Two parcels on one deed

[Chuck Parent]

If there are two parcels on one deed, a SFR on acreage and a subdivided buildable lot, is it permissible to appraise both parcels on a 1004?

I believe that a second land appraisal is required, the lender wants me to add the lot to the original appraisal and revise value.

The subdivided lot, while still owned by the bwr and on the same deed, has it's own address and it's own block and lot.

At time of inspection, bwr indicated that he subdivided his lot. Assessor confirmed subdivision and subject parcel size but did not indicate that the subdivided lot was still owned by the bwr.

 

[Amy Perkins]

If it can be sold separately, it should be appraised separately. It can only be sold separately if it is a "legal" lot. It does not matter if it is on one deed, it matters if you can sell it separately. Does it conform to zoning?

 

[Amy Perkins]

Make sure the septic system is on the same parcel as the house.

 

[CANative]

Sounds like it is two economic units with one owner. Appraise them separately. You can include both opinions (two values) in the same report. Then the client can make a proper decision on how to structure the loan.

 

[Roy Courtney]

This situation may vary by region. In my market it is common for a home to have one or more contiguous lots being appraised together.

 

[Mr Rex]

If it can be sold separately, it should be appraised separately. It can only be sold separately if it is a "legal" lot. It does not matter if it is on one deed, it matters if you can sell it separately. Does it conform to zoning?

Bullsheit!

 

[CANative]

Bullsheit!

That's not BS. If excess land or an extra lot has it's own separate HBU and there is a market for it then it should be valued separately. It's more "technically correct" to do it that way. At least according to the Appraisal Institute.

 

[hastalavista]

Sounds like it is two economic units with one owner. Appraise them separately. You can include both opinions (two values) in the same report. Then the client can make a proper decision on how to structure the loan.

I agree.

Make sure the septic system is on the same parcel as the house.

Good advice.

 

[Chuck Parent]

After a discussion with the tax assessor and some colleagues, the land is simply excess land. Despite the subdivided lot being a buildable lot ( meets all site size requirements), it is not transferrable until it has its own deed. Therefore the land is just excess land.

I plan to add the acreage of the second lot back into the appraisal and comment.

Agreed?

 

[CANative]

Therefore the land is just excess land

.

Just excess land? By definition excess land has it's own separate highest and best use. You could be making a serious error.

Go here and download common errors using the link.

http://www.appraisalinstitute.org/p...documents/common-appraisal-errors-and-issues/

Excess Land and Surplus Land

Excess land is commonly mishandled in assignments. It is often confused with surplus land. It is too often lumped in with the value of the entire property or ignored altogether. Excess land may be sold off separately from the rest of the property, so in effect, the subject property becomes two subject properties. Excess land may have a different highest and best use than the rest of the site. This must be addressed in the highest and best use analysis. Further, excess land will have to be treated separately in the valuation process. An entirely different set of comparable data may be required. The value of excess land must be reported separately. Be careful about adding the value of the excess land to the value of the rest of the property, as the sum of the parts may or may not equal the whole.

Surplus land does not have a separate value, as it cannot be sold off separately. It is “extra” land that may or may not contribute value to the overall property. It does not have an independent highest and best use. It may have the same value per unit of comparison (e.g., value per square foot, value per acre) as the rest of the site, or it may contribute less per unit of comparison.