Single family with Grocery Store

[RNMOVR]

I received a request today for a single family refi. After I pulled the assessment on it, I found out it is a residence with acreage and a small detached grocery store on the front of the property. Below is the assessment showing where they are all on the same parcel. Can I appraise the residence and land only, if I disclose the presence of the grocery store and that I am not giving it any contributory value?? I have contacted the lender to get their stance on it (I know most lenders will not lend on mixed use). But my question is can I do this? There may be a simple answer, but this is typical of how my workload has been lately and I can't come up with one. Thanks in advance for your responses.

TaxItemNo: ***** (12 - RURAL LOTS)
Assessed Value: 740
Implied Value: $7,400 (Assessment ratio = 10%)
Units: 6

TaxItemNo: ***** (22 - STORE)
Street Address: *******
Assessed Value: 5830
Implied Value: $38,866 (Assessment ratio = 15%)
Units: 1
Construction Year: 1950
Square Feet: 2448

TaxItemNo: ***** (21 - RESIDENCE)
Assessed Value: 16080
Implied Value: $160,800 (Assessment ratio = 10%)
Units: 1
Construction Year: 1981
Square Feet: 2403

Tax Item Totals:
Assessed Land: 740 ($7,400) 6 Units
Assessed Improvements: 21910 ($199,666) 2 Buildings
Assessed Total: 22650
Homestead Exemption: 7500
Taxable Parish Value: 15150

 

[Webbed Feet]

Rnmover,

Who "gives value?" .. You, or the market? ...

When an appraiser does not bother to determine what the market may, or may not, do.... and has no idea what the answer is to that.... this would be using a ........ what under USPAP?

When an appraiser knows what a market would do regarding the value of something, but opts to ignore that and do something else other than that... this would be using a ........ what under USPAP?

Now then, would either of those require certain SOW agreements with a client and have to be appropriate for the intended use or not?

Webbed.

P.S. Looks to me like your "small" detached grocery store is bigger than the house! It may be small "for a grocery store" but I don't think calling it a "small grocery store" quite shows the situation very well. And why is that tax stuff showing "6 units?"
P.S.S. ... I sure am tired to my feathers reading posts from professional appraisers saying, or wondering if they can, just not "give" improvements value.

 

[stefan olafson]

Good answer Webbed, it may require the OP to pick up his USPAP book and find the answers....

I grew up in a small town in NE North Dakota where the grocery store and the owners residence were the same building. It's not an uncommon occurence in NW Minnesota small towns to have both a commercial structure and a residence on the same parcel. It does require a different scope of work to be negotiated with the client!

 

[Lee Lansford]

.. But my question is can I do this?...

In some states (Illinois for example), a Certified Residential appraiser is precluded from appraising mix-use properties unless a Cert Gen co-signs; check with your state regarding the limits of your license.

There is more based upon your suggestion as to how you might approach the assignment, but let's deal with that later.

 

[Michigan CG]

You have a greedy MB who wants you to ignore a 2,500 commercial property. I wold love to see all the Hypothetical Conditions in that report.

 

[Mr Rex]

Yea, As a typical buyer, I really like the house Ms High Heels Realtor, but its kinda hard to ignore the grocery store in the side yard:Eyecrazy:

 

[Wayne Tomlinson]

Lee, Look to the recent post by Brian Weaver concerning mixed use properties and Cert Residential properties. I won't try to quote it here because I don't remember it that well.

I discussed it a little concerning small farms with some income, and the post also covered small business income properties.

The relative size in this thread likely does not fit, but you should read thread.

It is in the Illinois section

Wayne Tomlinson

 

[Restrain]

Mixed use: You have to disclose it. If it's on the site, you have to value it. Check out the Fannie guidelines regarding occupancy and ownership as well. You will have to disclose both.

Now, if they want to split the parcel and give you a survey for the residence and land, you're home free. Seems the best way to do it, solves all the issues.

 

[Wyoming]

RNM,

Don't be discouraged by the hostility on the forum. I would also warn about taking posters advice when not backed up by citation. The quote below is from The Appraisal Foundation and may or may not be of help to you.

USPAP Q&A Vol. 10 No. 3 March 2008
Does Appraising a Physical Segment Require Use of a Hypothetical Condition?
Question:
I received a request to perform an appraisal on an improved property; however, the client only wants me to provide an opinion of land value, giving no value to the improvements. Does such an assignment require the use of a hypothetical condition, since the improvements exist but are not being included in the value?
Response:
No, such an assignment does not require the use of a hypothetical condition.
Standards Rule 1-2(e)(v) permits the appraisal of a physical segment of a property. In this example, the segment being appraised would be the land. Put simply, the land is the subject of the assignment and the improvements are not. To avoid communicating a misleading appraisal report, the report would have to acknowledge the existence of the improvements on the land, but they do not have to be included in the valuation.
USPAP defines a hypothetical condition as:
that which is contrary to what exists but is supposed for the purpose of analysis.
In this example, a hypothetical condition would not be required because the land does, in fact, exist. This is no different than the situation that commonly exists in appraisals
employing the cost approach. In arriving at an opinion of value by the cost approach, an appraiser often develops an opinion of the site value as if vacant, separate from an estimated value of the improvements.
This can be contrasted by an assignment that includes providing a current value of proposed improvements. Appraising the improvements as if currently completed is contrary to what exists, so a hypothetical condition would be required in that case.

 

[Fred]

Rn, when you called back the client to discuss, did they say no? I suppose there are intended uses where it would be necessary. Condemnation always comes to mind, because that's where the chop properties up, and you usually have to appraise at least one segment.

Rnmover,
Who "gives value?" .. You, or the market? ...

If you mean market value, Web, then the market gives value. However, we have last dibs on hypothetical conditions. You know, like a house "on" 20 acres, when you only "give value" to 5. If you think that's OK, what's wrong with sweeping away a grocery store on residential mortgage?

RNM,

Don't be discouraged by the hostility on the forum. I would also warn about taking posters advice when not backed up by citation. The quote below is from The Appraisal Foundation and may or may not be of help to you.

You are right about the hostility. However, I don't think the advice in that AF QA is backed up by any citation. :icon_lol: