Lender says give no vale to illegal accessory unit

[444nutman]

I need some clarification.
So you have a second unit that is permitted but not permitted to be a rental unit?
You said it can not be rebuilt but it is permitted. Can it be rebuilt as a workshop/Shed or rebuilt minus the kitchen and other living areas?
What the heck is a detached four season porch? I have never heard of that term.
IF it can be rebuilt minus the kitchen and other items, the basically it is a workshop/Studio, etc. Then find those similar kind of comps and make it subject to making it legal.
If it can not be rebuilt, then this is where it gets tough. You have to find a sale with a similar illegal unit and determine value. I have done it and it takes a while. YOu have to call a bunch of realtors, and see if the heard of someone selling one, and then go through a bunch of MLS listings and hope you find one.

 

[Terrel L. Shields]

My question is can I value this property as though it does not have this accessory unit as the client has instructed me?

Yes, using a hypothetical condition and I bet the client will have a cow when you do ...I'm just saying....

 

[HF Mudd]

Why are you posting FHA related quotes?

I am appraising a single-family home with an illegal accessory unit. The listing agent described it as a "detached 4-season porch" but it is a 1000 sf structure with a kitchen,bath,bedroom and living room. The main house is 1100 sf. The unit is an illegal use (verified by the city) and cannot be rebuilt as is. I called the client and I have been advised to give no value to the accessory unit. This is an FHA assignment. My question is can I value this property as though it does not have this accessory unit as the client has instructed me? I have never ran into this before. Thank you for any and all help on this.

I hope this helps.

 

[residentialguy]

An appraiser .. DOES NOT GIVE VALUE .. tell your client its an unacceptable assignment condition .. it may well lead to a misleading appraisal.

Oh pulleeeze, PE. I can't stand this nonsense you posted.

They do too give value. They give (which means produce, indicate, show) value as a result of investigation or calculation.

Words have more than one meaning

 

[CANative]

I hope this helps.

Ahh. Thank you. I missed that. The OP edited after the first time I posted and I didn't go back and re-read it.

The property is not eligible for FHA since there is an illegal use. Period.

This particular assignment is over. That's not to say that the lender and borrower can't figure out a way to make the property legal and begin the loan process again.

 

[George Hatch]

MV is MV, the parameters of a lender's program don't alter that. What they do alter is the outcome of the decision of whether that transaction fits their program.

 

[Dan Umstead]

Who is the lender and/or AMC requesting that you "not give value" to the ADU?

 

[George Hatch]

And in case it's not already clear, if the market is acting one way with respect to such units and a lender includes assignment conditions to ignore that market reaction then the value conclusion that ensues cannot be considered an expression of MV as defined. It may be a prudent and reasonable question for them to ask but at that point the value conclusion reflects the value to the lender under their lending program, not the value of the property to the typical buyers and sellers.

If I had a lender who insisted on such a value opinion in their appraisal I'd include both values: the MV based on the actions of the buyers and sellers and a supplemental value based on a definition of Mortgage Value that reflect's the lender's perspective. give them the two values and leave the decision making to them.

It's not a bad question for them to ask - it just doesn't necessarily reflect the definition of MV.

 

[Deanie]

I am still a little confused ( and frustrated). If this assignment is not eligible for FHA financing is that my decision to make? Or is it the lenders?

 

[Michigan CG]

I am still a little confused ( and frustrated). If this assignment is not eligible for FHA financing is that my decision to make? Or is it the lenders?

You appraise, they lend.