Land / home packages are a no no

[Meandering]

That is written in typical fannie double speak. "You cant create comps by combining land sales with the contract purchase price of the home ...but you can do it for additional supporting documentation"

Isn't comps 4-9 considered supporting documentation?

You want them to put it in real hard fact language where they or the lenders could not slip out of?

 

[residentialguy]

Many people do not know this but GSE did not originate from Govt Sponsored Entity. It was pulled out of a description of the business model that ended up creating the term Govt Sponsored Entity. Here is the description the business model:

A way of escaping a difficulty, especially an omission or ambiguity in the wording of a contract or law that provides a means of evading compliance

 

[Meandering]

You crack me up!

 

[residentialguy]

..............
.....:icon_biggrin:
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[Bearslide]

This thread brings up something I have long questioned. A little background:

Here, in PA, there are regulations on the books allowing a lot to be purchased, with a new home subsequently constructed, but real estate transfer taxes applicable only to the lot. It is my understanding this legislation was designed as a tax break of sorts for folks building their dream retirement home.

A number of national builders, the Homes R Us crowd, along with their "preferred" wholly owned or partnered lenders picked up on this little gem and used it to dodge real estate transfer taxes. In most cases, they would have the buyer pay both sides of the tax - and the buyers were happy to do so because they weren't paying it on the much larger house price. These are not scattered random lots, but rather entire developments with no outside builders allowed.

The deeds show the transfer of the lot only - but the HUD 1's show a total of lot and dwelling. Not quite sure how this is being done - I've questioned several borrowers and they never actually forked over $60 - 100k for the lot - it was all rolled into their loan.

I've deliberately stayed away from these builders, for a number of reasons - one being they want to spoon feed the "comps" to the appraiser - and the comps were, of course, their own hand picked sales. Because local appraisers wouldn't play ball, they were bringing in their pet out of state appraisers to make the numbers work.

So.........wouldn't these "comps" have qualified as land/home packages? If so, a number of "too big to fail" banks pushed a lot of paper that technically did not qualify for Fannie Mae financing.

Are these type sales land/home packages? If in fact these type new construction sales are land/home packages, how could an appraiser use sales from these builders developments?

 

[Jo Ann Meyer Stratton]

No, those land / home packages would not be comparable sales because they were not exposed to the open market. Unless the builder builds "spec" homes then offers those homes on the open market. If a total package is offered to the general public to make an offer on, then it could be a comparable sale. Which happens in tract subdivisions, all lots belong to the builder/developer, then they advertise a choice of five house plans that can only be built by that builder in that specific subdivision.

But when the lot and site built house or factory built house was assembled, not exposed to the open market, they are land / home packages and not comparable sales. They would provide supporting documentation for the Cost Approach to value but not for the Sales Comparison Approach.

What you describe is what the big argument is for my friend. The manufactured home dealer is claiming since they filed an Affidavit of Property Value it is a bonafide sale. The filing of the Affidavit does not represent properties offered on the open market.

 

[Meandering]

Jo Ann,

The Affidavit of Property Value, just because I'm not overly familiar, but if my recollection is good enough, as I recall, it was not specifically for market value, but what I had seen was for taxing purposes, and the value is undefined.

Am I correct in this recollection?

If so, your friend could rely heavily on the definition of market value, whereas you have property that was designed and constructed for a specific buyer, not a typical buyer, and may be some of that design was predicated on the financing available to a specific buyer, not a typical buyer. The market value of the property could be tested by an appraisal, however, they are not one and the same, and there is no requirement to develop market value by someone who is certified or licensed to do so, in order to file a Affidavit of Property Value. Am I correct in this?

.

 

[Jo Ann Meyer Stratton]

An Affidavit of Property Value is filed with every deed transferring property (unless it is an exempt situation) with signatures of the seller and buyer. It reports the sales price, whether any personal property is involved, who will be occupying the property, etc. I have attached one that was recently filed. They went into effect in March, 1968 in Arizona with the main purpose for the assessor's office to track sale prices so they could develop data bases. State law requires the full cash value of properties in Arizona to be in the 80% to 90% range of actual market value. So there have been AVMs developed for assessment purposes since 1968 in Arizona. The sale price on the Affidavit is not used as a basis for the assessed value for only that specific property. The mass appraisal system develops a price per square foot for a typical property in a neighborhood and then that typical price is used to calculate the final full cash value, the assessment ratio is then applied--10% for owner occupied residential. Then fee appraisers and other real estate participants realized what a treasure trove of information the county assessor's had and they became very dependent on that information. A fee appraiser has to analyze each sale, practicing due diligence to gather other information to use with that info. Since they are required for every transfer of real property, the fee appraiser first has to determine if that Affidavit is a bonifide sale with adequate exposure to the open market, whether it has been exposed to the market, does it match up with other information like an MLS listing or by talking to the buyer and seller, etc, etc, etc. And with land / home packages the first step is missing--no exposure on the open market, therefore not an acceptable arm's length transaction and should be deleted from the fee appraiser's data base. The HUD1 in Arizona is private information and can not be disclosed to any one except the parties involved. So fee appraisers in Arizona do not have legal access to HUD1s. Financing has no bearing on an Affidavit of Property Value, they are used for trades, gifts, cash, or any type of financing since they are used for every transfer. There is no police type action overseeing the information that is put on the Affidavit. A buyer and seller that did not want any one to know what was paid for a property might fill it out with $1 or leave the sale price block blank and it is still is accepted for filing in the recorder's office. Dealers and some site built builders in with a land / home package will add the purchase price of the land from seller A to the purchase costs of the home from dealer/builder B and fill out the Affidavit with the total.

That is what the dealer is doing and attempting to argue that because they created an Affidavit that it is a sale to be used as a comparable in an appraiser's report. Problem is, it is an assemblage and was not exposed to the open market as a package deal.

You can go directly to thecountyrecorder.com choose a county in Arizona or Colorado and pull up the recorded documents available. Here in Graham and Greenlee counties, the recordings are available within 15 to 30 minutes after being recorded. So choose Graham County, AZ, then click on search, then scroll down to Affidavits of Property Values, put in dates like 05/03/2012 to 05/04/2012, then click on any Affidavit to read one more clearly than the one I have attached.

 

[Jo Ann Meyer Stratton]

Affidavits of Affixture

To enable a manufactured or on frame modular home to be taxed as real estate in Arizona, the original Manufacturer's Statement of Origin or title has to be surrendered to the Motor Vehicle Department and then an Affidavit of Affixture recorded in the county where the home is located. If you would like to see one go to thecountyrecorder.com again, choose Graham County, AZ, under document type scroll down to Affid/Affix, type in date of 04/01/2012 to 04/30/2012 and one will appear. Since it was recorded in 2012, that manufactured home will be taxed as real property on the 2013 real property tax roll. In 2012 it will be taxed as personal property. This years taxation as personal property will not make it ineligible for any type of financing because it will be taxed as real property in the future and that is what lenders want.

 

[Meandering]

Fight with this builder.

The Affidavit of Property Value means nothing to the market value of the property. Thank you for providing the detailed explaination. We have them here with deed recordings and they are to assess transfer taxes and are recorded with the deeds. Ours has a default to assessor's value if recorded as a gift or $1.00 transfer to a non relative. The transfer taxes will be paid based on the Assessor's value, not the $1.00 transfer.

Bear, check with that tax reg., because here, about 6 or so years ago, our assessor was rolling the land sale in with a house/land package and people were being taxed as if the house had actually been constructed, even if it never got constructed, so I don't know. I think that's when the reg was changed, because I have not seen it change back, but it might have, because I've seen some funny deed transfers from owners to builders and back again to the owners after the construction was completed. These types of recordings are not market value.