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Did/did not, analyze condo budget for current year ?

Discussion in 'General Appraisal Discussion' started by Will43, Jul 21, 2006.

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  1. Will43

    Will43 Senior Member

    0
    Aug 13, 2003
    Professional Status:
    Licensed Appraiser
    State:
    Ohio
    On the new condo form, there is the following question: " I did/did not analyze the condominium project budget for the current year.

    I highly doubt any HOA or management company is going to provide me with a copy of their budget and operating costs.

    Also, the condo fees are not the same for each unit.
     
  2. Colorado Guy

    Colorado Guy Member

    0
    Feb 9, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    Will

    I have done 4 or 5 of these on the new form. I have yet to have an issue getting the budget - it is typically a 1 page doc - I did get one that was 4 pages - broken down by unit.

    Guess folks in Colorado are just friendlier!
     
  3. Randolph Kinney

    Randolph Kinney Elite Member
    Gold Supporting Member

    371
    Apr 7, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Well folks here in California are not so easy. When requesting the budget, the HOA will tell you that request has to come from the owner of the unit, in writing. It is not a quick and easy process. I have yet to receive the budget.

    When asked about litigation or special assessments, 80% of the time I am told that request has to come from the owner, in writing.
     
  4. Elliott

    Elliott Elite Member

    122
    Apr 23, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Oregon
    I understand the real intent of the Kansas law was to prevent
    HOA documents from being provided to appraisers.

    I've been checking haven't seen it. I usually say something
    like the realtor or the manager said assessments are stable
    and there are no major projects in the near future.

    And I don't feel particularly qualified to "analyze" a HOA
    budget until I've had some training from a qualified instructor.
    I might ad a line about that and suggest the reader hire a
    qualified expert, such as an accountant. I need a little
    brush up....are HOA using double declining sinking fund
    reserves or are they going to an internal rate of return model
    for reserves??

    Elliott
     
  5. Ray Miller

    Ray Miller Elite Member

    0
    Feb 20, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Wisconsin
    In most cases appraisal should not be quick and easy.

    I request it and I wait tell I get it or write a very long story of why I did not get it and why the MB was pushing for the appraisal to be completed before I could get all the neccessary information to have a complete report.

    I like to have all my facts out in front of me before I complete the report. If it is to slow the MB can go hunt it up for me. It gives them something to do. I just had one spend over a week getting the budget for me. Never got a phone call as to when the report will be done untill they sent me the budget.
     
  6. Bobby Bucks

    Bobby Bucks Elite Member

    224
    Jan 27, 2002
    Professional Status:
    Real Estate Agent or Broker
    State:
    North Dakota
    I refuse to get drawn into that area and I plead incompetence. I’ve yet to get a call back on this statement. I check "NO didn't analyze".

    --------------------
    The appraiser is not an attorney and is not competent/qualified to comment on the condominium documents. The appraiser is not an accountant and is not competent/qualified to comment on the condominium budget or the adequacy of reserves.
     
  7. Lysander in Charlotte

    Lysander in Charlotte Member

    0
    Jan 16, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    North Carolina
    I always check "did not analyze" followed by a statement that the budget is not publicly available. We probably average about one condo a week, and "did not analyze" has never been questioned.

    If ever stiped, I'll tell the stipulator to forward a copy of the budget, and I'll analyze to the best of my ability with appropriate disclaimers. I'm not an accountant or budget analyst and likely wouldn't be good at it if I was.
     
  8. Webbed Feet

    Webbed Feet Elite Member

    58
    Feb 11, 2005
    Professional Status:
    Certified Residential Appraiser
    Mr. Bucks,

    I do not feel that if your method is used by any appraiser in some "eyes closed" manner (I am not suggesting you do, just bringing this up) that opting to ignore bothering to check on reserves or if any litigation is pending, and trying to disclaim it while ignoring it, is very wise.

    One condo I was assigned to appraise for a sale is a clear memory of this. I arrive and the landscaping, exterior concrete walks, exterior siding, roofing, all over the project are all reaching below average condition or worse. I contact the HOA secretary and ask about reserves and why things are looking this way. I find out all the owners have been refusing to vote for a increase in fees for years and they just had a case of a condo sale that required "Subject To" condition repairs and the unit owner sued the association to get them done. The reserves they had were drained to something like about $33 per unit. All that was left to cover everything a condo association is supposed to cover.

    Needless to say, my appraisal report had "Warning Will Robinson!" all over it. This association was One Small Step for Man away from bankruptcy and the project needed work all over the place. It was known by all the owners, and there was no doubt a negative effect on market values was well underway before I arrived. I could go just a few blocks in two directions and find projects in vastly superior condition with comparable units at asking prices just slightly higher than listings in the subject project. I was seeing active listings in my project trying to get those prices with way too many days on market.. Owners trying to bail with their shirts still on before the liens started to hit in my opinion.

    The moral of the story is woe be to the appraiser who just uses some disclaimer about not being able to analyze the budget, reserves, and litigation without even trying to check any of it, with a case like I describe above, and then uses comps from those projects next door without a word of any problems in their report. Because if someone like me follows behind in a review or gets ahold of that appraisal report and finds the above... it's gonna hit the fan! At least pick up the phone and try to speak with an officer of the association, report the effort, and who you spoke with. It's due diligence. Only using a "Three Monkeys" disclaimer and not at least calling is a bad idea IMHO.

    Mr. Bucks, I know you always call and are the due diligence King! I just thought I'd place a few thoughts on this for others reading the thread who might consider a copy and paste of your nice addendum comment with no additional follow up planned.

    Barry Dayton
     
  9. Don Clark

    Don Clark Elite Member

    46
    Jan 17, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Virginia
    Never appraised a condo without one

    I have never appraised a condo without reviewing the budget. Never been refused a copy. When I appraise a new condo I also get a set of the condo documents as well as the budget. Just depends on what you consider your job to be as a professional real estate appraiser.

    BTW, you might get some help here:

    www.condocerts.com

    You have to register but it is free to appraisers.
     
  10. Will43

    Will43 Senior Member

    0
    Aug 13, 2003
    Professional Status:
    Licensed Appraiser
    State:
    Ohio
    I was thinking the same thing as others here have mentioned. Are appraisers qualified to analyze and comment on the budget?

    This is the first time that I have used the new condo form.

    Thanks for the quick replies. I feel better! :new_smileyb: I was thinking how in the h*ll am I going to figure this out?

    Barry, I agree with you. I called the management company twice. However, I still do not think most appraisers are qualified to analyze the budget and reserves.
     
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