no kitchen.

[TPERALTA]

I have an assignment for a SFR purchase. The current owner gutted the kitchen, most of the baths (although you can piece together a shower, sink, toilet between the 3 bathrooms) and is now relocating (& selling). Can I appraise this one "as is" if I give it a hefty cost to cure & disclose it all in the report eventhough we have a big functional issue here? Thank you

 

[robert higgins]

Sure if you can find model matchs within your market, but if it is going to be done on a new 1004, nope wont meet Fannie Mea guidelines and will need to be subject to repairs.

 

[TPERALTA]

Thank you... I am searching to try to find something in writing so that I can show the lender that I wont be able to do this due to it not meeting FNMA guidelines, etc., etc... but can't seem to find it- any suggestions for locating this on a FNMA document?

The problem is: the request is from a broker who is using a lender who is saying "it is ok with us if it does not have a functional kitchen..." so the broker is telling me to move forward with it since the lender "does not care". UGH. Thank you...

 

[hastalavista]

You can appraise the property "as is". The cost to cure, however, is probably not the right approach for a number of reasons. Chances are good the cost to cure the subject (bring it to full functionality) will be much less than the affect on value that its present condition has on marketability. To put it simply, if you were a buyer, would you discount the cost of completing the work in progress from the sales price? Probabloy not. You'd probably want an additional discount for taking on the risk, time, and effort (that's called "incentive").

Another mistake some make on "cost to cure": The cost to cure adjustment does not change the as-is condition of the subject. If the subject is a "fixer", then it gets a "fixer" rating. Adjusting for its "fixer condition" in some other area (like, functional utility) does not change the "fixer" condition of the subject. So, be careful about applying a cost to cure adjustment and assuming the adjustment makes the subject "average". It doesn't.

Lastly, even with the C2C, there's still this issue: At the bottom of page 1 of the 1004, the question is asked, "Does the subject generally conform.... to the neighborhood?" I would argue that a home with a non-functional kitchen and bath does not conform to the neighborhood (unless there are communal kitchens and latrines located throughout the area!).

Homes like your subject are sold all the time, so the question isn't if it can be appraised. It can. But, it probably does not qualify for an A, B paper loan. So the key for the appraiser is to make sure the report isn't misunderstood in what exists and how its condition impacts its value.

Remember, there are two reasons a lender wants an appraisal:
A. They want to know what they are lending on.
B. They want to know how much it is worth so they can decide how much to lend.

If what exists is not something they want to lend against, then the value is moot. The property doesn't qualify for any loan "as is". My advice is to make sure you accurately present the property "as is" in your report, and they credibly analyze how its "as is" condition affects its "as is" value.

Good luck!

 

[Jim Shoe]

Thank you... I am searching to try to find something in writing so that I can show the lender that I wont be able to do this due to it not meeting FNMA guidelines, etc., etc... but can't seem to find it- any suggestions for locating this on a FNMA document?

The problem is: the request is from a broker who is using a lender who is saying "it is ok with us if it does not have a functional kitchen..." so the broker is telling me to move forward with it since the lender "does not care". UGH. Thank you...

XI, 202: Status of Construction (08/24/03)

When there are incomplete items or conditions that do affect the livability of the property—such as a partially completed addition or renovation—or physical deficiencies that could affect the soundness or structural integrity of the improvements, the property must be appraised subject to completion of the specific alterations or repairs.

 

[bart nathan]

I would suggest the hypo box and if they want the cost to complete the kit and baths they can hire a lic contractor and get a estimate. On occasion you might be able to find a comp that sold in similar type condition but thats usually only when you dont need it.

 

[Otis Key]

I would suggest the hypo box

Might I ask what "hypo" box you're talking about!!!!!!!!!!!!!!!!!!!

I would normally agree with Denis (like that's new ) except for one aspect of his statement

Homes like your subject are sold all the time,

Good grief - they sell houses without kitchens and baths like that all the time out there in CA?????????? I only expected something like that in the "outbacks" of TN, AR, NC, SC & NM.

so the question isn't if it can be appraised. It can. But, it probably does not qualify for an A, B paper loan. So the key for the appraiser is to make sure the report isn't misunderstood in what exists and how its condition impacts its value.

Remember, there are two reasons a lender

AssUmed real lender and not mortgage broker! (exceeding emoticon limits)

wants an appraisal:
A. They want to know what they are lending on.
B. They want to know how much it is worth so they can decide how much to lend.

If what exists is not something they want to lend against, then the value is moot. The property doesn't qualify for any loan "as is". My advice is to make sure you accurately present the property "as is" in your report, and they credibly analyze how its "as is" condition affects its "as is" value.

Can't be any more clear than that - you're "employed" to report the facts and your opinion of market value. Not to make friends or please everyone.

 

[sunnycal]

I have an assignment for a SFR purchase. The current owner gutted the kitchen, most of the baths (although you can piece together a shower, sink, toilet between the 3 bathrooms) and is now relocating (& selling). Can I appraise this one "as is" if I give it a hefty cost to cure & disclose it all in the report eventhough we have a big functional issue here? Thank you

From my experience you have to have one full working bath and a kitchen. This situation would present health and safety issues such as a lack of bath, kitchen and most likely open floors, exposed wiring and other such hazards. If it's private money or not a FNMA loan then you could try another approach.

 

[Don Clark]

From my experience you have to have one full working bath and a kitchen. This situation would present health and safety issues such as a lack of bath, kitchen and most likely open floors, exposed wiring and other such hazards. If it's private money or not a FNMA loan then you could try another approach.

Does not meet the definition of "Residential" without a kitchen, bathroom and bedroom. The IRS code defines residential as any property having those areas....bedroom, bathroom, and kitchen. Under that definition it can also be non real estate such as a sailboat, and RV, a (truely) moble home or many variations of the above.

 

[The Warrior Monk]

Can I appraise this one "as is" if I give it a hefty cost to cure & disclose it all in the report eventhough we have a big functional issue here?

How it gets handled will depend ultimately on your intended user. Some lenders will lend on a home with no kitchen; others won't. I would not proceed without clarification.