Residential Appraiser & Commercial Zoning...

[George Hatch]

The conventional wisdom is that the existing use is usually the HBU unless/until the underlying land value exceeds. The other consideration that doesn't get a lot of attention is the risk factor. In the development game, if "as vacant" and "as improved" are similar then the no-risk decision is to leave the property "as is". That does away with all the unknowns and contingency factors.

Gotta give some consideration to financing, too. An SFR being purchased and used as such is eligible for residential rates and terms. Properties purchased for redevelopment or conversion to non-residential use face completely different rates and terms, including the more limited LTVs.

No lender wants to get caught offering what amounts to a 95% LTV @ 5% loan on a property that was purchased to redevelop.

 

[Mark K]

There are a huge number of homes in this area that are small acreage tracts that are zoned Agricultural. Doesn't mean that they need to be appraised by CG appraisers.

You should check zoning (maybe next time if you've turned this down already) and see if a SFR is a legal, non-conforming use. I'm betting that the homes were there first and they changed the zoning at a later date. Many towns in this area have rezoned the older parts of town for commercial/office/retail use in the past 20-30 years and the homes located on those sites were built 100+/- years ago; they were there first and are grandfathered.

 

[Gobears81]

I recall talking to a residential appraiser in town with the same type of issue and provided some land sales to him to bolster his HBU conclusions, but he completed the reporAlso, commercial zoning classifications allow for many of the same permitted uses as a residential zoning classification. Didn't look through the link below, but it might not necessarily be legally non-conforming.

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In many parts of IL that I appraise, they are so happy that anyone would be interested in building that the zoning is less of a concern. Certainly not an issue to disregard, but also not a disqualifying factor unless you don't feel comfortable or competent in doing the assignment because of this factor.