Second Lot on VA Purchase

[J Grant]

Not all property owners are savvy, nor do they always care to maximize the HBU of their property, especially if dealing with an estate that just wants to cash out.

The real world buyer and seller do not have to be savvy or sell per HBU - BUT - we are appraising to the definition of MV which specifies a well informed or well advised buyer and seller .If the actual seller is an estate/ other circumstance where you believe their price reflects such, a reason their CS price might be above or below your appraisal opinion of MV

Which still begs the question , assuming the MV well informed seller, if the lot or lots vacant are truly in demand and can get a higher price sold solo, why is it not happening ? In a hot demand market, eager buyers would be knocking on door of a seller with vacant lots to sell...these are complex assignments because typically the demand for vacant lots comes from builders/spec home investors ,, whereas the demand for an existing house typically comes from owner occupant buyer - but in the assemblage might combine the motivation for the buyer - if a buyer has $ to spend and just want the privacy and use of a great big piece of land for their house, fine, but they would be competing with other buyers for the lot as buildable lots if demand is truly there.

In a high demand for vacant lot market, a buyer wanting to combine them for privacy with a house would have to compete with other buyers for the vacant lots and thus pay a similar price to get them.

These assignments stink because consider another complexity - a buyer combining a vacant lot or lots with a house in assemblage gets the advantage ofa loan at residential financing low mortgage rates and possibly low nonpayment - whereas a buyer for the lots as vacant has to pay all cash or a higher interest rate / big chunk down ( typically) How does THAT affect demand and price? It should be part of the analysis - The Fannie guidance I bet does not want to touch that aspect with a ten foot pole - but it exists as a factor since FF are financing these package sales at low res rates

 

[J Grant]

From reading earlier posts on this thread, I am seeing that I should check the "No" box under Highest and Best Use and explain, that makes sense.
I am stuck at how to deal with these two parcels in the sales comparison approach. I am not sure if I should include them as part of the subject site size since they have a different contributory value (and can be split off). Their value is greatly diminished as part of the subject as compared to if they were separate. However I am not sure that I should exclude them either.

If you check the NO box for HBU, then you CAN NOT include the value of the two additional parcels - checking the NO box HBU means in your opinion , the subject conveys without those two parcels

 

[Zoe]

If you imagine H&B use analysis with say 20 adjoining lots, it gets clear that what Lee posted is right. And Lee would be very specific in his disclosure of H&B use with a market value opinion. Lender after that can do what they want. They can take a lien on part, some, all. They can keep it in house. VA, FHA don't have to guarantee it and GSE's don't have to buy it. The key there is communicating with both lender and guarantor. That way they tell you what they want.

 

[J Grant]

If you imagine H&B use analysis with say 20 adjoining lots, it gets clear that what Lee posted is right. And Lee would be very specific in his disclosure of H&B use with a market value opinion. Lender after that can do what they want. They can take a lien on part, some, all. They can keep it in house. VA, FHA don't have to guarantee it and GSE's don't have to buy it. The key there is communicating with both lender and guarantor. That way they tell you what they want.

Nobody is disagreeing with him.

But the HBU question on page one URAR is the HBU as improved yes or no.

So if CB YES to the question, the assemblage aspect addresses the contributory value of the lots to the whole improvement.

One assumes an appraiser understand that the mortgage lien is for the house and additional lot or lots. Fannie talks about one umbrella lien to calm the fears of nervous appraisers but HBU opinion would be the same for a property whether it is a cash transaction or a mortgage transaction -

 

[Zoe]

Nobody is disagreeing with him.

But the HBU question on page one URAR is the HBU as improved yes or no.

So if CB YES to the question, the assemblage aspect addresses the contributory value of the lots as part of the whole with the improvement, vs separate the lots as separate

One assumes an appraiser understand that the mortgage lien is for the house and any other lots - why is that even an issue - they talk about the lien to calm the fears of nervous appraisers but HBU opinion would be the same whether it is a cash transaction or a mortgage transaction -

Yes but absorption rates and discounted cash flow would get involved. GSE's and guarantors don't like that. In house loans are fine with it. That is what makes "market value opinion" so unique. It is only value option that requires H&B use analysis.

 

[J Grant]

Yes but absorption rates and discounted cash flow would get involved.

Absorbion rates is list to sold invenotry What does that have to do with if a property is being financed or not? Same for discounted cash flow which is an income approach.

I only bought up financing because fannie mentions it as a one lien since some appraisers cant' wrap their head around that.

 

[Zoe]

Absorbion rates is list to sold invenotry What does that have to do with if a property is being financed or not? Same for discounted cash flow which is an income approach.

I only bought up financing because fannie mentions it as a one lien since some appraisers cant' wrap their head around that.

Not just sold inventory. Listings are involved too? Then you need a hypothetical condition if you want to sell a house and 20 extra lots with a MV opinion. H&B use dictates that.

 

[Zoe]

How does F/F feel about hypotheticals? What about VA, FHA? In house loans are fine with it. I know. VA will probably cancel. They might grant a waiver. They are client.

 

[Zoe]

I just had a VA loan cancel that has been on my docket for a long time. The lender would not provide the scope of work I needed to provide credible results due to safety and soundness issues. All I asked for was repair estimates from a licensed and bonded contractor. Funny part is owner is a contractor I think. I sent pictures to lender on everything.

 

[J Grant]

Not just sold inventory. Listings are involved too? Then you need a hypothetical condition if you want to sell a house and 20 extra lots with a MV opinion. H&B use dictates that.

NO HC, you are making things up now -

fwiw I doubt 20 lots would ever be the subject of a residential loan or show the HBU either - stop changing the discussion it is for either one, or a very limited number of excess lots.