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  #1  
Old 09-14-2007, 02:47 PM
Rick Neighbors's Avatar
Rick Neighbors Rick Neighbors is offline
 
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Default Form 1007

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 by Rick Neighbors : 09-14-2007 at 03:23 PM. Reason: Because I mis-spoke.
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  #2  
Old 09-14-2007, 03:11 PM
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Why can't you do the 1007/216 only? The going rate here is between $100 and $150.
  #3  
Old 09-14-2007, 03:21 PM
Rick Neighbors's Avatar
Rick Neighbors Rick Neighbors is offline
 
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Default 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  
Old 09-14-2007, 03:21 PM
sunnycal sunnycal is offline
 
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Default

Quote:
Originally Posted by Rick Neighbors View Post
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. This won't be an appraisal, but the signature line does say "Appraiser" signature.

What say you?

Rick
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  
Old 09-14-2007, 03:23 PM
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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.

walk-thru pix then report. bill em as u seez em.
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  #6  
Old 09-14-2007, 04:10 PM
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Quote:
They only want a part - the Income Approach.
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  
Old 09-14-2007, 04:16 PM
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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.
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  #8  
Old 09-14-2007, 04:17 PM
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but..but......PE......... they only need a $$$ number.
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  #9  
Old 09-14-2007, 04:18 PM
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Quote:
Originally Posted by Mike Kennedy View Post
but..but......PE......... they only need a $$$ number.


Darn it .. I keep forgetting the little details. Darn it .....
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  #10  
Old 09-14-2007, 04:46 PM
Edward OConor Edward OConor is offline
 
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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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