Lender Wants Only 5 Acres Valued Out Of 13?

[Fred]

Let me ask a question here.

I have a request where the property is five acres and the lender wants it appraised as if it were 25. Is that OK in USPAP? Apply all the same comments we get in defense of the 5-ac HC. It’s what the lender wants. It’s a portfolio loan. It’s not going to Fannie. This is OK, we do these all the time.

Don’t just say it’s ridiculous. Take a stab at making a reasoned standards argument, if you think it’s not OK.

 

[Farm Gal]

Steven:

I would apply the same logic in reverse... if that five acre site was surrounded by say WATER - a natural lake with little liklihood of being drained... on 7/8 of the surrounding area, would YOU apraise it subject to the larger site size?

Ain't likely, ain't probable, ain't 'curable' for about ANY amount of money... and don't make any sense.

On the other (other) hand it is caveat emptor if the lender has so instructed you IN ADVANCE, and been apprized of the situation (very clear scope agreement) prior to continuing with the assigment...
__________

I have no solutions, I just like to limit my risks. :usa:

 

[hastalavista]

I don't have a problem with it.
Disclose what is actually there. Identify the HC. Value the subject as if it were 25 acres. Subject the value to be conditioned upon the HC. Throw in that the value doesn't reflect its current market value if that's the case and it makes you feel better. Add a statement that the value approach isn't acceptable for purchase on the secondary market if you want.

Nothing is misleading. All is in compliance with USPAP. It’s a complicated assignment and I charge accordingly.

The report is going to stand on its own. I've stated what IS, stated what the value is based on (WHAT ISN'T), and valued the property based on the HC.

In an ideal world, I'd like the client to give me a reason why they want it valued as such, but if they respond "mortgage finance", what else can I demand? If I'm that concerned, I'd tell the client I would only complete the assignment and report it in a "restricted" format to eliminate the chance that a 3rd party might be mislead (Yes, I've told a bank client I would only accept an HC assignment if I could report it in a restricted format, and yes, they accepted it and funded the loan).

Where’s the problem?

 

[Rich Heyn]

Otis,
Who says you need a legal?

Lee Ann,
Number 3 in my response addresses the issue you raised. It wouldn't result in a credible analysis.

Steven,
Perhaps the owner of the 5AC is purchasing the adjacent 20A and combining the two parcels. Lender wants to know what the new parcel will be worth.

 

[Fred]

Rich,
In your questions, you can make up the givens. The owner of the 5ac is not buying anything.

 

[Carnivore]

Originally posted by Rich Heyn@Sep 4 2005, 07:00 PM
Steven,
Perhaps the owner of the 5AC is purchasing the adjacent 20A and combining the two parcels.  Lender wants to know what the new parcel will be worth.

Rich,

That actually would be a legitimate reason for the HC. Steve, I think, is putting this in the context of an intended use for a lender.

This demonstrate just how important the elements of Intended user and Intended use are to the appraisal process and subsequent report.

 

[T.E. Faravelli]

Don’t just say it’s ridiculous. Take a stab at making a reasoned standards argument, if you think it’s not OK

Graduate school is now in session. I don't feel tardy.

 

[Rich Heyn]

Steven,

Perhaps a better response to your question:

I have a request where the property is five acres and the lender wants it appraised as if it were 25. Is that OK in USPAP?

would have been that it depends on the following:

1) Do any supplemental standards prohibit it?
2) Is it required for legal purposes, purposes of reasonable analysis, or purposes of comparison?
3) Can the request be met in a USPAP compliant manner?

I guess what I did instead is give you an example where it might be OK. Your qualifying statement that the owner is not buying anything might be an example of you making up a given. Give me some more givens. What is the intended use? What is the purpose of the request? Pass it through the three part filter above and see what happens.

When I asked if I was missing something I was not trying to be a smart-alec. It just seemed that there might be a simple mechanism that an appraiser could use when a client asks for an appraisal involving an HC., and that perhaps we could evolve one based on my simple model.

 

[CANative]

I can't wait for this war to go nuclear when the dumbass AMC's or uneducated MB insist they only want the 5 acres and the appraisal must be reported on the new 1004.

 

[Farm Gal]

Rich:
1. none that I can find.
2. Hinges on whose glasses you are looking through. B) Mortgage brokers are told by their market: WE WILL BUY THIS and ONLY this product (5 acre sites)...SO from their perspective it is surely for the purpose of "reasonable" analysis and/OR comparison! Arguing against hat is like bailing ahead of storm surge.
3. if some of my competition is doing this, it surely seems to fall under USPAP. :blink: actions of my 'peers'.

I deeply miss that old definition which seems to have been excised from our collective memory (or use). "Possible and/or probable, even if not economically feasible"

I had that tattooed to the back of my eyelids in appraisal 101, and by my old mentor...

Under current zoning, this 5 acre thing, just ain't possible and surely is not probable in most of my market! and besides, I don't LIKE it. :rofl: but that gains me no ground agaisnt charges of aborting my mission (even if it was smoked by someone else before I got the message to embark)