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  #1  
Old 03-02-2006, 11:27 PM
Alisa Alisa is offline
 
Join Date: Jul 2005
Location: Huntsville, Texas
State: Texas
Professional Status: Certified Residential Appraiser
Posts: 976
Default No Kitchen & Home Equity Line of Credit (HELOC)

New order today from a new customer...yea!! BUT the customer mentioned it is for a home equity line of credit. Now if I have ever done an appraisal for a HELOC then I didn't know...so now I am wondering is there a difference?

I call the borrower and go through my questions and she happens to mention
she doesn't have a kitchen. I get her to elaborate and she tells me it is
gutted and that the HELOC is so she can remodel the kitchen.

I tried to reach the client to discuss this but he wasn't available.

So do I make this subject to completion??? Hard to do if the $$$ is for the
kitchen....a Catch 22 for sure. I think it was stupid to gut the kitchen and then go for financing but hey, what do I know?

Can I adjust for it or give some type of cost to cure? I've never had a house
without a kitchen before. And how do I find a comp with no kitchen??? That
seems next to impossible.

Thanks in advance for the help!!

Alisa
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  #2  
Old 03-03-2006, 12:22 AM
Steve Wyrick's Avatar
Steve Wyrick Steve Wyrick is offline
 
Join Date: Aug 2003
Location: Kings County, Lemoore, California
State: California
Professional Status: Certified General Appraiser
Posts: 942
Default

Absolutly the worst possible place to be with an appraisal. The lender won't wnat it "subject to" with a follow up 442 if you do it "as is" the you are going to have cost to cure that is probably going to drop value where they can't get a loan.

Maybe someone else can answer this, but "Is a house without a kitchen a house or just a building?"

Definitly need to talk to lender, probably to head underwriter of the lenders company since many loan officer's are so new they won't understand the issues involved.

Nasty, Nasty, Nasty. If you don't get answers in writing on your scope I would say bye-bye to this lender and assignment.

Good luck.
  #3  
Old 03-03-2006, 07:57 AM
Ron Griffith Ron Griffith is offline
 
Join Date: Jan 2005
State: Florida
Professional Status: Certified Residential Appraiser
Posts: 12
Default

I'm always suspicious of new clients that call out of the blue (if this is the case). Some are just fishing for someone to do what others won't (lie, inflate values, OVERLOOK MISSING KITCHENS!).

I leave these situations up to the lender. I give them a choice of "Subject to installation" of new Kitchen or "As Is" with a deduction for the missing Kitchen.

It's not your job to make loan decisions, just to report your findings. It's not your fault the homeowner ripped out the Kitchen either but there is a way to report your findings and place a value on the subject. I have found most lenders won't lend on this though. If the homeowner or loan officer doesn't like it then I refer them to the Golden Rule - He who has the gold (lender) makes the rules.

I hope you collected your fee up front. Rule number one for new clients - Collect at the DOOR! At the least charge an inspection fee for your time.
  #4  
Old 03-03-2006, 08:29 AM
Lobo Fan's Avatar
Lobo Fan Lobo Fan is offline
 
Join Date: Nov 2004
Location: Rio Rancho, NM
State: New Mexico
Professional Status: Certified Residential Appraiser
Posts: 5,900
Default

I inspected one yesterday that is a classic. It is a non-code home down 5 miles of bad dirt road. I would call it 60% complete. Still open to the studs, and dirt floors through more than half the bottom floor. Unfinished plywood walls, an unfinished roof. A permit has never been pulled, a building inspector couldn't find the place. It gets better... no permanent heat source, just a wood stove, plus they cook on a wood burning stove. No utility electricity, solar powered with a pretty sophisticated battery set-up. No propane, the gas trucks can't get down their road.

HEOC for B of A. The ****er is that the borrower told B of A exactly what was going on.

Between the inspection and comp search, I have about 8 hours into this puppy already. Plus I burned about $50.00 worth of gas just gettinh there and back. Fixin' to call the AMC right now to break the bad news. It is for the one that wants fresh updates every two hours, so I will have a nice one for them this morning.

A cost to cure will likely approach the value of the existing property. Making it subject-to means I will have to go out there again someday.
  #5  
Old 03-03-2006, 10:06 AM
Alisa Alisa is offline
 
Join Date: Jul 2005
Location: Huntsville, Texas
State: Texas
Professional Status: Certified Residential Appraiser
Posts: 976
Default

Ron, normally I am suspicious also however I marketed this customer myself. I was sending flyers out and I have started calling each company first. I am still suspicious though.

Luckily I have not yet "observed" the property. I am calling the LO this morning. I felt this was a rock and a hard place situation i.e., subject to or
cost to cure or adjustments....

And then there will be across the board adjustments for condition because I pulled the comps last night and none of them have "no kitchen".

I think I like Steve's idea of talking to the head underwriter.

Chuck, I am glad that isn't my house to do....
  #6  
Old 03-03-2006, 10:48 AM
Don Clark's Avatar
Don Clark Don Clark is offline
 
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Location: Virginia Beach, Virginia
State: Virginia
Professional Status: Certified Residential Appraiser
Posts: 8,947
Cool Definition of residential

The only place I have ever found for a definition of "residential" is in the IRS code. It states that for any property to be residential, not just real estate, but all property, it must have a place to wash & prepare food, a toilet, and a place to sleep. It is not a residential property without a kitchen. I would call for installation of a sink and a cooking stove as a minimum or an amount that would cure the cost of both items.
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  #7  
Old 03-03-2006, 12:22 PM
Alisa Alisa is offline
 
Join Date: Jul 2005
Location: Huntsville, Texas
State: Texas
Professional Status: Certified Residential Appraiser
Posts: 976
Default

Well, the order is on hold and I can't say I am overly upset. The LO claims he didn't know there was no kitchen, only that he knew it was to remodel the kitchen. I hope this is true.....

OH, I asked the borrower how she cooked and she said she has a George Foreman and a toaster oven. Can't imagine how she does dishes.
  #8  
Old 03-03-2006, 02:36 PM
Mountain Man Mountain Man is offline
 
Join Date: Jan 2002
Location: GA
State: Georgia
Professional Status: Certified General Appraiser
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Default

Oh man... we lived in a house I was remodeling once, and will never again! Even with our move last week, we didn't move until it was complete. Nothing is worse than living without a kitchen or bath, and the fresh scent of sheetrock dust every afternoon.

I bet your order gets cancelled. They'll call someone else for a drive by or run an AVM.
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  #9  
Old 03-03-2006, 02:41 PM
Hal Mann Hal Mann is offline
 
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Location: New York, NY
State: New York
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Default

Quote:
Originally Posted by Alisa Anne Ottaviano
OH, I asked the borrower how she cooked and she said she has a George Foreman and a toaster oven. Can't imagine how she does dishes.
Can you say paper plates?
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  #10  
Old 03-03-2006, 03:13 PM
Lobo Fan's Avatar
Lobo Fan Lobo Fan is offline
 
Join Date: Nov 2004
Location: Rio Rancho, NM
State: New Mexico
Professional Status: Certified Residential Appraiser
Posts: 5,900
Default

I had another one on an FHA deal where there was no kitchen. They cooked on a wood stove or a Coleman camping stove. It turns out that FHA has no definition for a kitchen in a primary unit, but does for a granny unit. We ended up deciding it was what was expected in the marketplace. That was a four burner stove and an oven. Took forever to get that 442 cleared.
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