re: Unpermitted Bathroom

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by normando, Jun 30, 2013.

Thread Status:
Not open for further replies.
  1. normando

    normando Senior Member

    0
    May 2, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    How does Fannie Mae look at unpermitted bathrooms? The market loves to have more bathrooms and it appears functional. I know some lenders don't want me to give any value and they refuse to lend on any unpermitted work.
     
  2. VolcanoLvr

    VolcanoLvr Senior Member

    1
    Oct 30, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Washington
    Your proof for the 'unpermitted' status of the bathroom is???
     
  3. andrew81

    andrew81 Member

    0
    Dec 5, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    not the same issue but some guidance

     
  4. Randolph Kinney

    Randolph Kinney Elite Member

    10
    Apr 7, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    You have Fannie Mae guidelines and you have lender overlays, their guidelines.

    Your task is to show market acceptance and therefore contribution to market value. If you can show that permits are actively enforced, ... therefore a negative impact on the marketability of the property ...
     
  5. nicholz12

    nicholz12 Senior Member

    0
    Sep 7, 2008
    Professional Status:
    Licensed Appraiser
    State:
    Massachusetts

    The building Department of any town or city issues permits.
     
  6. Denis DeSaix

    Denis DeSaix Elite Member

    35
    May 16, 2005
    Professional Status:
    Certified General Appraiser
    State:
    California
    You are correct; not the same issue.
    But I don't know what guidance one can glean from it to use for the OP's situation?
    The GSE excerpt refers to an illegal unit.
    The OP's situation refers to a non-permitted bath.

    This thread may quickly turn into another:
    Does an alteration without permits create an "illegal use" even though the alteration is consistent with the zoning ordinance, but in the specific case, is not permitted?

    Normando: I agree with Randolph's advice; the market will dictate if it has value or not.
    A client may have a guideline not to value a non-permitted bathroom, but if the assignment is as-is market value, then I consider such a guideline to be contrary to the definition of an as-is market value.
    Better, if the client doesn't want to loan on a property that has a non-permitted bath (which they are certainly entitled to do), its guideline should be to have the appraisal completed "subject to permits": that way, it is a lending requirement (and an acceptable assignment condition) for that specific lender, and not an appraiser's arbitrary decision.
    Otherwise, as-is means as-is.

    Good luck!
     
  7. Punalava

    Punalava Junior Member

    0
    Jul 23, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Hawaii
    When I come across unpermitted items that are relatively insignificant to the property's overall size of improvements and market value I state, "The subject's unpermitted improvements have negligible value since most, if not all of their contributory value is offset by the market's reaction to the estimated costs and/or uncertainty of obtaining permits."

    If the unpermitted improvements are significant in relation to the property's value, then I try to allocate similar comps which exhibit contributory value and marketability, or complete appraisal subject to permits and a final.
     
  8. George Hatch

    George Hatch Elite Member

    17
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    Cost to cure is prolly less than $1000. If it comes to that.
     
  9. Terrel L. Shields

    Terrel L. Shields Elite Member

    47
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    I would hate to attempt to quantify that before a state board.
     
  10. normando

    normando Senior Member

    0
    May 2, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    This is a sale and there were multiple offers. it appears the market gives the unpermitted bathroom some value. Regardless whether legal or not, market wants it even though overimprovement. Usually, I give it some market value but depending on client, client wants no value or some value given. Knowing which lenders absolutely do no loans on unpermitted work (not just illegal units), I screen my call and ask borrower whether they did any work without permits. If so, they may want to talk with their lender before I go appraise their property. I hate for them to waste their money.
     
Thread Status:
Not open for further replies.

Share This Page