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Condemned Property? Cost To Cure?

Discussion in 'Urgent - Help Needed' started by Renee Borne, Mar 22, 2005.

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  1. Renee Borne

    Renee Borne Junior Member

    0
    Jan 5, 2005
    Professional Status:
    Licensed Appraiser
    State:
    Arizona
    This is the problem. The buyer states that the two structures on property have been condemned. There was no posting at time of inspection and when the lawyer is called they do not know anything about it and they never call back with proof. The lawyer works for the buyer and the buyer is trying to get the lowest price. This county does everything by mail and it may take weeks to get an answer on the condemnation.

    Say they were condemned. Would you do a cost to cure including to rebuild structures and then use comps that would compare to "cured" property. Or would you use land with utilities already in place.

    I begged my boss not to accept this job but was over-ruled. Now it is my headache. Any input would be greatly appreciated.
     
  2. DB

    DB Elite Member

    0
    Apr 29, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Tennessee
    Land and in-ground improvements and cost to cure to demolish and clear the land ... if the building are condemned, then they are a detriment to the property at present and any lot value will have to be minus the cost to remove the condemned buildings.... ;)
     
  3. Joker

    Joker Elite Member

    0
    May 28, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Ohio
    Doug's got it right. If they are condemned, it's the value of the lot and any contributory value of site improvements such as a driveway and utilities minus the cost to raze the structures and have the property suitable for new construction.

    If they are not condemned, do they contribute to value?
     
  4. Dee Dee

    Dee Dee Elite Member

    1
    Jan 16, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    What Doug said.
    Then go find yourself a better boss. ;)
     
  5. Ross (CO)

    Ross (CO) Senior Member

    0
    Jan 17, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    Out of curiosity, just what types of "structures" are there, and how much land size are we talking about here, and what is special about this parcel, its access, its view or general location. Sure does sound like you'll be doing much land sale research in that market, finding those similar parcels selling recently, in close proximity, with the same attributes. What's the zoning around the property ? Is this the opportunity to change the Highest and Best Use of the land and proceed with greater economic benefit by building something new, and different ? Is this area seeing zoning changes and renewal activity ?

    Who is your client on this one ?....the lawyer, the buyer or the buyer's lender ? Have you asked what the intentions are once the buyer has acquired the property through purchase ? That answer will surely direct what "problem" they have and what you need to do to "scope" out the report. I'm sitting way out here, but I'd be betting that they intend to raze those old, ugly, tired structures completely......and build something new. Yes ? Knowing that, you can take any cost-to-cure thoughts right off the table. They will not be curing anything, or, is that incorrect ? Have you asked which demolition contractors the buyer has spoken with and the estimates given to demolish the structures and haul the debris away ? Get those estimate numbers and keep them in your file. If not done, then I guess you have call some demo guys and attain such estimates.

    Waiting 2 weeks for the county to confirm the condemnation notice, and only by mail, sure sounds archaic. Just what county are you in ? What state ? I guess you'll have to drive to the county office, and ask them face-to-face. Take your credentials and the appraisal order page with you in case they are less willing to assist you. Sounds like your "boss" is very anxious to provide you plenty of support since this assignment was accepted by him/her, and you've been given the task to help them with it. You both will need to see this property at the same time......Good luck.
     
  6. DTB

    DTB Elite Member

    56
    Jun 11, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    The seller or seller's attorney must have certified copies of the condemnation orders. Get it from them, through your client.
     
  7. Rick Urbancic

    Rick Urbancic New Member

    0
    Mar 17, 2005
    If the property is condemned, it should be reported sooner or later in the public records. I do not know what the law states in your State about the time frame from the filling out the documents to recording of them in city records, but I do know that I have seen many documents pass through my office in the last 10 years and I have learned to always try to verify, especially a significant item like this.

    A cost to cure really should not be done for a property if the cost to cure exceeds 2% of the total appraised value - standard for most lenders that makes sense to me. Sometimes clients/lenders ask for more than 2%, but when such a cost to cure is given, its recommended that it be in the form of a significant range of value with disclaimers that the appraiser is not a contractor or acting as one for this assignment. Typically when doing a cost to cure, you do not have plans and specs, etc

    When the person says, "condemned" what does that mean. If you haven't seen it is writing by someone authorized, you can't be sure what it means.
     
  8. Walter Kirk

    Walter Kirk Senior Member

    17
    Jun 24, 2003
    Professional Status:
    Licensed Appraiser
    State:
    New Jersey
    By saying that the structures are condemned I'll assume that the property is not being taken by a condemnation proceeding. You must determine whether the government is demanding that the structures be removed or is saying that they can't be occupied until repairs are made.

    I would prepare a report in as-is condition and include a cost to cure to bring the structures up to code. I would make the extraordinary assumption that the structures will comply with all regulations when repaired.
     
  9. Renee Borne

    Renee Borne Junior Member

    0
    Jan 5, 2005
    Professional Status:
    Licensed Appraiser
    State:
    Arizona
    We decided to cancell the order!!! Thanks to everyone for their quick response.
     
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