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Converted Garage

Discussion in 'FHA/HUD and VA' started by Gregory Beck, Aug 12, 2009.

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  1. Gregory Beck

    Gregory Beck Senior Member

    13
    Aug 6, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    I just finished and Fha appraisal and the homeowner converted the garage to a bedroom it's done in a professional workmanship like manner etc I asked her if she obtained a permit? She said she bought the house that way. The garage door is still on. Have to pass through the laundry room
    to get to the bedroom. Does anyone know how FHA handles a converted
    garage permitted and not permitted. Thanks in advance for the help
    this is not a 203k loan where buyers are fixing up.
     
  2. Gregory Beck

    Gregory Beck Senior Member

    13
    Aug 6, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    I can't believe nobody answered Hmmmmm I guess no one knows. It's Ok I found out
    but I won't tell anyone on this forum.
     
  3. CANative

    CANative Elite Member

    387
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Sheesh. What's your hurry? lol

    HUD/FHA does not involve itself in local building codes and rules. They are concerned with legal and illegal USES. If the use is legal then it's okay with FHA as long as there are no issues of safety, sanitation, etc. You say it was built in a workmanlike manner then they will accept that. But you have to realize that without permits you don't really know if it was built correctly and safely. So you are exposing yourself (and your client) to some liability.

    On the other hand, most lenders are extremely sensitive to improvements and permits. So it's more up to them than it is to FHA.
     
  4. Mike Kennedy

    Mike Kennedy Elite Member

    254
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    4150.2 appendix D pg D-8

    1. Matters of a Legal
    Nature
    The appraiser will not be responsible for matters of a legal nature that affect
    either the property being appraised or the title to it, except for information that
    he or she became aware of during the research involved in performing this
    appraisal.


    As of the Effective Date: Legal, LNC, or ........Illegal?

    The Governing Municipality reported which of the above??

    p.s. an Accurate Description of the Subject Improvements as of the EDA was _____________________ ??
     
  5. Mark to market

    Mark to market Junior Member

    0
    Nov 14, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    Greg there are two additional items that may pertain.

    One is functional obsolescence that may be associated with having to walk thru the laundry room to get to the bedroom, the other is that the ‘new’ bedroom needs an emergency egress to the outside.

    Appendix D
    Functional utility;

    Enter "Equal", "Superior" or "Inferior" as a total of the items rated in the Improvement Analysis compared to the subject. Use the "Summary of Sales Comparison Approach” to explain differences.
    · Adjust for functional obsolescence observed in the subject noted in the unit description and not found in the comparable sales.
    · Extract dollar adjustments from the market. For example, a poor floor design that includes two bedrooms so that the entrance to one is gained by passing through the other typically requires a negative adjustment for functional obsolescence.
    Floor plan of the subject is required when functional obsolescence is attributable to layout or poor floor plan.
     
  6. Vetteman

    Vetteman Member

    0
    Jan 5, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    If it was done without permits and the living area (without the converted garage) measures what is in public records, then I leave it as a garage and make an adjustment for what it would cost to convert back. I never conceal what has been done.

    If it was done with closed permits, then I include the additional bedroom and the measured living area. Of course, the subject now lacks a garage, which the comps may or may not have, and functional obsolescence has to be addressed due to access/egress.
     
  7. carlos alvarez

    carlos alvarez Sophomore Member

    0
    May 8, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Converted Garage,
     

    Attached Files:

  8. Lloyd Bonafide

    Lloyd Bonafide Senior Member

    0
    Jan 15, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Greg makes a good point. Something like an unpermitted garage conversion may be OK with FHA, especially if the appraiser can present comparables with the same situation. But getting approval from the bank underwriter? Not likely these days. Lenders are now terrified of making any loans that they may have trouble selling on the secondary market.
     
  9. CANative

    CANative Elite Member

    387
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Carlos... thanks for that pdf, it's a good find. I'm also sure it will provide a nostalgiac stroll down memory lane for the old WWI FHA pensioners like my dad and TC.

    Heh! On the back of the URAR... who would have thought?
     
  10. fifteen

    fifteen Senior Member

    0
    Nov 15, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Washington
    Wow, look at all those blank lines! lol. The terminology - You WILL do this you will do that. Sure looks grand but what if there's a basment?
    Can't say the people that write the forms have changed much .

     
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