Using a "package" sale

[Pat Butler]

I'm well aware of the problem of appraisers splitting up package sales of land and improvements. I have the opposite situation whereby a Realtor listed a house on its site as well as an additional adjacent site SEPARATELY in the MLS.

Both properties were marketed separately but eventually sold to the same buyer, so the deed included both of the properties. So essentially these properties were packaged together in one sale despite having their own legal description and marketed individually.

The house on its own site is a perfect comp for my subject property. It's the darn separate lot (now NOT separate) that is getting in the way. I'm thinking of using this comp (the entire package) and just adjusting for the excess land. I have a good idea of its value based upon its individual listing/marketing and the other comps I'm using. The adjustments will be huge, but this is a rural area with literally no other good comps.

Thoughts??

 

[stefan olafson]

If you do be prepared to defend your decision. Disclose and then Disclose again what the sale entailed and why you are using it. It seems reasonable that if you have other sales without the added lot you can determine contributory value, but make sure you disclose....

 

[Joker]

A willing buyer and willing seller agreed to the transaction of X acres with house instead of Y acres with house for a total of $. Big deal, use X acres at the $ price. That is the sale.

 

[Mark K]

What's the H&BU of the second site? Is it a legal building site? Just because the bank has secured its mortgage with two properties doesn't mean that you have to appraise it in this fashion. You can, but it won't fit into any F/F pigeonhole if this is a concern.

The bank can allow multiple building lots in one loan but they will continue to remain freestanding building sites, sites that can be marketed and sold individually with a partial release of mortgage.

The loan documents do not change the H&BU of the property and if there is an additional building lot included in the loan, you should report the value accordingly (or make corresponding adjustments). I recently completed 4 appraisals on 4 separate SFRs located in different areas and the bank was going to cover them all with a blanket loan for the owner. One mortgage, 4 properties; no big deal.

 

[The Warrior Monk]

The house on its own site is a perfect comp for my subject property. It's the darn separate lot (now NOT separate) that is getting in the way. I'm thinking of using this comp (the entire package) and just adjusting for the excess land.

IMHO, it's the only way it can be used...it's a transaction involving more than one lot and one have to be analyzed as such.

The first thing I would consider is if the lot is a legal single-and-separate building lot. Some municipalities handle contiguous developable lots under the same ownership differently than single-and-separate parcels under different ownership, especially if any of the lots are nonconforming in any way (lot size, lot width, etc.).

If they are legally single and separate and the vacant parcel can be improved, adjustments can be determined. However, the adjustment must take into consideration the utility. A one-acre single-and-separate parcel does not have the same value as two half-acre single-and-separate parcels, even though the total land are is the same.

 

[Mztk1]

I don't see any reason you cannot use it as a comp. You can even talk to the real estate agent and ask if there was an agreement on the value of the lot between the buyer and seller. Not that this would be your adjustment, but that it could be if you find it is supported by the market as well.

 

[xmusienb]

You might want to brush-up on Fannie and Freddie Guidelines if the client is going that route.

However, in no instance may the appraiser create comparable sales by combining vacant land sales with the contract purchase price of a home (although this type of information may be included as additional supporting documentation).

 

[Mztk1]

However, in no instance may the appraiser create comparable sales by combining vacant land sales with the contract purchase price of a home (although this type of information may be included as additional supporting documentation).

That is not what he is doing. What the guidelines guard against is a vacant land sale of say $150,000 plus a separate building contract of $250,000 becoming a $400,000 sale.

What OP says is that the seller was selling lot A for X amount and lot B with a house on it for Y and a buyer came along and bought them both under one deed/title for Z.

These are two separate issues Spidey.

 

[xmusienb]

What OP says is that the seller was selling lot A for X amount and lot B with a house on it for Y and a buyer came along and bought them both under one deed/title for Z.

An assemblage is an assemblage. I see your point but it's the same thing with a twist.

 

[Mike Boyd]

What's the H&BU of the second site? Is it a legal building site? Just because the bank has secured its mortgage with two properties doesn't mean that you have to appraise it in this fashion. You can, but it won't fit into any F/F pigeonhole if this is a concern.

The bank can allow multiple building lots in one loan but they will continue to remain freestanding building sites, sites that can be marketed and sold individually with a partial release of mortgage.

The loan documents do not change the H&BU of the property and if there is an additional building lot included in the loan, you should report the value accordingly (or make corresponding adjustments). I recently completed 4 appraisals on 4 separate SFRs located in different areas and the bank was going to cover them all with a blanket loan for the owner. One mortgage, 4 properties; no big deal.

His concern is with the DEED, not the mortgage.