Partial Release

[HouseWear]

Hey all. I did some searching and found a thread on this topic, but didn't quite answer my questions. Here goes.

Doing a Well Fargo order through an AMC. They want a 1004 with 2 values, the main report is to be made subject to release with 1/2 acre. In the addendum they want the value with the acreage currently platted, 3/4 of an acre. The land is not buildable and per city, this is a lot line adjustment.

On the thread I found, someone mentioned completing 2 reports? This can be done on a single report correct? I am aware I need to add expanded scope of work and intended use/user statements so I'm good there. Plan on doing some paired sales for the price difference in acreage.

Just want to make sure I'm doing this the right way. I've done one of these a long time ago, and my mentor agreed to guide me. I want to impress though as he hasn't seen my work for a while.

Any thoughts/concerns? Please let me know! Thanks in advance!

 

[CANative]

I used to do these a lot. Usually for boundary line adjustments. Sounds like you have the right idea. I don't know what lot size you're starting out with so half an acre can be a large difference and easy to prove or a small difference which is not so easy.

Two values, one report is good. Ask if you can use some other appraisal form rather than the '05 Fannie Mae 1004.

 

[HouseWear]

Thanks Can! Started with 3/4 and their dropping 1/4. Based upon looking at these paired sales, kinda looking like a 8-10k difference in value. Thats using an average of a few different paired sales. I should be good.

 

[sputnam]

Two values = two appraisals. No problem with it being in one report. Just make sure you are happy with the fee.

 

[HouseWear]

So. I am working up this report today and have a few questions.

1. If I am making the report subject-to: partial release and final plat approval: The hypothetical condition is taken care of on the form and no additional commentary is needed, correct?

2. I did a paired sales analysis on 2 sales similar in size and after adjustments came up with about 1.17 per sq.ft. for the difference in land. I then did a land sale search, and found a larger un-buildable lot that sold for $7,000(19,166 sq.ft.). I've been trying to verify who bought the land and if he has a connecting piece of property to the parcel(if he does not, wouldn't the excess land that I am dealing with being sold to a neighbor with an adjoining parcel be worth more?). This sale of the parcel is not buildable and shows a sq.ft. value of 36.5 cents, which is far less than the price per sq.ft. that my paired sales analysis is showing.

Any idea's?


I want to get this done right and when my mentor reviews, want a job well done comment LOL.

 

[HouseWear]

If I reconcile the two, the value difference is slightly above 6k. I'm keeping in mind that the sale price for this excess land will be the value difference in my report.

 

[CANative]

What's the value of the subject the way it is? What's the value of the subject the way it's going to be? What's the value of the adjacent property as it is? What's the value of the adjacent property the way it's going to be?

The value will be somewhere between the subject's loss and the adjacent property's gain.

BUT wait! You're not valuing that interest. All you're doing is telling your client what the value of the subject will be after the portion is released. So the question is simply the value of the subject on a half acre lot instead of it's three quarter acre lot.

 

[Pittsburgh Pete]

If I reconcile the two, the value difference is slightly above 6k. I'm keeping in mind that the sale price for this excess land will be the value difference in my report.

Not necessarily--you should be focusing on the contributory value of that excess land to the whole.

Should value with 3/4 acre and value without "excess" land. The difference between the two is the contributory value of the excess. Contributory value and value as a separate entity may be two entirely different things.

 

[CANative]

Does the client really need to know the contributory value of the portion being released? I assume they want to know if there will be sufficient value left after the release to cover the loan balance.

 

[Pittsburgh Pete]

Does the client really need to know the contributory value of the portion being released? I assume they want to know if there will be sufficient value left after the release to cover the loan balance.

Probably not. However, from his initial post:

They want a 1004 with 2 values, the main report is to be made subject to release with 1/2 acre. In the addendum they want the value with the acreage currently platted, 3/4 of an acre. The land is not buildable and per city, this is a lot line adjustment.

His proposed methodology doesn't do what the client has asked. If he values the entire property and subtracts his estimate of the value of the part being omitted/released, he is not doing what is asked. They want the value of the whole and the value of the dwelling with part of the land. What he suggests results in something totally different.

P.S. doesn't he also indicate that the land to be released is "not buildable."