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#2112-05-2007, 03:17 PM

DutchmanJoin Date: Jul 2007Professional Status: Certified ResidentialAppraiserState: WashingtonPosts: 31

If the agreed to SOW is for a residential appraisal "as is" then do that. Untill youhave a crystal ball that can foretell when and what zoning change is going tohappen, doing an HBU with the HC for each possible zoning designation is waybeyond the SOW. Appraise what is as is and mention that a zoning change couldoccur that would have significant impact on value when it occurs. The marketvalue when the change occurs would require another appraisal . Unless youcannot predict that the zoning is going to end up Light Industrial, Commercial orHigh Density Residential or ....., you could be doing HBU's untill the cows comehome. Appraise what is as is and inform the client of the possibilities

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#2212-05-2007, 03:33 PM

Denis DeSaixJoin Date: May 2005City: Northern CaliforniaProfessional Status: Certified Residential AppraiserState: CaliforniaPosts: 6,052

Quote:

Originally Posted by DutchmanIf the agreed to SOW is for a residential appraisal "as is" then do that. Untill youhave a crystal ball that can foretell when and what zoning change is going tohappen, doing an HBU with the HC for each possible zoning designation is waybeyond the SOW. Appraise what is as is and mention that a zoning change couldoccur that would have significant impact on value when it occurs. The market valuewhen the change occurs would require another appraisal . Unless you cannot predictthat the zoning is going to end up Light Industrial, Commercial or High DensityResidential or ....., you could be doing HBU's untill the cows come home. Appraisewhat is as is and inform the client of the possibilities

Dutchman-

Either I misunderstand you or I significantly disagree.

Regardless of how the property is going to be appraised, it still needs an HBUanalysis, no?And if there is evidence that the property may be in transition, one cannot ignorethat. That is why this assignment may be complex; there is evidence, so what doesone do?

Quote:

Appraise what is as is and inform the client of the possibilities

What if "it is" a property that has a higher value as developable land (allowing fordemo costs) vs. its as-improved configuration? Then what would you appraise whenyou recommend "appraise what is"?

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#2312-05-2007, 03:37 PM

DutchmanJoin Date: Jul 2007Professional Status: Certified Residential AppraiserState: WashingtonPosts: 31

Question is what is the zoning going to change to. You have to know that to do the"legally permissible" part of the HBU. Unless you know what it is going to be, youwould have to do an HC for each zoning possibility (good luck)

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#2412-05-2007, 03:45 PM


Quote:

Originally Posted by DutchmanQuestion is what is the zoning going to change to. You have to know that to do the"legally permissible" part of the HBU. Unless you know what it is going to be, youwould have to do an HC for each zoning possibility (good luck)

The market may already be telling the appraiser what it anticipates (my bold)-Quote:

Yes, it is an area in transition; however, there are several similar surrounding properties,which have not sold. Others have sold for commercial use on the corners of the mainroad and residential development has taken place along the subject's road.

and (my bold)Quote:

In addition, the owner has received an offer from a residential developer if heever wants to sell.

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#2512-05-2007, 03:50 PM

Kenneth BrownJoin Date: Feb 2004City: Boca Raton, FLProfessional Status: Certified Residential AppraiserState: VirginiaPosts: 1,129

What's the Comprehensive Plan got to say?

And the threshold is "reasonably probable" when it comes to zoning changes.__________________"Walk with those seeking Truth. Run from those who think they've found it." -DeepakChopra.

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#2612-05-2007, 04:05 PM

DutchmanJoin Date: Jul 2007Professional Status: Certified Residential AppraiserState: WashingtonPosts: 31

If it is in the "comprehensive plan" then I would agree that it is "reasonably probable"if the zoning authority has a history of staying in step with the planning department.If the homeowner says that he has an offer from a developer, I would like to see theoffer. (I know I should be more trusting LOL". (just like I believe an owner who tellsme the cabinets are brand new and I open them and find that they have beenrefaced). On things that are that substantial, I am skeptical untill proven otherwise.

Even if the probability that the zoning will be changed to residential, does the plan callfor staight SFR or is it planned to be a mixed use area or High Density. Unless thecomprehensive plan has determined those things, doing an HBU must include an HCfor all the possibilities.

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#2712-05-2007, 04:19 PM


Quote:

Originally Posted by DutchmanIf it is in the "comprehensive plan" then I would agree that it is "reasonablyprobable" if the zoning authority has a history of staying in step with the planningdepartment. If the homeowner says that he has an offer from a developer, I wouldlike to see the offer. (I know I should be more trusting LOL". (just like I believe anowner who tells me the cabinets are brand new and I open them and find that theyhave been refaced). On things that are that substantial, I am skeptical until provenotherwise.Even if the probability that the zoning will be changed to residential, does the plancall for staight SFR or is it planned to be a mixed use area or High Density. Unlessthe comprehensive plan has determined those things, doing an HBU must includean HC for all the possibilities.

Dutchman-

There may be a difference in semantics. And, I'm not being argumentative; this is animportant topic for residential appraisers such as myself; how far to go and what todo. So it is in that spirit that I'm commenting on your post.

I'd argue that the whole idea of doing an HBU is so that Hypothetical Conditions arenot considered and, rather, that legitimate and market-supported uses only beconsidered.

A property may have a number of potential uses that may create additional value inthe land "now" vs. what exists ("as improved") or can be expected to create additionalvalue in the land in the "future" vs. what now exists.For our subject, there may be three potential uses- SFR (as-is), commercial orsubdivision. Those uses are not "hypothetical" and neither is the one that returns thehighest land value.It could be that all three uses return the same value (unlikely) or that the appraisercannot determine which- commercial or subdivision- is higher but both are higherthan the current use (as-is). Regardless, each one presents a real use that isn't made-up and needs to be analyzed so that the subject can be valued using the appropriate

comparables.

And that really is the crux of the matter. If my subject's HBU is land development,then those are my best comps (vacant land purchased for subdivision development).And (PE) that is why it gets tricky for a residential appraiser. While I can do the HBUanalysis that determines what my subject's HBU is, depending on the assignment, Imay not be able to move forward and develop an opinion of value. That's why (Ithink) Greg B. said if HBU is something other than "as improved", the assignment (formortgage lending work) will probably stop right there.

Denis DeSaix

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#2812-05-2007, 04:24 PM

Greg Boyd

Join Date: Jun 2003City: Hopland, CAProfessional Status: Certified ResidentialAppraiserState: CaliforniaPosts: 14,358

When I took my very first apprazur class at Anthony Schools the second session onthe first day discussed the fannie form (as it existed then) and marched down theform line by line. When it got to HBU the instructer stated "if you have to check the"other" box your assignment is over."

It's the ony thing I remember about that course.__________________Sometimes I hate appraising.

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#2912-05-2007, 04:26 PM

PropertyEconomicsJoin Date: Jun 2007City: Central New MexicoProfessional Status: Certified GeneralAppraiserState: New MexicoPosts: 3,127

Denis .. I think you can move forward but you cant do a subdivision analysis. If youdetermine the highest and best use is probably for subdivision use ... then why not

compare your subject with other parcels that were purchased for subdivision use? Allproperties have an as is value and while the highest and best use may be for futuredevelopment, since the development hasnt occurred I see no reason why a residentialappraiser cant opine value "as is".If the analysis is too complicated I agree with David that the appraiser should employthe assistance of others. If there is a lack of sales and much analysis and adjustmentis needed it may be beyond the license level .. but assuming adequate sales its asimple land appraisal I would think. Perhaps I am wrong.__________________"The American Indians found out what happenswhen you don't control immigration."

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#3012-05-2007, 04:27 PM

PropertyEconomicsJoin Date: Jun 2007City: Central New MexicoProfessional Status: Certified GeneralAppraiserState: New MexicoPosts: 3,127

Quote:

Originally Posted by Greg BoydWhen I took my very first apprazur class at Anthony Schools the second session onthe first day discussed the fannie form (as it existed then) and marched down theform line by line. When it got to HBU the instructer stated "if you have to check the"other" box your assignment is over."

It's the ony thing I remember about that course.

I believe your instructor was wrong .. simple as that.__________________"The American Indians found out what happenswhen you don't control immigration."

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