Partial Release

[Greenra]

Partial Acquisition

Because the owner advised me that the sales price for the excess land is based upon the difference between the two values, would it be wise to include a statement such as: The appraisal assignment was for a valuation of the subject property subject to release of 1/4 of an acre and a valuation prior to the release of said land. The appraisal(s) should not be relied upon for establishing the value of the land released?

Whatcha guys think? I would like to eliminate any potential future headaches.

greenra.com
OK, makes a little more sense now as this is a partial acquisition analysis and the before & after methodology is appropriate. Sounds like the 1/4 acre is more surplus than excess land as the 1/4 acre may not be independently marketable with an independent highest & best use. Regardless, you don't even have to mention surplus/excess land with regards to the 1/4 acre.

Based on the owner's comment, it sounds like the purpose of the appraisal was to opine as to the market value of the subject property "as is" (before value) and after the proposed subdivision of 1/4 acre (after value). The due diligence and reporting should be same for each appraisal.

The intended use may be two-fold: 1) mortgage financing along with 2) an estimation of compensation due the owner for selling (releasing his interest) the 1/4 acre (essentially a subdivision of real estate or property rights).

Doesn't hurt to indicate that you are not valuing the 1/4 acre independently. You may want to take a look at the Uniform Appraisal Standards for Federal Land Acquisition (Yellow Book)

[url]http://www.justice.gov/enrd/land-ack/Uniform-Appraisal-Standards.pdf[/URL]

Although you are not appraising to these standards, it has good info for this type of analysis along with the basis for the logic behind the before/after valuation. A good reference all appraisers should have in their library as it provide practical info on appraising--- take whats useful and disregards whats not. Good Luck.

 

[HouseWear]

greenra.com
OK, makes a little more sense now as this is a partial acquisition analysis and the before & after methodology is appropriate. Sounds like the 1/4 acre is more surplus than excess land as the 1/4 acre may not be independently marketable with an independent highest & best use. Regardless, you don't even have to mention surplus/excess land with regards to the 1/4 acre.

Based on the owner's comment, it sounds like the purpose of the appraisal was to opine as to the market value of the subject property "as is" (before value) and after the proposed subdivision of 1/4 acre (after value). The due diligence and reporting should be same for each appraisal.

The intended use may be two-fold: 1) mortgage financing along with 2) an estimation of compensation due the owner for selling (releasing his interest) the 1/4 acre (essentially a subdivision of real estate or property rights).

Doesn't hurt to indicate that you are not valuing the 1/4 acre independently. You may want to take a look at the Uniform Appraisal Standards for Federal Land Acquisition (Yellow Book)

[URL="http://www.justice.gov/enrd/land-ack/Uniform-Appraisal-Standards.pdf"][url]http://www.justice.gov/enrd/land-ack/Uniform-Appraisal-Standards.pdf[/URL][/URL]

Although you are not appraising to these standards, it has good info for this type of analysis along with the basis for the logic behind the before/after valuation. A good reference all appraisers should have in their library as it provide practical info on appraising--- take whats useful and disregards whats not. Good Luck.

Well, the owner is not my client. My client, Walls Fargo, only wants a before and after value. The borrower just happened to mention that the sales price would be the difference in price between the 2. As of now, that stands at about a 4-5k difference for the difference in values. The intended use per the engagement letter is a partial release with a before and after release value. I'm just thinking, the owner might think the land is worth more than the difference in values. I think a statement that I am not performing an appraisal of the land might be a good idea. All caps and bold letters even LOL. I'll definately review that link.

 

[CANative]

It seems like you keep going back and forth regarding client, intended user and intended use.

Your client is the mortgage holder and the borrower has asked to release a portion of the property used as collateral. It's a simple straight forward assignment. They don't NEED both values but they do WANT both values. A before and after is probably the best way to go. You might even be able to use the same comps to get both values. Whatever.

The value of the portion being released is irrelevant to your assignment and it likely has no actual MARKET value for the reasons I've already stated. The owner and the proposed buyer are going to use this to negotiate a price that is acceptable to both. That is beyond the scope of your appraisal.