Permit Nay-sayers

[Stone]

It should be "illegal" to abuse the copy and paste feature.

At least it should be a rule that the actual quote function should be used in order to make posts coherent.

 

[TJSum]

It is more likely the letter from the homeowner's attorney will show up at the previous appraiser's office, the one who did not discover the issue when they purchased the home (along with the listing agent and/or previous owner who did not disclose it).

The homeowner is asking someone to loan them money on their home, the company loaning them the money, the Lender, has every right to research such issues, or have their agents (appraisers) research such issues prior to lending them the money.

 

[Joyce Potts]

The next time you do an appraisal and spend time researching all the permits and CO that aren't compliant, check to see who hold the current mortgage and for what amount and ask them why they would loan on such property. Oh wait, because the prior appraiser didn't disclose it?

With all the issues that are currently on, so many are fixated on permits? Don't forget to check the septic tank location and condition while you're at it, as that could also impact the value.

 

[CCAAMO]

I am concerned that the new generation of appraisers view our job as something other than estimating value. We are not the permit police. We are not home inspectors. We are appraisers.

Mike, the new generation? If I recall you've appraised for over 25 year just like I have. When I started we always went to city hall to verify permits. Checking permits is old school. It's the current crop of appraisers that mostly argue against it. Given the improvement in data sources in may areas, and I am only speaking the area where I am at, the vast majority of the time you have a pretty good idea when there is an addition or extra units etc so the vast majority of the time permits are not an issue.

In response to the argument about time and cost, when in doubt check the box " subject to" for verification of permits by the owner or lender. It will not cost the appraiser any additional time or money.

 

[The Warrior Monk]

Mike you know the answer to your question, no need for my to answer it. I repeat...we are not permit police, we are not home home inspectors.

But we are appraisers, i.e., valuation specialists. And as such, we take into consideration things that impact value.

 

[Ken B]

Don't forget to check the septic tank location and condition while you're at it, as that could also impact the value.

If it's an FHA, you better not only check the location of the septic tank, but the location of the well and the distance between them, the primary improvements, and the property line.

And, if, when walking the drainfield, you discover standing water with an oily sheen and a distinct odor, you better report that also.

 

[Mike Garrett RAA]

Things that affect value...now that is an interesting topic.

Would you say good landscaping, ie., a nice lawn would affect value?

Would you say neighbors who don't take care of their property would affect value?

How about a property located adjacent to a busy street or backing to a minor arterial. Would that affect value?

Then, what about the economy of the community?

And what about lenders changing lending requirements? Would that affect value?

Gee, I have so many things to consider. Should I add to that researching building permits? Code violations? How do I know if the property was properly inspected? Is there a Certificate of Occupancy? If not, what then?

What to do....what to do?

PS...my last FHA 8 hour appraiser's update class in Denver had a presenter say the appraiser wasn't responsible for determining the distance of the septic tank from the well. I think they are really more concerned with the leech field.

 

[Sid Pachter]

Obviously there are two camps here pertaining to whether or not there is the need to check on permits. I would not be so bold as to try and persuade someone who didn't want to incorprate permit verification as part of their routine when the need arose. Some of you will and some won't.

I reviewed an appraisal report on Friday for a purchase transaction of a SFR, where a garage with a maid's quarters above and a separate in law quarters attached to the rear of the garage was built in the past three years. The "main house " 3/3 was built in the late 1990's. No interior access from the main house to the in law or maids quarters. The appraiser made the extra ordinary assumption that buidling permits were issued/finalized for the garage, maid's quarters and in law suite. As part of my review/due diligence, I contacted local zoning to verify the "additions" were legally permissible-which they were. Then I contacted the local building department and found permits were issued but they had not been finalized/closed and the job was cited for failing electric inspection, no c/o was issued. There were other issues with the appraisal report pertaining to the sales comparison approach. I completed my review, delievered my findings and recommendations to the client.

There are a myriad of examples/situations we all see and I have reviewed appraisal reports where the subject is in a rural area where buidling permits are not required. Posts #72, 74 & 75 are on target. Its not a question of being the permit police, but rather being thorough.

 

[The Warrior Monk]

Gee, I have so many things to consider. Should I add to that researching building permits? Code violations? How do I know if the property was properly inspected? Is there a Certificate of Occupancy? If not, what then?

Our office recently sold a property that didn't have a CO, and wasn't going to be getting one any time soon (due to the waterfront location, DEC approvals, and variances that would have been required). It affected the marketing time, price, and type of buyer, since it had to be purchased cash or through a portfolio lender. An appraiser not considering this fact would have been way off the mark.

 

[Mike Garrett RAA]

So...did you make an adjustment for it?