Leased Fee

[Addie]

For the appraisers that use the 1004 form.

On properties that are rented as of the effective date, why do you check the box you appraised Fee Simple rights and do the report As-is only?

Curious your answers.

Not judging, curious of the answer.

“You know what, I never thought about it”
“I feel pressured to”
“That has slipped my mind”
“It’s the way everyone does it”
“The form doesn’t have a spot for it”
“The form only has Leasehold, FNMA knows more than you”


This thread isn’t to bash anyone as I already know 100% of FNMA appraisers violate USPAP by appraising Fee Simple Rights As-is even though no one holds the Fee Simple Rights of the subject as of effective date.

So with that out of the way.

Why do you value Fee Simple rights when the scope of work you set should have been leased fee as-is at a min and leased fee as-is and hypothetical fee simple value all in 1 report on a 1004? (And referencing 2 workfiles but reported on 1004 report?

 

[Dublin ohio]

 

[Terrel L. Shields]

Since most rents, are at most, only six month leases, and could be in a month by month basis, the time value of money means the leased fee is pretty much the fee simple. There isn't enough time to accrue in order to get a leasehold value. Now in a 20 year lease...sure.

 

[Basically Rectangular]

It is because the property rights being appraised are fee simple, even if the property is rented (I'm talking single family residential). The tenant box let's the intended user (lender) know there is most likely a short term lease. Everyone knows what is going on, no UPAP issues.

 

[Addie]

It is because the property rights being appraised are fee simple, even if the property is rented (I'm talking single family residential). The tenant box let's the intended user (lender) know there is most likely a short term lease. Everyone knows what is going on, no UPAP issues.

Who holds the Fee simple interest you just appraised under as-is though?

The answer is no one as of the effective date. Fee simple rights exist, yes. Just no one holds those rights.

 

[Addie]

It is because the property rights being appraised are fee simple, even if the property is rented (I'm talking single family residential). The tenant box let's the intended user (lender) know there is most likely a short term lease. Everyone knows what is going on, no UPAP issues.

You do this under a hypothetical value right?

 

[gregb]

Sunday night bone to chew-

https://pdfs.semanticscholar.org/99ad/5d68d2c729a29226cc93eaac10bf79af9ebb.pdf

 

[Addie]

Sunday night bone to chew-

https://pdfs.semanticscholar.org/99ad/5d68d2c729a29226cc93eaac10bf79af9ebb.pdf

Why can you not sell your home that day in CA if it has a lease though? (Sorry, take possession)

Under fee simple rights you can.


Fee simple rights let’s you do anything you want.

Leased Fee makes you subservient.

 

[Michigan CG]

This thread isn’t to bash anyone as I already know 100% of FNMA appraisers violate USPAP by appraising Fee Simple Rights As-is even though no one holds the Fee Simple Rights of the subject as of effective date.

I am pretty sure you have posted something similar in the past trying to be smarter than the rest of the class.

The simple answer to your question is that the client has asked for the Fee Simple Value. That is an appraisal assignment. Are you unable to provide that? What is that value? Appraisal assignment. Simple.

This thread isn’t to bash anyone...........

Sure it is, why hide your intention? Your whole post is intended to bash appraisers because you don't understand Scope of Work.

I am pretty sure that USPAP requires us to tell the reader of the report any current leases and disclose everything known about the subject property........ correct me if I am wrong.

A client can still ask for the value of the Fee Simple Interest of a property, that is the value they want to know for whatever reason.

In case you didn't know, if the lease is at market then there is no positive leasehold or leased fee value and there is no negative leased fee or leasehold value; the leased fee would be the same as the Fee Simple.

 

[Ken B]

1. The fee simple estate interest exists, it is merely partitioned between the lessor and lessee.
2. There is no such thing as a "hypothetical value." Once stated, an opinion of value is a fact.
3. What you meant to state is that the value reflects a hypothetical condition of the property; i.e., unencumbered by the lease.
4. See item 1.
5. If you would like to be technical about it, the entire premise of "market value" is based upon a hypothetical event regarding the property being sold in a cash transaction as of the date of value. But we don't report that as a "Hypothetical Condition" as defined by USPAP, do we?