Potentiallly Subdividable?

[Bret Acuff]

Im a relatively new appraiser assistant in Central Oregon and recently was asked a question that I would like some help with please.
The subject property is a ten acre parcel that the county records show as potentially subdividable. The client had a value estimate including improvements @ around 350k. If divided the land alone is worth much more than that. My supervising appraiser said that lenders do not, or will not lend on such a property. So I guess my question would be .........Could the property be appraised as is regardless of the division issue, and if so what needs to be stated in the report. This is my first post......and first question like this one, so be gentle . Any and all responses would be greatly appreciated. I know the info that I have given may be somewhat in-conclusive, however it is all I have and I hope some of you know where the problem lies, and I need the knowledge. Thank you

 

[Mark A Rewbury]

Highest and Best Use Alway's...............a residential license won't cut it here...USPAP Single family vacant land to 4 unit building.

 

[Jerry Bone Jr]

Why do you think "divided the land alone is worth much more than that"? Have you done an analysis? Do you know the site is dividable or think the site could be divided? When you say divided, do you mean parceled or subdivided? Are you qualified to analysis a subdivision? I'm not. Are you making a huge problem from a simple question? Market Value?
BTW: I'm in Salem. Good to see another Oregon Appraiser on this forum. Keep coming back. It's good learning.

 

[Tawfik Ahdab]

What's the highest and best use? For Pete's sake, you say it's subdividable. If you know the answer to that, then you've answered the question you may have thought you had but didn't.

Recap of the highest and best use test:

Physically Possible

Legally permissible

Financially Feasible

Maximally Productive.

The answer (based on your overt conclusion) is that this appraisal lies outside of the licensed or certified residential appraiser's ability to do per Oregon Statute.

Signed : Oregon Tawfik

By the way, Bret and Jerry, Oregon Doug and Oregon Craig are active in this forum as well . If I've left out other Oregonians, please come forth and be acknowledged.

P.S. - Our quarter dollar will feature Crater Lake, a wonder to behold.

 

[jeff samolinski]

I run across this issue a lot-

The way I handle it may not be applicable for you in your area but if the subject site can be subdivided i state that in my report but I value the site as is. A normal scope of work in my area does not include a determination whether the subject can actually meet a particular governmental authority's subdivision regulations and although it may appear based upon the zoning regulations that the subject could be subdivided, I generally require the owner to have that approval in hand before I will give any value for it or i require the lender to authorize a hypothetical to be included in the appraisal if they want to bet on the come.

So I generally disclose that it appears to allow subdividing but no additional value unless scope of work includes hypo or assumption-too many if ands and buts in our area's subdivision process for me to wade through for a typical fee so if they want more fee and change of scope of work required.

 

[Tawfik Ahdab]

Jeff, are you saying that you value the land at other than highest and best use?

Another question is whether you have chosen to do a highest and best use analysis at all?

You can depart from highest and best use determination, resulting in a limited appraisal.

 

[jeff samolinski]

Not departing if I am not sure if legally permisable- don't know until subdivision is approved.

 

[Otis Key]

A normal scope of work in my area does not include a determination whether the subject can actually meet a particular governmental authority's subdivision regulations and although it may appear based upon the zoning regulations that the subject could be subdivided, I generally require the owner to have that approval in hand before I will give any value for it or i require the lender to authorize a hypothetical to be included in the appraisal if they want to bet on the come.

So Jeff you're saying you ignore one of the first principles of valuation? I mean, from my perspective, it's one of the first, after consideration of the fee , factors to consider, as part of the consideration of the fee :rainfro: , because if it's not physically, legally and financially feasible, then it's not even getting close to the analysis for the existing or proposed usage.

 

[jeff samolinski]

Otis:

If you say so!!!!

 

[jeff samolinski]

This is an area where I have had questions for a long time on what others do so this is a good opportunity for me to learn;

Let's say you have a standard order to appraise a property with a house on it and 15 acres. no survey is provided and the zoning indicates that the minimum lot size is 5 acres. subject is under a single parcel id number.

How do you handle it? Do you call the zoning department and let them make the determination whether it could be subdivided? In my area the best I can get out of them is yes it could be subdivided provided it meets the subdivision requirements. So are we obligated as part of our highest and best use analysis to know wnough about the subdivision regulations to be able to make a reasonable determination that we have 3 buildable lots or can we wiggle out of it by using some language like the scope of work requested by the lender did not require a full blown highest and best use determination or in order to determine definnatively what the highest and best use is would require subdivision approval by the appropriate governing authority?

Can one value a property not as its highest and best use?