Can you do a 216 without a 1007

[gregb]

The elephant in the room is why wouldn't the lender have the UW complete the 216?

 

[J Grant]

Payment and fees are up to the appraiser, I am suggesting an opinion of market rent can be developed without putting it on a form.

 

[Randolph Kinney]

The elephant in the room is why wouldn't the lender have the UW complete the 216?

Yeah, especially if the place is rented and if it is vacant, why bother unless the appraiser supplies the market rent 1007 form.

 

[J Grant]

Opinions please,

Lender has requested an Operating Income Statement, but not the 1007 form.
What is your opinion? I feel that I cannot do the 216 without first determining what market rent would be.

You can first determine what market rent can be , but not put it on the 1007 form, reference the rental comps found in narrative and keep them in your work file. Charge enough for it. If the client does not want to pay a fair fee, decline. I would not base an operating income on subject rent alone ( assuming it is rented). Your results have to be credible no matter the form or fee, if the lender is trying to be cheap that it their problem lol. I am so over making lender's problem our problem. They want to pay a tiny fee, let them find someone else.

I bet if you held out for a certain fee, and they could not find a sucker to do it cheaper, they'd agree to your fee but suddenly want the 1007 form as well.

 

[Peter LeQuire]

Has anyone ever challenged a lender client about what the lender client is supposed to provide an appraiser they ask to complete the OI statement/Form 216? The form instructions are unambiguous that the lender/client is to provide the expense information to the appraiser, whether they are provided directly by the applicant of by the lender from the income-related documents accumulates.

I don't see how an appraiser can complete the 216 without developing an indication of market rents: as always, what to charge for that is a bidness decision. I would think that developing an indication of market rent would be part of the SOW for a tenant-occupied or vacant rental property, whether a 1007 is required to report the analysis of market rent or not.

 

[hastalavista]

I don't see how an appraiser can complete the 216 without developing an indication of market rents.

SOW, IMO, addresses that.
Client wants an estimate of expenses. Appraisers can do that all day.
I'm fairly certain I have had a few (less than 5) of these types of requests in, say, the last 5-years. I provide an expense and replacement estimate and state that market rents are not part of the analysis. Sometimes, the house was owner-occupied.

I don't see this as a big deal (again, that's me).
Certainly, if we are going to develop market rents as part of the original appraisal assignment, that is more work.

If you get a request for this type of assignment as a stand-alone, and then develop market rents to complete it, that is an appraisal (and you'll have to have all the reporting requirements of SR2-2a that are relevant).

Otherwise, I take it for what is being requested:
Client: Denis, can you give us an estimate of operating expenses for the subject property?
Denis: You just want the expenses; you don't want an estimate of market rent?
Client: Yes, we just want the expense estimate.
Denis: I'd be happy to. The cost is $X.
Client: Great, and thanks!

 

[Peter LeQuire]

I understand and don't disagree that the estimate of expenses and replacement reserves can be done "in a vacuum" (without regard to market rent: one could be done as a stand alone analysis and report). But, in my experience, the income and reserves analysis and report has never been requested unless it was in connection with a property that was tenant occupied or which had been and was intended to be used for rental purposes.

I would be curious whether you, Denis, or anyone else requires the expense history for properties when asked to do the OI and reserve analysis/216 for a single family house.

 

[hastalavista]

We request them. I've been provided with it 3-4 times in the last 5-years (twice last year; same client- smaller, local lender).

I think I've read on this forum that there is one (and maybe more) poster who won't complete the assignment without the information.
I haven't had a situation where I thought the lack of owner-expenses for a 2-4 (or SFR) created a case where I couldn't complete the appraisal (while disclosing the information was requested but not provided).

 

[VolcanoLvr]

Years ago, I stopped 'estimating' expenses for income properties.

I now provide a blank 216 Form to the property owner, and ask them to fill in the numbers. Then I say in the one I use in the report that the details came from the owner.

Owners know best what their expenses are. It's their loan. Let them help you! I have yet to have anyone decline....but of course I mention that I need it for the report, and will pick it up on the day of the property walk-through.

 

[J Grant]

Aren't expenses supposed to be market based? For example an owner can claim artificially low expenses but that is not typical or realistic of what it costs to maintain the property