Unique Zoning Issue

[timd354]

I had a small older home that I was asked to appraise once where most of the lot was zoned as residential but a small corner of the lot was zoned commercial. It was clear that the H&BU was commercial for the entire property since it was located right next to commercial buildings. I called the client and informed them of the situation and they cancelled the order.

How could the HBU for the residentially zoned portion of the property be commercial, since this would not be a legal use on that part of the property?

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[RSW]

I had a small older home that I was asked to appraise once where most of the lot was zoned as residential but a small corner of the lot was zoned commercial. It was clear that the H&BU was commercial for the entire property since it was located right next to commercial buildings. I called the client and informed them of the situation and they cancelled the order.

How could the HBU for the residentially zoned portion of the property be commercial, since this would not be a legal use on that part of the property?

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You would have to see where the subject is located and how it is situated near the commercial zoned areas of the neighborhood. It is very simple for the residential zoned property to have a H&BU as commercial as the neighborhood is going through a transition from residential to commercial. All it would take if for the owner or a potential buyer to request a review of the zoning and ask to have to zoning modified.

 

[PropertyEconomics]

You would have to see where the subject is located and how it is situated near the commercial zoned areas of the neighborhood. It is very simple for the residential zoned property to have a H&BU as commercial as the neighborhood is going through a transition from residential to commercial. All it would take if for the owner or a potential buyer to request a review of the zoning and ask to have to zoning modified.

However, such use as of the date of appraisal is not legally permissible, thus failing the first test of highest and best use, UNLESS, you appraise the property under the hypothetical condition it is zone commercially. Such zone requests are not automatic and neighbors have a tendency to protest such zone changes thus there is some risk associated with appraising the subject under the hypothetical condition the zoning is commercial.
Hypothetical conditions are not allowed under Fannie guidelines unless they pertain to proposed improvements.
These items certainly affect the scope of work greatly and should be considered carefully.

 

[RSW]

However, such use as of the date of appraisal is not legally permissible, thus failing the first test of highest and best use, UNLESS, you appraise the property under the hypothetical condition it is zone commercially. Such zone requests are not automatic and neighbors have a tendency to protest such zone changes thus there is some risk associated with appraising the subject under the hypothetical condition the zoning is commercial.
Hypothetical conditions are not allowed under Fannie guidelines unless they pertain to proposed improvements.
These items certainly affect the scope of work greatly and should be considered carefully.

I agree with you, Webbed. But, just because it is not zoned commercial does not mean that the H&BU is not commercial. The REL of a property as residential may not be long enough to support a residential loan of say 30 years.

 

[Farm Gal]

That is what is called a flag lot around here and may be subject to certain rebuild restrictions due to a lack of minimum street frontage... make sure you ask! In all likelihood it is grandfathered for the foreseeable future but again ASK don't assume!

Looks also as if it is a single parcel with dual zoning (I HATE those because typically it starts a series of inquiry and rebuttal regardless of how well you explain the situation). Narrative explanation required! And i quite agree that the picture is wortha thousand words.

Without the street layout it really isn't possible to see if there is a back way or potential back way into the property that might be obtained. Sometimes the zonign authorities are willing to allow a modification to prevent the direct to highway entry exit - on the other hand -if it ain't broke, don't fix it!