USDA on one deed but 2 lots on 2 tax parcels?

[Debra]

I've got a USDA purchase order and just saw from the listing and tax records that it is a large old house on one tax parcel and the sale also includes the vacant lot next door. It's on the same deed but a seperate tax parcel. So, from reading the information below, I'm thinking that I need to figure out if the vacant lot can have a house built on it and if it can, I know it will be worth more seperated from the lot with the house. Therefore, the client will need one appraisal for the lot and house and a second appraisal which would be a land appraisal for the second lot.....is this correct?

or could the second lot just be commented on in an addendum and it's value not included in the appraised value with the first lot with the house?

Um, bet this is clear as mud how I tried to explain this! Anyway, please tell me how to handle this the right way before I contact the client about the vacant lot being included in the sale. Thanks.

from handbook...

Quote:


2. Excess Land

Quote:


Excess Land is defined as the area by which the plot exceeds the area of a readily marketable real estate entity. This occurs when the subject lot is considerably larger than typical lots in the neighborhood and the excess is capable of separate use. Generally, the defining characteristic is an excess portion that can be subdivided and marketed as an individual parcel. However, in small communities and outlying areas, appraisers must use different criteria because the market may accept a wide variance in lot sizes. This segment of the market may show wide differences in lot use.
>If the plot contains excess land, delineate and appraise separately the readily marketable real estate entity and the existing or proposed improvements. Describe the excess land but do not appraise it with the primary 1 - 4 family residential building that is subject to a mortgage.
The lender will require that the value of excess land be excluded from the maximum mortgage amount that will be calculated only on a reasonable amount of land and improvements.

 

[Mr Rex]

I've got a USDA purchase order and just saw from the listing and tax records that it is a large old house on one tax parcel and the sale also includes the vacant lot next door. It's on the same deed but a seperate tax parcel. So, from reading the information below, I'm thinking that I need to figure out if the vacant lot can have a house built on it and if it can, I know it will be worth more seperated from the lot with the house. Therefore, the client will need one appraisal for the lot and house and a second appraisal which would be a land appraisal for the second lot.....is this correct?

or could the second lot just be commented on in an addendum and it's value not included in the appraised value with the first lot with the house?

Um, bet this is clear as mud how I tried to explain this! Anyway, please tell me how to handle this the right way before I contact the client about the vacant lot being included in the sale. Thanks.

from handbook...

Quote:


2. Excess Land

Quote:


Excess Land is defined as the area by which the plot exceeds the area of a readily marketable real estate entity. This occurs when the subject lot is considerably larger than typical lots in the neighborhood and the excess is capable of separate use. Generally, the defining characteristic is an excess portion that can be subdivided and marketed as an individual parcel. However, in small communities and outlying areas, appraisers must use different criteria because the market may accept a wide variance in lot sizes. This segment of the market may show wide differences in lot use.
>If the plot contains excess land, delineate and appraise separately the readily marketable real estate entity and the existing or proposed improvements. Describe the excess land but do not appraise it with the primary 1 - 4 family residential building that is subject to a mortgage.
The lender will require that the value of excess land be excluded from the maximum mortgage amount that will be calculated only on a reasonable amount of land and improvements.

Re the bolded part: Part of the H&BU test is Financial Feasibility. Just because a lot may be used for a separate SFR does not automatically mean that there is sufficient current demand for a SF lot. There may be a surplus of excess competing inventory of available lots.

I would suggest you call the local or state USDA office and talk to the head appraiser and discuss your preliminary findings before preceding down your presumptive path. MHO.

 

[Tom Foster]

I had a similar situation last month. The subject has on 4 parcels each having it's own tax bill.

1 parcel had the house, 1 parcel had the 6 car garage, 1 parcel had the swimming pool and the 4th parcel was used for weddings. Total of all lots was about 2 acres.

Got the same situation tomorrow up in Wrightwood ... 1 cabin on 3 lots. Lender is going to loan on the total of all 3 lots.

I learned to snow ski up in Wrightwood back in 1982. June is hiking season up there.
I always like to mix business with pleasure whenever I can

 

[Walter Kirk]

Don't let the deed distract you. Its common practice to convey multiple parcels on one deed. You should do a thorough H&BU analysis to determine whether the additional lot is buildable (remember that it might be grandfathered) or is just excess land when conveyed with the improved parcel.

 

[Debra]

Thanks for your replies.....your replies along with my calling USDA and I got her done.....

 

[SutnNC]

Debra,

I have nearly the same exact thing I'm working on, called the client Monday (holding for me as they didn't know two lots/PIDs were being purchased) and my local state USDA office; they didn't have an answer (asked that I email them some details so that they can do some research and are supposed to get back to me tomorrow at some point). The one I'm working with has a garage that encroaches onto the adjacent vacant parcel, another great little nugget.

I get/understand that my local market works differently but generally speaking, what was their response by you about the additional/vacant lot? Thanks-

 

[Debra]

The local USDA didn't know what to do either. So, they called Nashville and called me back. USDA told me because the adjoining lot could be sold seperately and built on and I was going to "appraise" the lot value for the house anyway, to explain and the lot was worth $. So I gridded on the site line for 2 lots +$ on the comparable lines. I also (of course) took pics of the 2nd lot-vacant lot and inclued tax maps for both parcels and tax cards and explained, explained, explained, and added my land/lot sales that I figured the lot value estimated from and included the deed and I may be forgetting something at the moment.

 

[PropertyEconomics]

If these are for USDA direct loans, it is my opinion they may not qualify for the lending program. USDA does not, to my knowledge, lend on properties where there are two distinct parcels, one of which is not developed. Nor will USDA lend on a parcel that has the potential for subdivision, unless, the size of the tract is typical and customary for the area.

 

[SutnNC]

PE-
Guaranteed: to your knowledge, will they not consider the overall analysis/opinion less the opinion of any excess that is above customary (or deeded separately)?

 

[PropertyEconomics]

PE-
Guaranteed: to your knowledge, will they not consider the overall analysis/opinion less the opinion of any excess that is above customary (or deeded separately)?

Under the Guaranteed Lending program .. I believe the property qualifies. Under the guaranteed program the rules are totally different, with essentially those that are utilized by FHA being the guidelines which prevail.

Those appraisal orders, however, come from a lender and not directly from USDA. USDA is only providing the "insurance" (guarantee) in lender made loans under the "gurantee" program.