use- Market Value is the same
Lending- Market Value is the same
Billy Bob Son In Law wants to purchase the site- Market Value is the same

You think the appraiser is unethical if they don't know exactly what the appraisal is going to be used for? That is ridiculous.

You clearly state your scope of work and the appraisal problem that is to be solved. Where am I being misleading?

Quit slinging mud, think about what I am saying.

So I agree with you. I would point out that USPAP Standards Rule 1-2 (B) applies BUT where I agree with you is simple, They tell you one thing and do something else is not our problem. However We also MUST Standards Rule 2-2(ii) State the Intended Use of the Appraisal.

But Again, what ever they actually do with your report is not our problem.

You already know this...I am not sure what Amy's point has been...