Real Estate Appraisal Forum

appraisersforum.com logo
The Premiere Online Community for Real Estate Appraisers!
 Fastest Way to Find a Real Estate Appraiser Enter Zip Code:
 
 
Go Back   Appraisers Forum > Real Estate Appraisal Forums > General Appraisal Discussion
Register Help Our Rules Calendar Archives Mark Forums Read


Closed Thread
 
Thread Tools
  #1  
Old 06-21-2011, 10:49 PM
NORTON NORTON is offline
 
Join Date: Oct 2007
State: California
Professional Status: Certified Residential Appraiser
Posts: 1,904
Default Subject to, once repaired the condition will improve, does it need to be bracketed?

Hadn't come across this situation before. Doing an FHA purchase on an REO property that was vandalized (AC unit, water heater, kitchen and bathroom fixtures, broken window etc..) with the overwhelming majority of repairs being required by FHA to meet MPR's. So as it stands now, the property is considered between fair to average minus but since the majority of repairs are required by FHA and the appraisal is "subject to" the required repairs, the property condition and market value will increase once repaired although the contract was written with the borrower getting money back for the AC unit not realizing FHA wants the repairs prior for this loan (not a 203K). The contract was written at a price point based on the home needing many repairs. In order to close it will be improved thus eliminating the majority of the damage so my opinion of value will be higher based on its repaired value. Has anybody else come across this type of situation before? Also, how imperative is it that the current condition is bracketed if it's getting repairs? I tried but couldn't find comparables of similar condition.

Last edited by NORTON : 06-21-2011 at 11:10 PM.
Sponsored Links

  #2  
Old 06-21-2011, 10:56 PM
AnonApprsr's Avatar
AnonApprsr AnonApprsr is offline
 
Join Date: Jan 2008
State: Massachusetts
Professional Status: Certified Residential Appraiser
Posts: 6,285
Default

My brain actually hurts from reading that. Is that really only one sentence? I couldn't finish the sentence but it is always possible for repairs to not equal value. Perhaps being repaired is not the same thing as remodeling. If you repair a 50s kitchen it's still a 50s kitchen and the next buyer may STILL want to put in a new kitchen. FHA doesn't say it has to be "nice" or "smart," it just has to be marketable when repaired. I can see that happening, sure.
__________________
Anonymous Appraiser
Certified Residential
FHA Approved
  #3  
Old 06-21-2011, 11:45 PM
Lloyd Bonafide's Avatar
Lloyd Bonafide Lloyd Bonafide is offline
 
Join Date: Jan 2006
Location: Poway / San Diego
State: California
Professional Status: Certified Residential Appraiser
Posts: 4,785
Default

Quote:
Originally Posted by NORTON View Post
how imperative is it that the current condition is bracketed if it's getting repairs? I tried but couldn't find comparables of similar condition.
Not important - you are appraising subject to the repairs being done, so the current condiiton may not be relevant, (and need not be bracketed.)

If the seller is going to pay for the A/C unit to be replaced, I'm sure they will be rewriting the contract. I wouldn't be concerned with the contract price, because you are appraising subject to a bunch of repairs.
  #4  
Old 06-22-2011, 03:19 AM
Randy G Randy G is offline
 
Join Date: May 2008
State: California
Professional Status: Certified Residential Appraiser
Posts: 224
Default

Appraised value is to be as if all the "subject to's" are completed and the property "meets minimum FHA HUD property standards" when completed. That's why you have "subject to's."

The purchase contract and it's terms have nothing to do with the SOW in an FHA report, except that you report what's in it. If the sales price includes a new BMW, new A/C unit and a kickback for a trip to Hawaii the final reported value should still be the value of the subject property with conditions if any in order to meet minimum FHA HUD property standards.

It amazes me that Realtors present offers on homes that do not qualify for FHA financing with their buyers wanting FHA financing. Waste of time.

RG

.
  #5  
Old 06-22-2011, 09:51 AM
Terrel L. Shields's Avatar
Terrel L. Shields Terrel L. Shields is offline
 
Join Date: May 2002
Location: Springtown, AmeRica
State: Arkansas
Professional Status: Certified General Appraiser
Posts: 39,414
Default

Quote:
The contract was written at a price point based on the home needing many repairs. ... it will be improved ...e so my opinion of value will be higher based on its repaired value. Has anybody else come across this type of situation before?
Yes, and in analyzing the sales contract, I would point out that it does not reflect the "as repaired" scenario being appraised. You should not let the contract influence your value in this case for sure.
__________________
At our age, you can't win, lose as slowly as possible.-R.Green
  #6  
Old 06-22-2011, 10:13 AM
Mile High Trout's Avatar
Mile High Trout Mile High Trout is offline
 
Join Date: Feb 2008
Location: -
State: Colorado
Professional Status: Certified Residential Appraiser
Posts: 12,152
Post

Minimum repairs should bring the subject home back into alignment with the average. That's a neighborhood by neighborhood consideration. Should someone need repairs on a mcmansion, they can provide only minimal, but then an additional reduction based on reduced state of material quality compared to the comparables may be prudent.

If a buyer offers on a property thinking it's fha ready, then it turns out not to be, they can work a 203k into the loan. The price of the unit is typically reduced dollar for dollar on repairs, so the seller loses the net off repair costs, but contract price remains the same. Buyer still borrows the same and finances the costs of repairs himself.

Considering repairs ahead of time can make your task simpler. The reason being is the appraisal now becomes a hypothetical based on a future state which brackets area standards, ie your comps.

When the contract is written based on current condition, you now need an as is and and repaired value. Remember that being an unbiased party means you don't advocate for any one party. Just tell it like it is, weather they got it right in the first place or not. Should the seller be fessing up the cost of repairs, they deserve to know. But should the buyer be adding cost to the loan for the repairs, the as repaired value is prudent. Should the buyer be incorporating cost of repairs to reduce the contracted price, they're writing at an as is value.

Sneaky hobbits.

Oh yes, everything is listed FHA these days.

Sometimes the nature of available comps, prices and repairs, has a relationship to your approach with these issues.
__________________
Hold fast because the amc outsourcing miracle is not a miracle any more.
Sponsored Links

Closed Thread


Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump




Copyright © 2000-, AppraisersForum.com, All Rights Reserved
     Terms of Use  Privacy Policy
AppraisersForum.com is proudly hosted by the folks at AppraiserSites.com

Fastest Way to Find a Real Estate Appraiser Enter Zip Code:
Partner Sites:
AppraiserUSA.com - National Appraiser Directory AllDomainsUSA.com - Domain Name Registration
DeadbeatListings.com - Deadbeat ListingsAppraiserSites.com - Web Hosting for the Professional Real Estate Appraiser
Find FHA Appraisers - FHA Appraiser Search Commercial Appraisers - Commercial Appraiser Search
Relocation Appraisal - Find Relocation Appraisers Domain Reseller - Business Opportunity
Home Security Buzz - Home Security Info Radon Testing - Radon Gas Info
My Medicare Forum - Medicare Info Stop Smoking Help - Help Quitting Smoking
CordlessPhoneStore.com - Great Cordless Phones AndroidTabletCity.com - Android Tablet Computers

Follow AppraisersForum.com:          Find us on Facebook            Follow us on Twitter


All times are GMT -5. The time now is 12:47 AM.

SiteMap: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93