Property Zoned C-2 Commercial

[johngior]

If a property is zoned C-2 does that mean a certified general appraiser must appraise it or can a licensed appraiser appraise it highest and best use? Thanks for your time.

John

 

[Charles Knutson]

It depends on the use -- if it's an SFR in a C-2 zone, there is probably no problem. If it's a commercial building with a commercial use, it probably requires a CG license. (I think a CR can do reports on some small commercial properties.)

What uses does the C-2 zoning permit? Some commerical zoning also allows residential uses; if this C-2 does not and the use is SFR, it may still be a legal non-conforming grandfathered use.

Are there HBU issues? If the existing improvements and use contribute any value to the land, the present use is the HBU.

 

[jamieseaton]

In my opinion it depends. If the home is an older home that was built prior to current zoning enforcements and has a highest and best use as a SFR, then I would say yes. Depending on the area is when zoning was enforced. I've encountered this problem on homes built prior to the 1970's era {which is when zoning was established/enforced}. But, my home wasn't the only SFR. There where other SFR homes - none having any commerical uses. It was purely a reflection of legal non-conforming due to the home and its neighborhood being built prior to zoning enforcements.

 

[The Warrior Monk]

In my opinion, these properties should be appraised by a general certified appraiser. While it is possible the current use is the HBU, the appraiser still has to make that decision. That decision includes considering the nonresidential uses of that property, which are outside the scope of practice of thier license.

In my experience as a reviewer for lenders, it appears that residences on commercially zoned property raise red flags.

 

[Ken B]

Speaking in generalities:

HABU as if vacant: mostly likely some commercial use

HABU as improved: if overall value is higher than land value (improvements continue to contribute to overall value), most likely to continue as a residential property as an interim use

big question to be answered: who is most likely purchaser and for what use?

another big question: if HABU "as is" is interim use as a residence, how long is the interim use period (what is the remaining economic life?)

something else to consider: what is going on the market area? Even if the improvements continue to add value for a residential use, in an active redevelopment market, a commercial developer might still be willing to raze the improvements for a more intensive use.

more: What are your State's requirements? Can a CertRes appraiser appraise commercial properties below a certain transaction amount? Transaction amount not necessarily being a value of any type, but more commonly defined as a loan amount? Does the restriction apply only to FRTs? Is this an FRT deal?

The answer to your question: a licensed res appraiser most likely cannot appraise the property. A certified res appraiser may be able to appraise the property if they have or gain the competency to do so prior to development of the appraisal.

Now, ask yourself why a residential appraiser is being asked to appraiser a commercially zoned property?

 

[Doug Meyer]

We have run into older established neighborhoods that were "blanket zoned" for future commercial usages for manufacturing plants. As these plants did not use this land, the commercial zoning was left in place. Some areas now have had a hard time getting a residential loan on them due to the commercial zoning.

 

[Greg Parker]

In Philadelphia, the C-2 zoning is applied to every corner property in the southern section of the city.

When these homes were built post wartime, the model for the neighborhood was for the corner stor, hair place, what have you to occupy these buildings with a business on the first floor, and a home on the second floor.

Recent decades of course have called for larger and larger homes, we do our shopping in malls or supermarkets, and the way of the corner business has largely gone to the wayside.

With that in mind, the city recently announced they were revamping the entire zoning process and designation, because to build anything here, you almost always have to have a variance, which is nearly always granted.

My point is, that many of these zoning regulations are outmoded in some areas.

For your area, you need to KNOW the neighborhood to make the HABU decision. When I first started appraising, I would absolutely panic as a trainee when I saw C-2.

 

[Howard Klahr]

HABU as improved: if overall value is higher than land value (improvements continue to contribute to overall value), most likely to continue as a residential property as an interim use

How would you go about determining land value since appraising commercial land is beyond the scope of a cert res license?

 

[Ken B]

Interesting question. I suppose I could develop an opinion of the land value although I may not be able to report that value within a FRT related appraisal if HABU is commercial. If the HABU is residential, a Cert Res can most certainly appraise it despite its zoning.

 

[Carnivore]

Interesting question. I suppose I could develop an opinion of the land value although I may not be able to report that value within a FRT related appraisal if HABU is commercial. If the HABU is residential, a Cert Res can most certainly appraise it despite its zoning.

Ken,

That does not make sense to me. 'Interim Use' is OK or 'Use Value', not necessarily 'Value in Use', but the problem still would be land value as if vacant ready for improvement HBU Analysis. The FRT status does not have any bearing on your actions in reporting. Your still creating an appraisal to assist the lender/client in making a loan decision. In this case they would probably turn the loan down because you did your job.

The proper action I believe was to inform the lender of the HBU issue, they would probably cancel the assignment and you collect some bucks for time. I seriously doubt they would pay a CG for the site valuation just to confirm the zoning/HBU issue.