"cost To Cure" Disclaimer Wording.

Discussion in 'General Appraisal Discussion' started by Dave Smith, Sep 16, 2004.

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  1. Dave Smith

    Dave Smith Senior Member

    0
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Wisconsin
    I have started adding this wording to the Conditions of Appraisal section when there are likely to be some cost to cure issues. That is, when I am appraising a property "as is" but there are items that a lender is going to want corrected. Why should we be the ones to stick our necks out? Most of use aren't qualified to provide accurate cost quotes.
    Comments?
     
  2. Farm Gal

    Farm Gal Elite Member

    0
    Jan 14, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Nebraska
    Dave:

    We are as qualified or more qualified than the lenders are....

    There are national cost estimators.

    I always state the source of my guesstimate (noteing whether it is locally derived figures or from a cost estimator book), tell them the repair ESTIMATE was prepared on the basis of a miminally qualified visual observation of the problem, and that that hidden damages are NOT addressed at all. I make it very clear that it is my best SWAG given the scope of my "I ain't no contracter" expertise and is based on limited knowledge ... and I strongly reccomend acqusistion of actual bids by professionals.

    Furhter: if discovery after inspection by qualified personell that the cost to cure exceeds my rough estimate, or uncovers additional damages, the value opinion is rendered void. A more accurate opinion can be furnished on presentation of properly prepapred estiamtes by qualified professionals.

    ~~~~~~

    Balls in their court.

    Scope, and making sure that you cover your value opinion validity and assumptions...

    Your honor, I told them I wausn't no expert, and that they needed to get REAL contractors in there and that the value you are holding isn't worth using as toilet paper if I was off on my guess...

    :shrug:
     
  3. Bobby Bucks

    Bobby Bucks Elite Member

    10
    Jan 27, 2002
    Professional Status:
    Real Estate Agent or Broker
    State:
    North Dakota
    There is some good verbiage on the Supplemental REO addendum. I use a customized version of what is on that form.
     
  4. Steve Owen

    Steve Owen Elite Member

    0
    Jan 16, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Missouri
    I use something pretty similar to what you do, Bobby. If the appraisal is ordered "as is" and there are cost to cure issues, then determining a cost to cure will probably be part of your scope of work. You cannot disclaim your way out of it if you want the assignment, but you can protect yourself with proper language.

    P.S. I love your signature, Bobby. (But, paying attention to detail might just make the difference between a good appraiser and a great one :p )
     
  5. Dave Smith

    Dave Smith Senior Member

    0
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Wisconsin
    What I don't understand is why appraisers should be expected to be able to calculate what a contractor is going to charge to do remodeling or repair work!!! Let the contractor do it.

    I don't have the smarts or expertise to quote the cost to replace a septic system, the cost of correcting a non conforming well, the cost of replacing a roof, the cost of doing lead paint remediation or of dealing with asbestos, etc.

    There is a lot I know about a lot of things but there is even more about a lot of things I don't know. One thing I know for sure, I am not going to go out on the weak limb of providing cost to cure estimates. I am not qualified to do so, no matter how many disclaimers I put in my reports. No way, no how!!! :angry:

    Quoting cost to cure is like doing free comps check and I know how to do comp checks but I won't do them either!!!
     
  6. Real3992004

    Real3992004 Sophomore Member

    0
    Mar 24, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    Estimated Repair Costs have been provided at client's request. The appraiser is not an expert in the field of building construction or engineering and actual costs may vary from those provided. Repair costs and opinion reported herein are subject to future revision based on new repair estimates and evaluations by a licensed building/plumbing/heating and cooling contractor or professional engineer.
     
  7. Bobby Bucks

    Bobby Bucks Elite Member

    10
    Jan 27, 2002
    Professional Status:
    Real Estate Agent or Broker
    State:
    North Dakota
    Steve when I’m working on a URAR I’m probably more anal than anyone in here; however, I can get a bit shoddy with a 2055 if I don’t like the fee. :lol:

    One reason I try to avoid B & C paper clients is because of the constant hassles with deferred maintenance.....they always seem to have water damage somewhere.. I’d rather have an REO ready for a bulldozer than a stretch refi needing $1,000 worth of work.
     
  8. Steve Owen

    Steve Owen Elite Member

    0
    Jan 16, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Missouri
    Amen! Brother. :beer:

    On the other hand, I'm rather fond of high risk loans (when the mb makes the borrow pay COD, that is). :lol:
     
  9. Eric Bishard

    Eric Bishard Junior Member

    0
    Jun 9, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    I can accurately estimate the cost to replace a roof. Pretty simple measurements and a call to a roofing contractor will do the trick. I have never done an appraisal like this, but Im assuming I could charge extra for the appraisal if I was qualified enough to make those estimates of cost to cure.
     
  10. Otis Key

    Otis Key Elite Member

    0
    May 15, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    Dave - Like Bobby said, the REO addendum has some good verbiage - if you don't have that form, then pm me with your email and I'll send one as a pdf. As appraisers, IMHO, we're providing a service, not a report, hence the HO can grumble all they want about the fee amount, just like we do over the mechanic charging us some ridiculous fee for a fuse. Anyway, like I was saying, we're providing a service and part of that is to "estimate" the cost of repairs. It's only an estimate. Scope of work and additional disclaimers should pretty much cover you and I figure out what a local handyman or contractor might roughly charge me and then increase that by about 2 to 5% - CYA.
     
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