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 > Urgent - Help Needed
Register Help Our Rules Calendar Archives Mark Forums Read


Closed Thread
 
Thread Tools
  #1  
Old 10-24-2011, 03:47 PM
metrowideMN metrowideMN is offline
 
Join Date: Oct 2005
State: Minnesota
Professional Status: Certified Residential Appraiser
Posts: 59
Default standing water (damage) during original inspection

When inspecting the subject (REO) a couple weeks ago, I found standing water on the kitchen floor which was leaking into the finished den below. Advised the borrower's lender and was told to put it on hold - the bank was going to make repairs.

Fast forward to today where the borrower's lender contacted me and said the repairs have been made and it looks like nothing ever happened. I will be going back out to re-inspect the subject this week.

So my question is: what would you state in the report regarding the findings during the original inspection?
Sponsored Links

  #2  
Old 10-24-2011, 03:57 PM
miktay's Avatar
miktay miktay is offline
 
Join Date: Jul 2007
Location: Insert city here
State: Texas
Professional Status: Certified Residential Appraiser
Posts: 306
Default

Disclose everything you know. Did you get photos of the water the first time out?
Include them with new photos of the same scene. Then include photos of any known repairs. Then disclose more.
__________________
HI > CA > CO > TX
  #3  
Old 10-24-2011, 04:00 PM
metrowideMN metrowideMN is offline
 
Join Date: Oct 2005
State: Minnesota
Professional Status: Certified Residential Appraiser
Posts: 59
Default

Quote:
Originally Posted by miktay View Post
Disclose everything you know. Did you get photos of the water the first time out?
Include them with new photos of the same scene. Then include photos of any known repairs. Then disclose more.
Yes I do have photos of the water from the initial inspection.

This was my initial reaction, but was told by the borrower's lender that if Fannie or Freddie sees the mention of water damage they'll kill the deal. Not that I should hide the fact, just sayin'....
  #4  
Old 10-24-2011, 05:28 PM
NorthTexValuation NorthTexValuation is offline
 
Join Date: Sep 2011
State: Texas
Professional Status: Certified Residential Appraiser
Posts: 1,095
Default

Quote:
Originally Posted by metrowideMN View Post
Yes I do have photos of the water from the initial inspection.

This was my initial reaction, but was told by the borrower's lender that if Fannie or Freddie sees the mention of water damage they'll kill the deal. .
Killing or making a deal is not your concern.

Reporting what you observed during both inspections, and your requirements for mitigating the water damage is your responsibity.

It would be a very bad move for you to take out the mention of prior water damage and simply comment, it looks good today. You cannot simply remove prior condition comments no matter what current condition is. Same would apply to a house that had a fire two years ago that you were aware of that now has been completely repaired. You still should report prior damage if you have knowledge. Report, report, report....
  #5  
Old 10-24-2011, 08:14 PM
vanguard vanguard is offline
 
Join Date: Oct 2004
State: Minnesota
Professional Status: Retired Appraiser
Posts: 943
Default

Did the client ask you to complete an REO addendum? If they did then a cost-to-cure for rental of a commercial dehumidifier should have been included in your repair estimate. Apparently the client believes the standing water may have been a hazard. I assume if electric service was active then electrocution is a possibility. Hopefully the property has been winterized and the water turned off. Any type of water damage has traditionally been a precursor to mold.

Last edited by vanguard : 10-24-2011 at 08:15 PM. Reason: correction
  #6  
Old 10-24-2011, 08:33 PM
vanguard vanguard is offline
 
Join Date: Oct 2004
State: Minnesota
Professional Status: Retired Appraiser
Posts: 943
Default

In addition, a significant number of cities in Minnesota require a truth-in-housing/point-of-sale inspections. The water should have been disclosed on the inspection report. The buyer as well as the lender are supposed to examine the inspection report. Was this a contingency on the purchase agreement or was the water not present when the required inspection was completed?
  #7  
Old 10-25-2011, 11:37 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

Quote:
but was told by the borrower's lender that if Fannie or Freddie sees the mention of water damage they'll kill the deal. Not that I should hide the fact, just sayin'....
Looks like you should check the validity of that position.

Fannie loans on repaired or cost to cure properties right? I mean they don't only loan on new houses.

Cost to cure should have been established and this should have been included.
Additionally to that point: The repairs have a partial improvement influence which offsets other damages in the market value opinion, if even slightly.

"The appraiser had observed standing water and then informed the lender of that. On the following dates, the lender stated to have repaired such condition. The following work order receipt of completion of repair is attached within the report. The influence of the fixed condition is a minor benefit to the subject's state of condition and necessary repairs, although the repairs noted in the REO addenda are still considered to be influencing the subject's comparable selection and market valuation analysis, having a cost to cure total of $x dollars.

Just made that up, but something like that right? If a lending client is expecting every REO HOME to be in AVERAGE OR BETTER condition, I'd say those are not very realistic expectations. The point of cost to cure is so the lender, and potential buyer know very clearly what it will take to bring the home up to minimal habitable and market standards. Where is the lender coming from stating that an appraiser cannot mention damage in an REO report? Perhaps you should double check your informational source and get clarification from the next guy up the ladder or something.

I mean think carefully about what is being stated in this scenario. The LENDER who OWNS the LENDER OWNED REO (REAL ESTATE OWNED) property is stating FANNIE will not lend on a damaged property. Who is FANNIE going to LEND the PROPERTY too? The LENDER whom is CURRENTLY IN POSESSION of the property? I'm not following the logic with the lenders request. (Not shouting, just trying to be text schnazzy for effect.)

Great questions - intriguing but possibly rooted in a mentality better suited for a mortgage banker who deals primarily with refi's? The MB appears concerned with selling the package again on the secondary market. Any other more knowledgeable appraisers who can continue that line of thought regarding the nuances of an REO being viable in a transfer situation, and how that consumer chain of activity plays out? That's an interesting topic which may be a root topic regarding this thread.

Funny: http://www.youtube.com/watch?v=umkaD...eature=related (One does not simply rock into average condition - HA!)
__________________
Hold fast because the amc outsourcing miracle is not a miracle any more.

Last edited by Mile High Trout : 10-25-2011 at 12:28 PM.
  #8  
Old 10-25-2011, 03:51 PM
vanguard vanguard is offline
 
Join Date: Oct 2004
State: Minnesota
Professional Status: Retired Appraiser
Posts: 943
Default

Due to the incongruity between Fannie/Freddie REO guidelines and the lenders concern, I would suggest that you ask the lender to e-mail you a direct statement from Fannie Mae reguarding the water issue if for no other reason than lender transparency. I would contact the person at Fannie Mae that supposedly issued this statement. This could possibly be construed as an attempt to influence the appraiser. I would put the response in your work file for future reference.
  #9  
Old 10-26-2011, 03:03 PM
metrowideMN metrowideMN is offline
 
Join Date: Oct 2005
State: Minnesota
Professional Status: Certified Residential Appraiser
Posts: 59
Default

Quote:
Originally Posted by vanguard View Post
Due to the incongruity between Fannie/Freddie REO guidelines and the lenders concern, I would suggest that you ask the lender to e-mail you a direct statement from Fannie Mae reguarding the water issue if for no other reason than lender transparency. I would contact the person at Fannie Mae that supposedly issued this statement. This could possibly be construed as an attempt to influence the appraiser. I would put the response in your work file for future reference.
The LO was telling me he thought it might kill the deal, but he's not the underwriter and didn't know for sure. I've worked with this company for years and know he was definitely NOT trying to influence me. Plus nearly all communication is done via email, which I have saved on my server (and backups).

An REO addendum wasn't requested, and this is in Rosemount which doesn't require a truth in housing inspection. Even if it was in a city that required it the leak & damage occurred shortly before my appraisal inspection, which was 60+ after the home went on the market.

**** happens with foreclosures - a lot of the times we see it and sometimes we don't. I was 99% sure how I was going to handle this situation, just wanted a 2nd opinion.

Thanks for the input everyone
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 04:53 PM.

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