If you split a property, how does that affect appraisal?

Question

Looking at a property with plans to split it into two pieces. If we do this, and plan to develop one, how does that affect appraised value?

We would obviously purchase initial piece with 1 loan, but then may sell one of the resulting lots.

Patricia Steiner · Answer

And, my apologies for not addressing the appraisal question.  The appraisal on the one parcel will not be divided into two when reappraised when/if split. Appraisals are based on current/best usage so two smaller lots would/could have a different usage and therefore value.

I have seen investors attempt to divide lots before to find out that it cannot be done.  What may have been sold as an oversize - or "on two lots" - often times is actually one plat.

Steve Morris · Answer

Once you get the replat done, I don't think that will affect the appraiser since he's only addressing what the current legal property is.

Kelsey T. · Answer

@Patricia Steiner thank you for the reply! Yes, we have been in talks with the county and are working with the right people to get the job done. We have over 9 months of research into this project and we definitely understand the complexities. That answers my question, thank you! We just want to have all our ducks in a row so that we can get moving ASAP once it gets completed, and I like to educate myself as much as possible before getting into talks with lenders.

@Steve Morris thanks for responding! We understand this and have been working on that part for the better part of a year now.

Steve Morris · Answer

You really need to check with your county (I'm guessing) on what you need for a replat.  It'll take money and time, not so simple.

Patricia Steiner · Answer

You may not be able to "split" it.  Is it platted?  What are the minimum lot sizes for development in that area with setbacks?  Gotta start here...

If you split a property, how does that affect appraisal?

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