Two parcels on one deed

[Chuck Parent]

Thanks for your wisdom and patience, Can.

Hopefully I'm not opening a can of worms, but I'm gonna try for more constructive advice here....

The original lot was 4.85ac. The minimum lot size required to build is 35k sf (0.81ac), so the bwr subdivided 0.81ac off to be the exact minimum size. Based on everything that we've discussed here, couldn't the HBU of the remaining 4.02 ac STILL be subdividing into two more buildable lots? (see below)

The total value of the additional lots as buildable parcels, when added back the remaining subject lot, would be higher. Despite the subject being on 4.02ac site, the acreage of the comps ranged from 0.5ac to 3.2ac. Nothing similar was located larger. My analysis indicated that the value was in the size and condition of the home, not necessarily the wooded extra 1-2ac. The subject land would appear to have more value subdivided into two more lots, and leaving the subject on a 2.3ac+/- site. It most likely would have minimal impact on the comp adjustments, and create a total of three buildable lots in addition to the subject.

Crosses fingers....

PS. I'm assuming that the additional lots would also be buildable, even if it was only one more lot. This is a large wooded tract.

 

[Terrel L. Shields]

Maybe I don't have my head wrapped around this yet. But I will try.

You were asked to value the 2 lots and a house.

You valued one lot and the house?

You did not fulfill the agreed scope of work then?

Now they want you to add it back in and create a HC....which makes no sense.

It is not contrary to what is there. Both lots exist. I see no problem with including both lots in the land value. The fact there are 2 tracts is a non-event. It is operated as ONE property. You are trying to turn ONE property into TWO??? right?

I deal with farmland. I've had farms with 20 separate parcels. I am valuing the farm, not the individual tax parcels. The farm is operated as a unitary holding and often there isn't even a fence between these parcels. My own family's farm has 5 parcels ranging from 8 to 80 acres. But it can be appraised as one farm. And each and every one of those parcels save one, has access to a road and there is no restriction to selling each separately. It is unlikely to be sold that way.

If they want both lots appraised then appraise it. Estimate the value of the lots (which might mean the sum of the value of 2 lots) and that is the Land Value. Do the same for the comps. Make a dollar for dollar adjustment between land values and then do your magic on the improvements. You will come out fine. The client will be happy.

No HC is necessary. It exists. It is not contrary to what exists. Therefore an HC is not only not necessary, it would be misleading to state same. At the very worst you could blather on about an extraordinary assumption (an assumption that applies only in this case) that the two lots would sell together. With or without the EA, I don't think would matter.

 

[Chuck Parent]

Maybe I don't have my head wrapped around this yet. But I will try.

You were asked to value the 2 lots and a house.

You valued one lot and the house?

You did not fulfill the agreed scope of work then?

Now they want you to add it back in and create a HC....which makes no sense.

It is not contrary to what is there. Both lots exist. I see no problem with including both lots in the land value. The fact there are 2 tracts is a non-event. It is operated as ONE property. You are trying to turn ONE property into TWO??? right?

I deal with farmland. I've had farms with 20 separate parcels. I am valuing the farm, not the individual tax parcels. The farm is operated as a unitary holding and often there isn't even a fence between these parcels. My own family's farm has 5 parcels ranging from 8 to 80 acres. But it can be appraised as one farm. And each and every one of those parcels save one, has access to a road and there is no restriction to selling each separately. It is unlikely to be sold that way.

If they want both lots appraised then appraise it. Estimate the value of the lots (which might mean the sum of the value of 2 lots) and that is the Land Value. Do the same for the comps. Make a dollar for dollar adjustment between land values and then do your magic on the improvements. You will come out fine. The client will be happy.

No HC is necessary. It exists. It is not contrary to what exists. Therefore an HC is not only not necessary, it would be misleading to state same. At the very worst you could blather on about an extraordinary assumption (an assumption that applies only in this case) that the two lots would sell together. With or without the EA, I don't think would matter.

I'm not sure how it's operated. It's just wooded land now. No mention was made of appraising multiple parcels at the time of acceptance, only an address was provided. The subject is located at that address, that's the parcel that was appraised. The subdivided parcel has it's own address and tax id.

The SOW issue is why I asked Can about it being USPAP compliant. No value was given to the second parcel, as I was not aware that is was part of the deed or still owned by the bwr. My report only valued the parcel at the address provided on my order.

Adding the subdivided land value back into the site value, after a HBU analysis to determine value, seems reasonable to determine value of the entire parcel. I don't see that as being overlooked or missed, I see that as being an additional request. Am I out of line requesting a fee for this request, or do you see it as something missed in the original research?

 

[CANative]

What you haven't wrapped your head around yet is that the correct treatment of excess land when it exists is to value it separately. Surplus land involves a different treatment.

The subject properties in the OPs scenario involve two separate, marketable interests. The parent lot and the lot that was divided off (logic demands that the reason the owner created this new lot was to have a separately marketable lot in order to increase the value of his portfolio.) To lump it in with the parent lot is incorrect.

Thinking more on this I don't see why the client is making these requests (demands). There is no real need to put a mortgage on both interests just because they're on the same deed. All they need to do is have new deeds recorded. It probably wouldn't even involve have new surveys done because that probably already done when they subdivided.

In fact, it's probably not in the borrowers best interest to structure the loan this way because if he defaults he will lose both properties.

Maybe I don't have my head wrapped around this yet. But I will try.

You were asked to value the 2 lots and a house.

You valued one lot and the house?

You did not fulfill the agreed scope of work then?

Now they want you to add it back in and create a HC....which makes no sense.

It is not contrary to what is there. Both lots exist. I see no problem with including both lots in the land value. The fact there are 2 tracts is a non-event. It is operated as ONE property. You are trying to turn ONE property into TWO??? right?

I deal with farmland. I've had farms with 20 separate parcels. I am valuing the farm, not the individual tax parcels. The farm is operated as a unitary holding and often there isn't even a fence between these parcels. My own family's farm has 5 parcels ranging from 8 to 80 acres. But it can be appraised as one farm. And each and every one of those parcels save one, has access to a road and there is no restriction to selling each separately. It is unlikely to be sold that way.

If they want both lots appraised then appraise it. Estimate the value of the lots (which might mean the sum of the value of 2 lots) and that is the Land Value. Do the same for the comps. Make a dollar for dollar adjustment between land values and then do your magic on the improvements. You will come out fine. The client will be happy.

No HC is necessary. It exists. It is not contrary to what exists. Therefore an HC is not only not necessary, it would be misleading to state same. At the very worst you could blather on about an extraordinary assumption (an assumption that applies only in this case) that the two lots would sell together. With or without the EA, I don't think would matter.

 

[Ken B]

The subdivided lot is the exact minimum size required to build. It's definitely buildable. But it's just a large wooded tract right now, I believe.

That's most likely the bwr's plan, (sell the buildable lot ) but I guess I got hung up on two parcels being on one deed, and being asked to appraise them as a single unit when the second parcel was discovered to be on the same deed AFTER the original appraisal. Instead of surplus land, the land is currently excess and is already subdivided. I've believed since the beginning that it should be addressed separately.

I think I have my course of action, but will wait until tomorrow to address it with them. I'm gonna keep checking in here, just in case I get some additional information.

Thanks to all who offered advice. It is much appreciated.

What kind of trees? If properties in the area are on septic systems, tree growth that is primarily pine is an indication of soil conditions that are not suitable for drain fields.

 

[Stone]

What kind of trees? If properties in the area are on septic systems, tree growth that is primarily pine is an indication of soil conditions that are not suitable for drain fields.

Lol - there are going to be a lot of pizzed homeowners in central and northern WI when they find out they shouldn't be have septic systems.

 

[Lee Lansford]

...

Adding the subdivided land value back into the site value, after a HBU analysis to determine value, seems reasonable to determine value of the entire parcel.
...

Combining two opinions of MV to arrive at one opinion of MV--given the intended use of the appraisal--is a no-go.

See Standards Rule 1-4 (e), 2nd sentence: "An appraiser must refrain from valuing the whole solely by adding together the individual values of the various estates or component parts."

 

[Chuck Parent]

Combining two opinions of MV to arrive at one opinion of MV--given the intended use of the appraisal--is a no-go.

See Standards Rule 1-4 (e), 2nd sentence: "An appraiser must refrain from valuing the whole solely by adding together the individual values of the various estates or component parts."

I mean in terms of providing two opinions of value in one report, one for each parcel and clearly explaining it. I believe I have properly appraised and supported the subject parcel in my original report, but I'll need to add another value for the subdivided lot. Based on the information/advice provided in this thread, don't I need a value opinion for that buildable lot?

What do you suggest?

 

[Ken B]

Lol - there are going to be a lot of pizzed homeowners in central and northern WI when they find out they shouldn't be have septic systems.

"Indication" Which probably varies by region. NJ is more proximate to my old stomping grounds in VA than it is to WI.

 

[Ken B]

"Why?" Always a good question to answer when a property owner does something to change the nature of their property. Sometimes it needs to asked multiple times and not always of the same person.