Zoning, Use and Competence

[Zero]

Who can/should appraise these types of properties?

a)A rural property used residential on 10+ acres zoned Agricultural (no Ag use present)

b) An urban property used residential zoned commercial.

I was taught that (box-checking aside) to appraise a non-residential property (w/ a transaction value >$250K) you should be Certified General. I read AQB standards as saying Residential Appraisers are qualified to appraise properties that are 1-4 unit residential or if HBU is 1-4 Unit. Basically how this can be read is that if used as residential, it's considered a "residential property" and anyone can appraise it.

I turn most of these down. Should a non-CG appraiser accept them? What says everyone here?

And if the transaction value is less than 250K, what then?

My questions, more clearly stated, are

1) Just because it is Residential Use, does that mean a residential appraiser is competent to appraise it?

2)Does the residential appraiser have the "knowledge and experience" to do an HBU analysis on these type properties and thus accept and complete the appraisal assignment.

3)Does everyone just "to check no" and move on with the value in use? It seems like a lot of us do.




Here are my state's license categories:

License Type Scope of Licensure
Licensed Real Estate Appraiser May provide appraisal services in federally related transactions with:
1) non-complex one to four unit residential properties with a transaction value less than $1,000,000;

2) complex one to four unit residential properties having a transaction value of less than $250,000;

3) commercial properties having a transaction value of less than $250,000

Certified Residential Real Estate Appraiser May provide appraisal services in federally related transactions with:
1) one to four unit residential properties without regard to value or complexity; and,

2) commercial properties having a transaction value of less than $250,000

Certified General Real Estate Appraiser
May provide appraisal services in federally related transactions with all types of residential or commercial real property without regard to value, or complexity.
Appraiser Trainee
Appraiser Trainee must work under the supervision of a supervising licensed or certified appraiser

 

[The Warrior Monk]

I was taught that (box-checking aside) to appraise a non-residential property (w/ a transaction value >$250K) you should be Certified General. I read AQB standards as saying Residential Appraisers are qualified to appraise properties that are 1-4 unit residential or if HBU is 1-4 Unit. Basically how this can be read is that if used as residential, it's considered a "residential property" and anyone can appraise it.

The big problem with the commercially zoned property with a (usually preexisting) residential use is that how did the appraiser come to the conclusion that the HBU is residential? That determination may require techniques typically not used by residential appraisers. It is one of the reasons I recommend against residential appraisers doing such assignments on their own, until they have the skills to make such a determination.

If it's used as a residential property, it doesn't mean it's considered a residential property. Often the use of such properties is an interim use.

 

[Joyce Potts]

I agree with Andrew, while a residential appraiser may be qualified to appraise a 10+ acre vacant parcel technically, there's a whole lot of HBU analysis that needs to be done before you can accept this job.

Even an improved property with a house and acreage needs to be carefully scrutinzed for subdividablity potential. It can get complicated, so like Andrew, I usually refer those out in most cases.

Most want the highest value (HBU) but for a SFR residential price.

 

[Couch Potato]

Not about competence.

1) Just because it is Residential Use, does that mean a residential appraiser is competent to appraise it?

Wrong question. It is not a question of competency, but license scope.

Think in terms of driving a car. A person may be a very competent driver of an automobile, but if that person doesn't have a driver's license (revoked, too young,etc.) they cannot legally drive a car.

 

[Mike Garrett RAA]

Zoning, in and of it's self does not constitute highest and best use.

 

[Couch Potato]

No it does not, but the appraiser needs to be competent to determine the highest and best use based on any of the uses under that zoning. Then they need the license to perform the appraisal based on that use. I will turn down a property that is commercially zoned due to HBU complexity. I can handle some of the analysis for commercial HBU, but not enough to be comfortable.

 

[Mike Garrett RAA]

I like to use the escape..."highest and best use, as improved".

 

[Couch Potato]

Even that can get tricky. There are many commercial uses for a house.

 

[Zero]

Mike, if one takes the HBU as improved "escape", how does one explain in the report/to the underwriter why it is zoned commercial but used residential. hat Is something like this going to fly for Fannie on Fannie forms? Is it misleading not to go into a detailed HBU analysis to show why HBU is residential?

 

[Mike Garrett RAA]

My thoughts are...what is the present use? Lets say the property is zoned commercial but is, and has been, used as residential. If the highest and best use was something different...then why hasn't it already been changed? Thus my theory the highest and best use is, as improved.

Zoning, in and of it's self, does not necessarily create a "higher use". There is more to the test for highest and best use than just "legally permissible".

Lets see if my memory serves me....

Legally permissible
physically possible
financially feasible
maximally productive

I think that is correct. We have some older homes on the city's westside where the city changed the zoning to C-6, commercial. Single family residences are mixed in along with some small commercial usages like a legal office or beauty shop. Since there is really little demand for more commercial space, the existing use (could be interim too) is the highest and best use.