Winslow AZ problem

[ThorleyB]

Got a new one.

FHA appraisal in Winslow, which is in itself a complexity. Subject never in the MLS, very little data in the Navajo county records.

Turns out the subject is in the commercial center, built onto the back of a commercial building. The home itself is perfectly livable, updated and remodeled and in current use as STR.

Zoning overlay permits single and two family in C commercial.

The problem is, while there are plenty of recent sales of comparable GLA, none of them are attached. There is no condo or townhouse in Winslow.

The HOC is shut down, so no help there. Of course the lender says, go ahead and use detached comparables for this attached home.

Anyone have thoughts on how to proceed?

 

[alebrewer]

Never actually knew this was a real town... just heard the Eagles sing about it.

That aside, ya gotta be able to distill the market reaction to the attached nature of the structure (even if there is none), although I know you already know that. Not a chance the subject sold previously at some point is there? You could develop a ratio for the market reaction using sales that would have been contemporary with the subject's prior sale if that was/is the case...

 

[Mark K]

Does FHA loan on mixed use properties? What's the ratio of commercial to residential? Is the loan on only the residential portion of the property or on the entire building?

I appraised one once, a large welding business with built-in, nice residential property. However, it was for a local bank at 50% LTV, in-house loan, so the bank didn't really care about the appraisal.

FWIW, I used the cost and income approaches in the report. Doubt this is an option for you.

 

[swandel1]

It all goes back to - what is the HBU? If the property is in a commercial zone, are you legally qualified (from a licensure standpoint) to determine the HBU? You are in AZ, and we know that the AZDFI has zero tolerance for this. Sometimes, it is better just to let it go.........

 

[ThorleyB]

HBU is a sticky one; a fairly large part of the downtown commercial core is vacant, never recovered from 2008.
As I mentioned, single and two family is permitted in C commercial.
I don't have the credential to appraise commercial. If it appeared that commercial were HBU, I would definitely defer.
I can infer price differential between attached and detached units of similar size, from the Flagstaff market, which is as you might expect not very similar.
No prior sales. Property was built in 1910, commercial space on the street frontage is vacant, has been vacant for some time.
I'm inclined to push it to the back of the desk until the HOC reopens.

 

[swandel1]

I am very familiar with Winslow and have done a lot of work there. Regardless of what the current use is, what is the HBU? From AZDFI point of view, are you legally qualified, from a licensure standpoint, to determine the HBU? If you get caught, it is a Level II or Level III sanction. Your E & O will sky-rocket, AMCs will start dumping you, you will waste 40 - 80 hours defending yourself. It is a risk vs reward situation.

 

[ThorleyB]

See my prior.
I’m well familiar with Winslow, and am dual licensed, and have listed homes for sale there.
This unit has no street frontage at all; access is from the ally. There are plenty of vacant commercial units with street frontage.
HBU is what is legally permissible and economically feasible, and provides highest return. Check check and check.

 

[swandel1]

I think we are on different pages. I get what you are saying about your ability to determine it. I am talking about the legality of you determining it. If this, or anything similar, goes in front of AZDFI you automatically lose and will get sanctioned because you DO NOT HAVE A COMMERCIAL LICENSE. That is all I am saying......

 

[Tom D]

Run rabbit run. An existential threat and how much are they paying you. FHA has a big stick to beat you, if you get any part wrong.
And finding all the other small mistakes you made, by page and paragraph that they note for your learning benefit, right before noting your punishment

 

[ThorleyB]

Why I’m waiting to consult with the HOC