One is now three?

[Deleted member 142783]

Hello all! I ask for your help.


Engaged to to an appraisal on a rural property for a refinance.

I have two addresses, with two 2.5 acre lots, stick built home, barn and shop (own well, septic, propane and electric meter) on one lot, newer high quality manufactured (own well, septic, propane electric meter) on the other 2.5 acre lot. Permits exist for both the main house and the manufactured home.


The Prelim states the legal description as both lots. I contacted the county planning department and assesors office who state "it is one parcel".

Zoning is minimum 2.3 acres.

Per the planning department the lots cannot currently be sold separately, although for 3 fees totaling $7,500 and some paperwork at the county, the lots can be "split". Current setbacks appear to be met.



1. Am I now at the point where I need to determine what is worth more - both lots and houses sold together or 1 house, and one manufactured home sold independently less the $7,500 in fees. If so, is this not now 3 assignments? I need to determine the value of each separate 2.5 acre property and the 5 acre as a whole....

Best guess is 500-600k value sold together. 400k + 300k sold separate. (although these are very rough numbers). My experience tells me significantly more sold separate, although I Would need to develop an opinion for each piece of property. To what extent must I develop and support this opinion?


2. How can I be certain setbacks can be met? It looks within reason, although do I have the expertise to verify on an irregular lot shape? I think not....



I have consulted with several peers, and am now looking for further help.


Thanks all!

 

[Tim The Enchanter]

Sounds to me like one assignment. A tough one.
So one is now three should apply to your fee.

 

[Deleted member 142783]

Yeah, I get it is one assignment.... Although I need to develop 3 opinions of value?

 

[Michigan CG]

In order for you to know the Highest and Best Use you will need to develop the values for the properties together and as separated. So yes you have a complicated appraisal report that takes good analytical skills defining Highest and Best Use. You will need to determine the discount for the properties as one and in order to do that you will need to find parcels where two houses sold together.

I am working on a similar situation. My Highest and Bet Use section is now at three typed pages and I am not done yet. The fee I am charging is four times my normal residential fee.

 

[Tim The Enchanter]

My Highest and Bet Use section is now at three typed pages and I am not done yet.

It's not just a checkbox?

At that rate 4x might be a little light.

 

[hastalavista]

Alright, I'll be the heavy: OP- is your license level "licensed" or "certified"?

If you are certified, you need to bulk-up on H&BU. You have two improved sites here with a $7,500 fee to make them legally separate. Assuming the two separate values are higher than the single value (and not just a a little or "close", but clearly higher) after the $7,500, how do you think the market is going to price these properties?
Also, read Certification #11 on the 1004; the requirement is to have knowledge and experience in appraising the subject property-type; this is a requirement prior-to accepting the assignment.

If you are licensed-level and you are appraising this for lending purposes, you have two issues:
A. This is a complex assignment. IMO, whether you are an expert at H&BU or not, your license level would preclude you from doing this unsupervised.
B. Read Fannie Mae Certification #11. The GSEs require the appraiser to be knowledgeable and competent to take on the assignment prior-to acceptance. This is different from the USPAP; USPAP allows an appraiser to gain competency during the assignment (with the appropriate disclosures); the GSE assignment-conditions do not allow for that; since it is a standard higher than the USPAP, it is can be imposed and there is no contradiction with the USPAP.

This is a complex assignment by any reasonable definition: An unsupervised licensed-level appraiser (in Calfiornia) cannot do it solo if it is a lending assignment.
The GSEs require competency and experience prior to taking the assignment.

I'm not a license-snob. This has nothing to do with your individual competence, professionalism, or anything else. This has everything to do with licensing regulations and client assignment-conditions.

Like I said, if you are Certified, you pass the licensing threshold (but not the experience; you ought to think about that).

Good luck!

 

[hastalavista]

Just so you don't think I'm talking outta my ace, this is an excerpt from the current Fannie Selling Guide. My bold on the last sentence:

B4-1.1-03: Appraiser Selection Criteria
Knowledge and Experience
Lenders must use appraisers that

• have the requisite knowledge required to perform a professional quality appraisal for the specific geographic location and particular property type; and
  
  
• have the requisite knowledge about, and access to, the necessary and appropriate data sources for the area in which the appraisal assignment is located.
  

Appraisers that are not familiar with specific real estate markets may not have adequate information available to perform a reliable appraisal. Although the Uniform Standards of Professional Appraisal Practice (USPAP) allows an appraiser that does not have the appropriate knowledge and experience to accept an appraisal assignment by providing procedures with which the appraiser can complete the assignment, Fannie Mae does not allow the USPAP flexibility.

 

[factsandtruth]

It does sound complex...4x the work and time.

 

[Deleted member 142783]

Unfortunately I am certified...

 

[VolcanoLvr]

No one has mentioned it yet...so I will - because I also work in suburban/rural areas and see this kind of stuff:

Check the prior sales history on the properties. See if both parcels have 'sold together' in past transactions, several times in a row. That will help you understand if the two parcels are considered to be one site. Keep in mind that the transactions may show up separately, applied to each address and P#. But if the recorded sale price, recording date, and doc number is THE SAME on both, that tells you that the parcels are joined at the hip.

Once you know that, the next thing is to check why a 'newer' MFH was allowed to be plopped down on the second lot, if the county considers both lots joined at the hip into one site. It may be a situation where the new MFH actually replaced an older one, so the county considered this to be an 'upgrade' and not a new installation. They probably collected building permit fees, and are assessing the new unit higher in value that what it replaced.

On the other hand, if the second lot was actually vacant/unimproved prior to the planting of the MFH, then the question needs to be asked of the county...."why was this allowed?" Does it meet zoning for size and number of dwellings on ONE site. Perhaps they consider the MFH to be an ADU if it's GLA is smaller than the site-built home.

You say the assignment is for a 'refi.' Is that loan going to be sold to one of the GSE's, or is it a portfolio loan held by the lender? You really should find out, because if it portfolio'd, you actually don't need a license to do this (in CA).....unless the lender's guidelines say you must. The 'license' issued by CA applies for any lending activity that involves any federal government lending guarantees or purchases.

A "Licensed" appraiser can appraise properties up to $1M in value. Check your regulator's guidelines for more requirements. Beyond that, you must be "Certified."

However, as others have stated, this assignment is Complex. But the property is appraisable under Residential H&BU. Not 'three values' either, in one report. One value, if indeed the two lots are treated as one site.

Another thing to consider: legal access. Does each lot have it's own separate street access, or is there a driveway across one lot serving the second lot? If so, is there a non-exclusive perpetual easement in place for that?

Last point....there is no shame in telling a client that you will politely decline the assignment, if indeed, you don't have the required knowledge and experience to do this one. When you do that, give them names of other appraisers you have already discussed this with, who do have the background necessary in complex assignments. Your helpfulness and honesty will be a feather in your cap.