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Need help with Commerical Zoning & Highest & Best Use!

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Rodney Williams4377

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Nov 8, 2006
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Indiana
I am working on an appraisal that is a duplex. I called zoning and they stated it is zoned commerical and was probably grandfathered like that. I notified client that I could not do it because of the commerical zoning, I am only a LR currently. My client is now requesting to complete with a highest & best use. My question is can I do this? I would think a CG would need to handle this because of the zoning.

Maybe I am making this harder than what it is but want to make sure I handle it correctly.

Thanks for your time and help.
 

The Warrior Monk

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New York
My client is now requesting to complete with a highest & best use. My question is can I do this?

A highest and best use analysis in this case requires the consideration of the commercial uses of the property, so the general answer would be no.

The commercial use is not necessarily the highest and best use (though it commonly is), but the appraiser would have to be able to support for any conclusion.
 

Rodney Williams4377

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State
Indiana
Thanks David. I thought I would have to know about commerical property values to be able to determine the highest and best use.
 

George Hatch

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This sounds like the appraisal problem would fit the definition of "complex" residential appraisal and as such might fall outside the scope of practice for your license. It might depend on how your state's regs are written rather than what your client finds acceptable.

BTW, if your client is not the direct lender, it would probably also be a really good idea to identify who their lender is and find out what their expectations are for this assignment.
 

Mountain Man

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Georgia
Rather than turning it down, why not find someone to work with and learn?
 

Doug Meyer

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Sep 13, 2003
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Certified Residential Appraiser
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Indiana
In Indiana, we find blocks of properties that have been rezoned to commercial or industry some years ago. These properties will not be utilized as commercial properties or as industrial uses. If the properties HBU is for a multi family or duplex unit why would he not be able to appraise it? Just because there is a commercial zoning does not mean that the HBU would be commercial or ever would be commercial. We probably need more information from Rodney on this.
 

Doug Meyer

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Certified Residential Appraiser
State
Indiana
Is this in an older part of town of older homes? Can the property be rebuilt as a duplex if destroyed (per zoning codes). Has the property been given a status of legal conforming?
 

Artemis Fowl

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Mar 16, 2004
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Certified Residential Appraiser
State
Michigan
You are not making it harder than what it is. Get assistance or decline. It's interim use may be residential but you still need to do the analysis to determine that. An experienced commercial person can help you. I keep running into this more and more and they keep cancelling once I describe the problem. I'd love to complete these because I do have access to some great CG's. If they want you to proceed then go for it...just don't attempt it alone. Great learning opportunity here.
 

Rodney Williams4377

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Nov 8, 2006
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Indiana
I did decline the order because I was not comfortable with this one doing myself nor could I find a commerical appraiser that could help me with this at this time. It would be a couple of days out before I could get help but my client needed someone to do ASAP.

I do have a little more information. Lot size is not big enough for it to be zoned commerical today therefore it is grandfathered. It is around older homes predominatly 70 -100+ yrs with a few businesses nearby. Not sure if that helps or not.

Thanks for all the responses.
 

The Warrior Monk

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New York
If the properties HBU is for a multi family or duplex unit why would he not be able to appraise it? Just because there is a commercial zoning does not mean that the HBU would be commercial or ever would be commercial.

How does one draw the conclusion that the HBU of the property is not commercial without consideration of the commercial side of the equation?
 
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