Excellent response George, but as I see it I can't define "Complex" and frankly I wonder if a court could. USPAP and FIRREA are law/regulations that tend to define things in abstract terms, apparently hoping the courts will sort them out...they don't sort very well.
I agree entirely that the Land Form is subject to abuse because so many addendum could be required. You gave an example of appraising land based upon what might be built. But I live in an area where zoning is pretty much non-existent. You have commercial buildings and houses being built in the same subdivisions as screwy as that sounds. Oklahoma recently passed a law that won't allow a chicken farm to be built within a 1/2 mile of a house, but no law protecting a chicken farm from having a subdivision built within 1/2 mile of it....which means you can grandfather a chicken farm by building a house. The worst property we have to appraise is near a regional airport where the Ark. Teacher Retirement System has purchased millions of dollars of land at premium plus prices. THe director of the ATRS has resigned under a cloud. Before it is over, I am afraid we may find out there was fraud, like a quid pro quo, as someone somewhere is profiting quite handsomely off the largess of the ATRS. Speculative property is far more difficult to appraise than commercial vacant tracts.
How about this example? A 1,800 SF 10 year home, average in every way, with 40 acres. Non-complex? $150,000 worth
How about a (2) 16,000 SF broiler houses on 40 acres. I have 10-20 comps for it from the past 18 mo. Non-complex? $160,000 worth
What about combining both? 80 acres, 2 chicken houses, & a home? $300,000 worth
2 Chicken houses might service the debt on the land and barns, but not likely to on the entire property. So is it really commercial income property, anymore than renting a house is? It is not an economic farm. Is it Complex Residential Property to be appraised by a Certified Residential or a CG? Or, non-residential, Certified General territory only?
This question came up for me because when I started 10 years ago, few farms were selling for more than $200-250,000. For the few I had that appraised for more, I used a couple of CGs who would cosign for me. One died, another retired, and a third had to retire with throat cancer. Finally, I was getting so many requests for +250K farms I had to take the CG test and upgrade. Was it really necessary for small farms?
If it has an owner occupied house on it, I contend it must be "residential" property regardless how complex. Until the industry settles on clear and unambigeous definitions of "Complex" I offer it is going to have to be like ****. You know it when you see it.
Ter
