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USDA w/ 2nd parcel

what are the hurdles with a usda guarnteed loan when home has 2nd adjoining lot, by stawar_535_276 from Lady Lake, Florida. Mar 7th 2013 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

Because it's on a separate parcel, it will not be included in your financing or calculated in your appraisal. If the purchase price for Lot A with a house on it, and Lot B, vacant land, are substantiated by the appraised value of lot A with the home on it solely, then in essence you purchase Lot A with the home, and you get Lot B, the 2nd lot, deeded to you for zero cost, zero value... kinda like "buy one, get one free"... the key is that Lot A has to appraise for the full sale price... if it does not and there is a difference, then you would have to pay the difference in cash...I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Mar 7th 2013
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Sharon Duffy (sduffy)
#71 ranked lender in Pennsylvania - 595 contributions

Is this a purchase or a refinance? And are there 2 deeds?

Mar 7th 2013
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It is a purchase and yes there are two deeds

Mar 7th 2013
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Sharon Duffy (sduffy)
#71 ranked lender in Pennsylvania - 595 contributions

Excess Land is defined as the area by which the plot exceeds the area of a readily marketable real estate entity. This occurs when the subject lot is considerably larger than typical lots in the neighborhood and the excess is capable of separate use. Generally, the defining characteristic is an excess portion that can be subdivided and marketed as an individual parcel. However, in small communities and outlying areas, appraisers must use different criteria because the market may accept a wide variance in lot sizes. This segment of the market may show wide differences in lot use. >If the plot contains excess land, delineate and appraise separately the readily marketable real estate entity and the existing or proposed improvements. Describe the excess land but do not appraise it with the primary 1 - 4 family residential building that is subject to a mortgage. The lender will require that the value of excess land be excluded from the maximum mortgage amount that will be calculated only on a reasonable amount of land and improvements. I hope this helps. If you need more information please give me a call.Sharon7th Level Mortgage732 606 6264

Mar 7th 2013
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There was a affidavit of accessory structure filed in the county about a year ago when owners placed a hobby shed between the two properties stating the two lots are now combined.

Mar 7th 2013
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Ken Baltes (kbaltes)
#16 ranked lender in North Carolina - 242 contributions

USDA may still reject doing a loan on that property(that encumbers those two lots)because they will not loan on a property that can easily be sub-divided into two or more sites. The buyer could always resurvey the property back into two parcels, move the hobby shed and sell the other lot. USDA wants to avoid that situation.

Mar 7th 2013
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

If the 2 lots have been combined, then it's not 2 lots.. It's one... and so long as there are other properties within a close proximity to the subject property of similar size, both lot size and structure size for the appraiser to use as comparable, then you should be ok.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Mar 7th 2013
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#77 ranked lender in Florida - 2,240 contributions

Sounds as though USDA may have a problem with this. I recommend you contact them directly.

Mar 7th 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

Write your offer on lot A, with the house, at the offering price, with a $1.00 offer on lot B (vacant), which will only close contingent with the closing on Lot A. The appraisal on lot A, with the house, may very well come in at the offering price. You may have to pay a few dollars closing costs on lot B, depending on the needs of the seller. It IS legal for the seller to pay ALL closing costs on a cash sale (lot B).

Mar 7th 2013
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Problem is apprasial included 2nd lot and apprasied at contract price, now im 20 days from closing date and this is now an issue. Can sellers combine the two with county? How long would that take?

Mar 7th 2013
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Phil Dumouchel (PhilDu)
#1 ranked lender in South Carolina - 2,243 contributions

Sounds like a mess, it may be possible to combine the two but it depends on local zoning and other laws, and the timing will vary a lot from community to community and based on who is doing the work. I recommend you not make any firm commitments about your closing date until you are certain all this is resolved. Good luck.

Mar 7th 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

Merging the 2 lots can take about 3 to 6 months, or longer. An appraisal revision could be done quickly, and may not reduce the lot A value very much. Contact me at primefinancial@frontier.com, and I will assist you. Dave Metsker, 503-620-2239.

Mar 7th 2013
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,970 contributions

Generically, the answer is no... But each case is different. Sounds like the lots are now combined into one PID, so that technically wouldn't be an issue anymore. USDA really doesn't like anything bigger that two acres, and the bigger the lot, the more likely they will want proof the lot can never be subdivided. www.MortgagesUnlimited.biz/USDA

Mar 7th 2013
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