excess land
8) Only 10 Acres of Land...
11/16/06
Hi Henry,
I have a question regarding a client request.
The single family residential subject has 17.4 acres, 16.4 of which is assessed as farmland.
The client is asking me to complete the appraisal but only value 10 acres of land. Is this legit? I didn't think it was but then the client provided me a copy of an old appraisal (completed in March of 2006) on this same property which was completed in this manner, where the appraiser stated in the report the conditions laid out by the client.
Thanks in advance for your help.
Gary Paris garyparis@optonline.net
Dear Gary,
It is quite common for appraisers to only appraise part of a property.
You must do whatever is necessary to make a credible appraisal, according to the USPAP requirements. The appraisal must make it crystal clear what part of the property is being appraised, and what part of the property is not being included in the appraised value. A survey is the best way to descirbe this situation, but it is not required.
A tricky aspect of this type of appraisal is how you describe the inter-relationship between the two parcels and how that may affect the value.
When you determine the Scope of Work with the client, you should point out that Fannie Mae and Freddie Mac rarely buy mortgages on rural properties or properties with a total of more than 5 acres, regardless of what part of the property is included in the appraisal.
Finally, keep in mind the USPAP requirement that says that any extraordinary assumptions you make must be reasonable and not for the purpose of deceiving a user of the appraisal.
Yours,
H2
I have a question regarding a client request.
The single family residential subject has 17.4 acres, 16.4 of which is assessed as farmland.
The client is asking me to complete the appraisal but only value 10 acres of land. Is this legit? I didn't think it was but then the client provided me a copy of an old appraisal (completed in March of 2006) on this same property which was completed in this manner, where the appraiser stated in the report the conditions laid out by the client.
Thanks in advance for your help.
Gary Paris garyparis@optonline.net
Dear Gary,
It is quite common for appraisers to only appraise part of a property.
You must do whatever is necessary to make a credible appraisal, according to the USPAP requirements. The appraisal must make it crystal clear what part of the property is being appraised, and what part of the property is not being included in the appraised value. A survey is the best way to descirbe this situation, but it is not required.
A tricky aspect of this type of appraisal is how you describe the inter-relationship between the two parcels and how that may affect the value.
When you determine the Scope of Work with the client, you should point out that Fannie Mae and Freddie Mac rarely buy mortgages on rural properties or properties with a total of more than 5 acres, regardless of what part of the property is included in the appraisal.
Finally, keep in mind the USPAP requirement that says that any extraordinary assumptions you make must be reasonable and not for the purpose of deceiving a user of the appraisal.
Yours,
H2