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#21
12-05-2007, 03:17 PM

Dutchman

Join Date: Jul 2007

Professional Status: Certified Residential
Appraiser
State: Washington
Posts: 31

If the agreed to SOW is for a residential appraisal "as is" then do that. Untill you
have a crystal ball that can foretell when and what zoning change is going to
happen, doing an HBU with the HC for each possible zoning designation is way
beyond the SOW. Appraise what is as is and mention that a zoning change could
occur that would have significant impact on value when it occurs. The market
value when the change occurs would require another appraisal . Unless you
cannot predict that the zoning is going to end up Light Industrial, Commercial or
High Density Residential or ....., you could be doing HBU's untill the cows come
home. Appraise what is as is and inform the client of the possibilities
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#22
12-05-2007, 03:33 PM

Denis DeSaix

Join Date: May 2005

City: Northern California
Professional Status: Certified Residential Appraiser
State: California
Posts: 6,052

Quote:

Originally Posted by Dutchman

If the agreed to SOW is for a residential appraisal "as is" then do that. Untill you
have a crystal ball that can foretell when and what zoning change is going to
happen, doing an HBU with the HC for each possible zoning designation is way
beyond the SOW. Appraise what is as is and mention that a zoning change could
occur that would have significant impact on value when it occurs. The market value
when the change occurs would require another appraisal . Unless you cannot predict
that the zoning is going to end up Light Industrial, Commercial or High Density
Residential or ....., you could be doing HBU's untill the cows come home. Appraise
what is as is and inform the client of the possibilities
DutchmanEither I misunderstand you or I significantly disagree.

Regardless of how the property is going to be appraised, it still needs an HBU

analysis, no?
And if there is evidence that the property may be in transition, one cannot ignore
that. That is why this assignment may be complex; there is evidence, so what does
one 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 for
demo costs) vs. its as-improved configuration? Then what would you appraise when
you recommend "appraise what is"?
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#23
12-05-2007, 03:37 PM

Dutchman

Join Date: Jul 2007

Professional Status: Certified Residential Appraiser
State: Washington
Posts: 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, you
would have to do an HC for each zoning possibility (good luck)
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#24
12-05-2007, 03:45 PM

Denis DeSaix

Join Date: May 2005

City: Northern California
Professional Status: Certified Residential Appraiser
State: California
Posts: 6,052

Quote:

Originally Posted by Dutchman

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, you
would 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 main
road 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 he

ever wants to sell.

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#25
12-05-2007, 03:50 PM

Kenneth Brown

Join Date: Feb 2004

City: Boca Raton, FL
Professional Status: Certified Residential Appraiser
State: Virginia
Posts: 1,129

What's the Comprehensive Plan got to say?

And the threshold is "reasonably probable" when it comes to zoning changes.
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#26
12-05 -2007, 04:05 PM

Dutchman

Join Date: Jul 2007

Professional Status: Certified Residential Appraiser
State: Washington
Posts: 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 the
offer. (I know I should be more trusting LOL". (just like I believe an owner who tells
me the cabinets are brand new and I open them and find that they have been
refaced). 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 call
for staight SFR or is it planned to be a mixed use area or High Density. Unless the
comprehensive plan has determined those things, doing an HBU must include an HC
for all the possibilities.
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#27
12-05 -2007, 04:19 PM

Denis DeSaix

Join Date: May 2005

City: Northern California
Professional Status: Certified Residential Appraiser
State: California
Posts: 6,052

Quote:

Originally Posted by Dutchman

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 the offer. (I know I should be more trusting LOL". (just like I believe an
owner who tells me the cabinets are brand new and I open them and find that they
have been refaced). On things that are that substantial, I am skeptical until proven
otherwise.
Even if the probability that the zoning will be changed to residential, does the plan
call for staight SFR or is it planned to be a mixed use area or High Density. Unless
the comprehensive plan has determined those things, doing an HBU must include
an HC for all the possibilities.
DutchmanThere may be a difference in semantics. And, I'm not being argumentative; this is an
important topic for residential appraisers such as myself; how far to go and what to
do. 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 are
not considered and, rather, that legitimate and market-supported uses only be
considered.
A property may have a number of potential uses that may create additional value in
the land "now" vs. what exists ("as improved") or can be expected to create additional
value in the land in the "future" vs. what now exists.
For our subject, there may be three potential uses- SFR (as-is), commercial or
subdivision. Those uses are not "hypothetical" and neither is the one that returns the
highest land value.
It could be that all three uses return the same value (unlikely) or that the appraiser
cannot determine which- commercial or subdivision- is higher but both are higher
than the current use (as-is). Regardless, each one presents a real use that isn't madeup 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 HBU
analysis that determines what my subject's HBU is, depending on the assignment, I
may not be able to move forward and develop an opinion of value. That's why (I
think) Greg B. said if HBU is something other than "as improved", the assignment (for
mortgage lending work) will probably stop right there.
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#28
12-05 -2007, 04:24 PM

Greg Boyd

Join Date: Jun 2003

City: Hopland, CA
Professional Status: Certified Residential
Appraiser
State: California
Posts: 14,358

When I took my very first apprazur class at Anthony Schools the second session on
the first day discussed the fannie form (as it existed then) and marched down th e
form 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.
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#29
12-05 -2007, 04:26 PM

PropertyEconomics

Join Date: Jun 2007

City: Central New Mexico
Professional Status: Certified General
Appraiser
State: New Mexico
Posts: 3,127

Denis .. I think you can move forward but you cant do a subdivision analysis. If you
determine 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? All
properties have an as is value and while the highest and best use may be for future
development, since the development hasnt occurred I see no reason why a residential
appraiser cant opine value "as is".
If the analysis is too complicated I agree with David that the appraiser should employ
the assistance of others. If there is a lack of sales and much analysis and adjustment
is needed it may be beyond the license level .. but assuming adequate sales its a
simple land appraisal I would think. Perhaps I am wrong.
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#30
12-05 -2007, 04:27 PM

PropertyEconomics

Join Date: Jun 2007

City: Central New Mexico
Professional Status: Certified General
Appraiser
State: New Mexico
Posts: 3,127

Quote:

Originally Posted by Greg Boyd

When I took my very first apprazur class at Anthony Schools the second session on
the first day discussed the fannie form (as it existed then) and marched down the
form 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.
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when you don't control immigration."
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