Seller agent is the Borrower

[Tom D]

When you apply for a mort you tell the lender it will be owner occupied, or it will be tenant occupied. You get a lower rate with owner occupied. And the lender then typical wants a rent schedule for income puposes. This is an investment property. Maybe the lender knows, maybe not. Just being cautious. Sometimes loan officers don't read the agreement, or leave it out.

You can put owner. I assume you will explain that the low sale price will involve the seller renting 2 years there. They may come back asking for a rent schedule.

You do what you think best. This one is a bit unusual. Good post.

 

[J Grant]

One day I would like to fill in the occupant as "a ghost."

Then watch UW return with stips - Is a resident ghost adverse to marketability? Please provide another ghost occupted comp.

 

[Joe Flacco]

If it is not listed on the MLS then why do you believe that the agent is representing the seller?

Does the contract have the agents information in the "listing agent" section and then the same agent is also the buyer in the contract?

 

[KHS445]

Part of the sales agreement includes a two year lease, so yes it will be tenant occupied. It will be a leasehold estate as soon as the deal closes. I would run what you know past your client to see how they want you to address the issues you have discovered. The closing will occur prior to the lender’s lien being recorded and should the property go into foreclosure during the term of the lease and possibly any extension thereof, there may be some issues with the lender receiving possession and/or clear (fee simple) title.

 

[J Grant]

Part of the sales agreement includes a two year lease, so yes it will be tenant occupied. It will be a leasehold estate as soon as the deal closes. I would run what you know past your client to see how they want you to address the issues you have discovered. The closing will occur prior to the lender’s lien being recorded and should the property go into foreclosure during the term of the lease and possibly any extension thereof, there may be some issues with the lender receiving possession and/or clear (fee simple) title.

We report the occupancy as what exists on the effective inspection date, it is not based on a future occupancy.

 

[KHS445]

We report the occupancy as what exists on the effective inspection date, it is not based on a future occupancy.

True, but you are also required to discuss the terms of purchase agreement and to address any differences between your estimate of value and the contract price. Based on the information provided by the OP, the discussion would have to include the fact that the seller is receiving a two year lease as a part of the deal. Thus, a requirement of the purchase agreement is that immediately upon closing the property will be owned leased fee.

 

[J Grant]

True, but you are also required to discuss the terms of purchase agreement and to address any differences between your estimate of value and the contract price. Based on the information provided by the OP, the discussion would have to include the fact that the seller is receiving a two year lease as a part of the deal. Thus, a requirement of the purchase agreement is that immediately upon closing the property will be owned leased fee.

So it is agreed that we put the occupancy as an existing day of inspection, and yes, we disclose a rental agreement and any other CS terms..

I would not put in that the day after closing, it would be owned leased fee. You can of course, but I think offering opinions of the future is a step too far.
Regardless of the future intent of the Contract with a future closing on Y date, we are appraising the sbuject as of X eff date, a hypothetical"transaction between a typically motivated buyer and seller.

 

[paperasir]

If it is not listed on the MLS then why do you believe that the agent is representing the seller?

Does the contract have the agents information in the "listing agent" section and then the same agent is also the buyer in the contract?

Yes, it is in the contract.

 

[paperasir]

Just appraise the property and report what you know and let your client speculate.

From the info provided I'd call it arm's length but it likely doesn't meet the definition of a "market value" sale as we know it due to some apparently high motivation on the part of the seller. So what? Our appraisals are for market value and hence, its likely that your appraised value will be higher than the sales price.

The sale and lease back? Again, no big deal. Put that info into the report and let the lender decide if its owner occupied or tenant occupied. The loan terms may vary depending O-O or a rental property. Include the lease amount being provided back to the seller in the appropriate section. Everything being discussed here has no effect on the appraised value, or at least it shouldn't. The property speaks for itself, the rest is background noise.

And NEVER use this sale as a comp.

The property was not listed in MLS. So, no risk of it ever being used as a comp.

 

[paperasir]

It's arms length. The seller had some unusal requiremenrs. The agent figured out how to do it the way the seller needed, and the seller got to stay there for 2 more years. The agent got the sale price and the seller sold it with a 2 year lease.

You have to label it as tenant occupied, but it was probable a somewhat distressd seller needing a specific way to close it. Not a typical sale, there is a reason. Why not ask the home owner when you inspect the house. I would be asking questions. You have to analysis the agreement of sale, especiaaly being non typical. There is a hidden seller motivation.

Arm length, but maybe some unusual seller motivation or ditress. Underwriter will ask why you appraised value is higher.

I headed that off with commentary before the fact.