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Form 1007

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by Rick Neighbors, Sep 14, 2007.

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  1. Rick Neighbors

    Rick Neighbors Senior Member

    0
    Jan 19, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Texas
    I am performing an appraisal for a lender on a new construction. Just got an email wanting to know if I could do a " 1007 Market Rent Analysis for the borrowers current residence ".

    Seems that they are basing his ability to pay the mortgage on the new home on the possible rental income on his current residence.

    I explained that I have done Fannie Mae Form 1007's before, but it was usually in conjunction with a Small Residential Income Property Appraisal on a Fannie Mae Form 1025.

    I explained that the 1007 has needed data on the subject property, such as GLA, room count, Design and Appeal, etc, that one would not have without at least performing an inspection of the subject.

    They said that the UW's only want the 1007 form. The real kicker is that I have appraised the subject before, back when it was new construction, but that was several years ago. Guess I could offer to do a new appraisal, at maybe a reduced rate, with the 1007, or maybe just charge a trip and measure fee on top of the fee for the 1007. May be more trouble than it's worth.

    I have researched this forum, but haven't found anything definitive.

    What say you?

    Rick
     
    Last edited: Sep 14, 2007
  2. MBD

    MBD Member

    0
    Jan 10, 2005
    Professional Status:
    Certified General Appraiser
    State:
    New York
    Why can't you do the 1007/216 only? The going rate here is between $100 and $150.
     
  3. Rick Neighbors

    Rick Neighbors Senior Member

    0
    Jan 19, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Texas
    Answer

    Well, this answer is from one of my recent instructors:


    USPAP says the definition of an appraisal is – an opinion of value. There are many types of value. The lender is requesting Rent/Income Value. Therefore, this request IS an appraisal. Can you do an appraisal for just Rent or Income Value – YOU BET! I have done them on several occasions. Remember, this is why USPAP changed all of its verbage in 2006 and placed so much emphasis on Scope of Work.

    What is the Scope of Work….a rent analysis. You do not need to perform an entire appraisal with all components to arrive at just Rent/Income Value. Yes, you need to know GLA, room count, design, appeal. But, this information can be obtained from what are deemed to be reliable sources (such as the appraisal district, MLS, tax records, etc.). You can do this assignment and never leave your desk!!!!!! That is what Scope of Work is all about.


    Example: If you wanted to remodel your bathroom at your home, would you have a contractor remodel your entire house? Of course not. He’s just going to do the part that you want done. Same thing here. They only want a part - the Income Approach.

    Accept the assignment, do the Income Approach using information from a previous appraisal performed by you, verify as much of that info as you can with current reliable sources and get paid! Remember that it is still a Summary Appraisal Report and follow SR 2-2(b) with regards to all the information required by USPAP. In SR 1-4(a) and (b) only apply when necessary for credible assignment results. Is the Sales Comparison Analysis necessary for the Income Approach…No! Is the Cost Approach necessary in order to have credible assignment results for Rent/Income Value….No! They do even apply to the assignment.
     
  4. sunnycal

    sunnycal Member

    0
    Mar 28, 2007
    Professional Status:
    Licensed Appraiser
    State:
    California
    Use what ever information you have about the subject to compare to rentals. If you've already been to the subject then it should be easy to rely on your previous information rather than just public records as happens sometimes. In today's environment why not offer your knowledge of the first property no charge to make your client happy and you can have the satisfaction of knowing that you have detailed subject info regarding the rental survey.
     
  5. Mike Kennedy

    Mike Kennedy Elite Member

    38
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    assuming it didn't get flooded, the improperly laid roof didn't leakk toooo much, and the damage the 13yr old son smoking his first cig in the bathroom didn't reallllly impact the Condition from several years ago. :new_smile-l:

    walk-thru pix then report. bill em as u seez em. :)
     
  6. Mztk1

    Mztk1 Senior Member

    0
    Dec 3, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    No they don't. You are not finding out the market value of the property via the income approach. The assignment is to find out the monthly value of the tenant's bundle of rights. How much a month, based on the market, are those bundle of rights given in a typical lease worth? That is the problem. In most residential markets the income approach does not even apply because buyers and sellers do not consider the potential income of a SFR while negotiating sale price.

    You know the house, you have the data, make the same extraordinary assumptions you would in a driveby report - average condition, average quality, or that quality and condition hasn't changed since you last saw the house - and put the thing together on it.

    The one thing that has changed, because market rent is now explicity considered a type of value and you are estimating a value, is that we have to keep a complete file on the 1007 for the 5/2 minimum.

    Otherwise, you're good to go. Driveby if it makes you feel more comfortable.
     
  7. PropertyEconomics

    PropertyEconomics Elite Member

    0
    Jun 19, 2007
    Professional Status:
    Certified General Appraiser
    State:
    New Mexico
    I say you have to inspect it in order to know what condition it is in before you can determine rent on it.
    Id do the 1007 only BUT Id require inspection, measurement, just as though I were doing an appraisal.
    Lots could have happened between your original appraisal date and today.
     
  8. Mike Kennedy

    Mike Kennedy Elite Member

    38
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    but..but......PE......... they only need a $$$ number.
     
  9. PropertyEconomics

    PropertyEconomics Elite Member

    0
    Jun 19, 2007
    Professional Status:
    Certified General Appraiser
    State:
    New Mexico


    Darn it .. I keep forgetting the little details. Darn it ..... :rof:
     
  10. Edward OConor

    Edward OConor Member

    0
    Apr 27, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    Be careful, I suspect that the purchaser is lying about renting the house he currently owns and is trying to avoid the non owner interest rate. Does the "new" house have potential as an illegal 2 fam? I have had "personal" experience with this.
     
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