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Old 09-19-2011, 09:05 PM
65076507 65076507 is offline
 
Join Date: Jan 2008
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Default Need help with 203K.

While doing the 203K loan, lender asks for "as is" value to be in the addendum. This may sound like appraisals 101 but do we need to support this value with comps? if yes, do we add them in the sales grid? I am assuming not but I am not certain.

Also, when describing the condition, do we write what we currently see (a shell) or describe what will be done per the contractors scope of work. My last 203K I desribed current amd also detailed what the contractor's scope of work was going to be and the quality of work but lender says not to mention current state at all. I am kind of confused. Any quick thoughts jusy so I stay consistent throughout the report. Thanks guys!
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Old 09-19-2011, 09:13 PM
TJSum TJSum is offline
 
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Is this a streamline 203-K or regular 203-K? There are different requirements to follow so this is important to find out.

Typically, for either one, you would write the report "subject to", therefore the report is written as if the work is complete.

Some lenders require an "as is" value, while others do not. When "as is" is requested by the client, in addition to the "subject to" value, you can not just pull this number out of the air, so I usually do put a couple sales on the grid to support this value opinion as well (condition and upgrade adjustments reconcile these comps in line with the "subject to" comps, and show the market value difference). You could also support your "as is" value in narrative if you wish instead of trying to do it on the grid. Both numbers should be supported adequately, it is up to you how best to do that.
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Old 09-19-2011, 09:25 PM
65076507 65076507 is offline
 
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Tj,

It Is A Regular Fha 203k, Not Streamline.
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Old 09-19-2011, 09:27 PM
65076507 65076507 is offline
 
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TJ,

if you are describing the project as if complete, do you include current pictures. This subject is pretty beat up and lender asks for current pictures but again I am confused as why my report is as if the work is complete but i am adding these current pictures. any thoughts?
  #5  
Old 09-19-2011, 09:38 PM
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Michigan CG Michigan CG is offline
 
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Quote:
Originally Posted by 65076507 View Post
TJ,

if you are describing the project as if complete, do you include current pictures. This subject is pretty beat up and lender asks for current pictures but again I am confused as why my report is as if the work is complete but i am adding these current pictures. any thoughts?
Include current pictures and describe the property As-Is. Then describe the property as repaired and your opinion of the value As-Is and As-Repaired.
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Old 09-19-2011, 09:42 PM
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Terrel L. Shields Terrel L. Shields is offline
 
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USPAP suggests you "support" your conclusions...I would interpret that to mean comps for the As is and comps for the "subject to"...
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Old 09-19-2011, 10:22 PM
TJSum TJSum is offline
 
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Actually, whenever I have done a full blown 203-K, and the lender wanted two values, they also requested two separate reports. It sounds like a lot of extra work, but in the long run, it is easier than trying to fit it all within one report.
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Old 09-20-2011, 10:24 AM
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Make sure you negotiate a higher fee for this extra service.

Two opinions of value. One is pretty easy to do (the "as complete" value) and the other not so easy (the "as is.")

Sometimes when they want both I'll include 5 or 6 sales in the grids. Some sales where the properties sold in good condition and some sales where they sold in not so good condition. The as completed value is the adjusted sales indicators and the as is value is the unadjusted sales indicators of the not so good condition sales (sort of.)
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