Land / home packages are a no no

[Jo Ann Meyer Stratton]

There are times a owner of a vacant lot with have a contractor build a house of their choice on that lot. So the lot owner will deed the lot to the builder, the builder is then able to get a construction loan and then can build the house. An Affidavit of Property Value will be filed for each transaction. Some times the second affidavit will have the value (per builder/owner) of the house only. Some times the second affidavit will have a total by adding the lot sale plus the building cost/sale. Neither one of those Affidavits of Property Value will be arm's length transactions and should not be used as comparables. The dealer that my friend is arguing with does the second illustration. He has a potential buyer come to the manufactured home sales lot that selects a model of their choice, then the dealer finds a vacant lot the buyer likes and sets up the manufactured home on that lot. The dealer files an Affidavit of Property Value with the combined costs as the sales price. That combination package of land and manufactured home were not exposed to the open market. Therefore, it is not a bonifide sale and should not be used as a comparable. The dealer thinks it should be used as a comparable because he has filed this bogus Affidavit of Property Value. This particular dealer has an appraiser come from 200 miles away that uses land / home packages as comparables. The mortgage broker and the appraiser are related and have promised the dealer (and a builder also since they have another relative that builds houses in a bankrupt subdivision) that whatever value they want will be reported in the appraisal report and uses the land / home packages to achieve that value. When a different lender who does not have an arrangement with that appraiser orders an appraisal from some one else, the other appraisers do not use land / home packages and the opinion of market value is below what the dealer/builder had hoped for, then the arguing begins.