Site Value

[Flygirl 152]

Is it a requirement to have the site value on all FHA appraisals even if the Cost Approach is not used? I've looked through the 4150, and don't see that it is required. I found this information about the Cost Approach, but nothing specific to site value.

If the subject property is new construction (less than one year old), or the Cost Approach is recognized in the market as a basis for pricing, the appraiser may complete the Cost Approach; however, it is not required for an FHA appraisal. If, however, the subject is a unique property, has specialized improvement, is manufactured housing, or the client requests the Cos Approach be completed, then the Cost Approach is required and must be completed. The square foot method is to be used.

 

[Lucien Hamernik]

It is in the old handbook but there is some argument whether the new handbook totally superceeds that. I just always do it anyhow and occasionally use it as a basis for adjusting the site in the grid.

 

[Blueprint]

I have done multiple FHA appraisals without site value. I'm honestly not sure whether it is required or not. Site value is part of the cost approach, so I do not see why it should be required if the cost approach is not.

Is the client requesting it for an appraisal you have already submitted? Maybe the client is requesting site value for their own reasons, not because it is an FHA requirement?

 

[Tom Woolford]

I may be somewhat anal about this issue, but it seems to me that for many properties, if its not a cookie cutter sub, if you do not know the site value of the subject ( and comps) how are you going to adjust for site value differences? It should be part of your basic research, and its no big deal to include it if you have already done your due diligence. I usually include it on ALL appraisals, just to eliminate underwriter calls if nothing else.

 

[Blueprint]

I may be somewhat anal about this issue, but it seems to me that for many properties, if its not a cookie cutter sub, if you do not know the site value of the subject ( and comps) how are you going to adjust for site value differences?

That's not anal, that's doing your due diligence like you said. I do not provide site value, even though I have done my site analysis. I am not giving any weight to the CA when providing my final estimated value. When I am not completing the CA, unless the client wants the site value, I leave it blank. That's just how I do it.

You are not alone providing site value only, my mentor provides site value on all his appraisals, whether he completes the CA or not.

 

[Mike Garrett RAA]

The VA is saying an appraiser should not provide a site value in the report if the cost approach is not fully developed. I have been receiving numerous requests for site values from the lender on VA appraisals recently which leads me to the conclusion they are using those VA appraisals for other types of loans such as conventional.

We are also getting requests for VA loans on properties well in excess of the VA loan limits too. I had one the other day for an $800,000 property. The lender came back and ask for the cost approach. I said, "No!" and the VA backed me up. The lender then came back and asked if I could do a seperate cost approach form for a fee and I said "yes!". I did not upload that through the TAS system but sent it directly to the client.

There is more than one way to develop a site value. The most common, in my market, is the direct sales approach followed by allocation, and then extraction using a cost approach. If the lender wants the site value for insurance purposes then they should be willing to pay for it.

 

[Mike Kennedy]

If the lender wants the site value for insurance purposes then they should be willing to pay for it. - from an Insurance Company.:icon_idea:

 

[PropertyEconomics]

Many believe that the new handbook did not supercede the old but rather amended it on some issues, thus site value remains a requirement.
I think a call to your regional HUD office would be prudent when answering your question.

 

[CANative]

PE,

The handbook to use is the 4150.2, with the revised valuation protocol (Appendix D) which was transmitted with ML2005-48. There are several areas in 4150.2 as well as other documents stating which sections of 4150.2 are superceded by the revised valuation protocol.

The passage regarding the requirement for a site value estimate is in the 4150.1. HUD/FHA's appraisal requirements are/were similar to Fannie Mae's in this regard and the site value estimate requirement was in the FNMA selling guide until a year or two ago.

IMO:
You don't need to develop a site value opinon in order to have an opinion of the influence site area has on the sales prices of improved properties. It's an apples and oranges comparison anyway.

Adding a stand alone estimate of site value is an additional appraisal which adds liability, time and expenses. It should be well documented and adequately supported within the report and the appraiser should charge a fee for it.

 

[PropertyEconomics]

PE,

The handbook to use is the 4150.2, with the revised valuation protocol (Appendix D) which was transmitted with ML2005-48. There are several areas in 4150.2 as well as other documents stating which sections of 4150.2 are superceded by the revised valuation protocol.

The passage regarding the requirement for a site value estimate is in the 4150.1. HUD/FHA's appraisal requirements are/were similar to Fannie Mae's in this regard and the site value estimate requirement was in the FNMA selling guide until a year or two ago.

IMO:
You don't need to develop a site value opinon in order to have an opinion of the influence site area has on the sales prices of improved properties. It's an apples and oranges comparison anyway.

Adding a stand alone estimate of site value is an additional appraisal which adds liability, time and expenses. It should be well documented and adequately supported within the report and the appraiser should charge a fee for it.

Thats why I said some have the OPINION that it remains a requirement. My advice to contact HUD remains in effect.