Vacant Land Appraisal

[thomas hubberts]

Hello.......I am a Certified Residential Appraiser in Illinois.

It is my understanding that in Illinois, there is a $250,000 limit on the value of a vacant land appraisal a Certified Res Appraiser can perform. Recently, I have been challenged on that position, and I cannot find any information from either the State of Illinois, or the AQB web site that will either support or alter my beliefs.

Any help or direction on where I can find the answer would be appreciated.

Thanks, TJH

 

[Stone]

Thomas - In WI, as in many states, it has to do with the H&B Use of the property, not whether it is improved. Here, if you were a CR and the HBU was single family res, there would be no limit. I would be surprised if IL is that much different.

Michael

 

[Otis Key]

Thomas, I would agree with Michael but would also suggest that you contact your state board for a final ruling on it. A board member will most likely refer you to a USPAP instructor and it would also make a good ruling to be posted on the state web site as a "final answer". Good luck. Let us know what transpires.

 

[George Hatch]

From the AQBs "The Real Property Appraiser Qualification Criteria" on The Appraisal Foundation website:

II. The Certified Residential Real Property Appraiser Classification applies to the appraisal of one to four residential units without regard to transaction value or complexity. The scope of practice identified herein represents the consensus of the Appraiser Qualifications Board. The Federal Financial Institutions Regulatory Agencies, as well as other agencies and regulatory bodies permit the Certified Residential classification to appraise properties other than those identified within this criteria. Individuals should refer to Agency regulations and State law to determine the type of property that may be appraised by the Certified Residential appraiser. All Certified appraisers are bound by the COMPETENCY RULE of the Uniform Standards of Professional Appraisal Practice.


Scope of Practice Interpretations:
1. The Certified Residential Real Property Classification includes the appraisal of vacant or unimproved land that is utilized for 1-4 family purposes or for which the highest and best use is for 1-4 family purposes. (adopted, March, 1991)

2. The Certified Residential Real Property Classification does not include the appraisal of subdivisions for which a development analysis/appraisal is necessary. (adopted, March, 1991) established by the AQB.

 

[Robert Dunkle]

George's quote is, of course, exactly correct. However, our Board interprets transaction value to be the amount of the loan in refinance situations. Therefore, if the loan amount is <$250K, it doesn't matter the value of the property or the HBU. However, if it is a sale where the contract exceeds $250K and HBU is commercial or AG, CR's cannot do the report without a CG co-signing. In some ways it seems they are just worried about the clients' exposure!

My concern would be with AG land that my analysis indicated an HBU of residential, but is located on a major artery and "someone" might second guess me and develop a report with part or all of it with an HBU of "commercial". That could develop into a "sticky wicket" and require lots of defense.

I remember, years ago and before licensing, being involved in a condemnation case where the opposing appraiser showed an HBU of motels, service stations and restaurants on all four corners of a proposed interchange way out in the boonies. This gave the condemned land a preposterous indicated value for the owner. It has been 25 years and there has not been one motel, restaurant or service station built in the immediate vicinity of the interchange. Even though the court didn't have the luxury of hindsight that we have today, they did agree with my viewpoint that it was not likely to happen.

 

[CANative]

Since the brains of this outfit have posted to this thread and we have their attention I wanted to ask questiion that's been bugging me and is only slightly off topic.

If a residential appraiser is to appraise a tract of land that zoning will allow for subdvision, but there is no discernable market for subdividing in the NEAR foreseable future (3 years, say) is it safe to rely on the AI's variation of the definition of H&BU ... "the reasonably probable and legal use of vacant land (or an improved property,) which is physically possible, appropriately supported, financially feasible, and that results in the highest value." (Appraisal Institute, The Appraisal of Real Estate, 11th ed. 1996) p. 297.

 

[thomas hubberts]

Thank you all for your comments.

George Hatch's quote from the AQB is MOST helpful and I will now go to the State of Illinois to see if they have impossed any further restrictions.

Thanks again! Tom Hubberts

 

[Robert Dunkle]

As I was reading these posts a thought came to me concerning the requirements for upgrade from CR to CG. The AQB says that at least 1500 hours of experience has to be "non-residential". Now, I have always interpreted that to mean properties that did not currently have a residence and many of my "non-residential" hours of experience are from appraising vacant land that was zoned residential or was zoned AG and HBU was residential.

Does anyone have any experience with Boards or the AQB to know how they would interpret this? If vacant lots and acreages that are zoned residential or have HBU of residential don't count for "non-residential" experience, I have to step back a ways and look at what I have to do to upgrade to CG.

 

[Stone]

Robert - most of my "commercial" hours came from vacant land, although I have some "commercial" hours on improved properties. I knew this going in and discussed it with the WI dept. of Reg and Licensing. I could only count properties with a HBU that wasn't residential towards my commercial hours. Because of this, it took me over five years to acquire the Certified General license. I had many, many appraisals that took over 30 hours but could only count them as 10 hours of residential, not commercial, because the HBU was residential.

I'd get written verification that you can count all vacant land appraisals as part of your commercial hours. I'd be surprised (and jealous) if that is the case.

 

[moh malekpour]

Scope of Practice Interpretations:
1. The Certified Residential Real Property Classification includes the appraisal of vacant or unimproved land that is utilized for 1-4 family purposes or for which the highest and best use is for 1-4 family purposes. (adopted, March, 1991)

Can a Certified Residential Appraiser analyze an unimproved land as commerical use for its H & B U with no knowledge of commercial appraising?