1007 & 216 "Subject To" ?

[ZZGAMAZZ]

The assignment is for a mortgage transaction of a SFR being purchased by an investor.

The 2007 and 216 were order a few weeks after the 1004 was completed, and will be conducted as a stand-alone report with a different effective date.

The original report was conducted "subject to" resolution of various issues of deferred maintenance.

Should the "subject to" status of the original report be referenced in the new report, which probably won't have the orginal 1004 attached?

 

[Tom Barclay]

I would say "yes", any information that you observed at the original inspection would carry over to the new assignment unless you have re-inspected and those items have been corrected.

 

[c w d]

Hmmm, that would depend.

Are the effective dates the same? If yes, then I'd say yes, subject to, as those issues would likely have an effect on the ability to rent or amount of monthly rent that could be charged.

If the rent schedule is based on a later eff. date after the problems are correct, then I'd say no.

Is the rent schedule and op. inc. being completed to develop an opinion of value utilizing the income approach? Or are they by themselves?

 

[ZZGAMAZZ]

different effective dates because the 1007 and 216 were ordered on different dates, although the subject to conditions described in the 1004 have not yet been resolved so I presume the issues of deferred maintenance have not been resolved.

I don't understand the question about the income approach; the rental survey is an income approach product as far as i am aware.

 

[c w d]

Determining market rents and deriving a opinion of value for the subject based on them are different tasks. The 1007 will allow you to determine monthly market rent for the subject. You'd still need to develop a GRM if you're going to opine a value based off the income approach.

And because the 1004 and 1007 were ordered on different dates does not mean their effective dates must be different. They can be the same. Effective date of the 1007 would be the same if you used data from before the effective date of the 1004.

If they were to have the same effective dates then your opinion of the subject's monthly rent would have to reflect those conditions or be subject to remediation. If it's after the effective date and remediation then your opinion of rent would need to be as is.

I don't necessarily believe the 1007 has to be included in the 1004 but that would depend on your client's needs. If it does then it should have the same effective date and be subject to. It's really up to the client if they can accept it on its own or if it needs to be included in the original report.

If all they need is the 1007 and 216 I don't see any problem with you including it in the original report. But, if they also need you to opine an opinion of value based off the income approach then it's a new assignment as it may affect your opinion of value which was not part of the original assignment.

 

[ZZGAMAZZ]

Oh, your comment finally pierced my gray matter. My assignment was to determine monthly market rent via the 1007 rather than to develop a GRM--although to be truthful I never gave a moment's thought to developing a GRM...

The leases for all of the comparables that I included in the 2007 were in place on the "original" effective date but I figured that the date that I conducted the rental analysis would be a more honest effective date, although my opinion of market rent would have been the same on either date.

Thanks for your advice. Now I'm trying to figure out whether the 1004 should be included with the 1007/216 if they were ordered after the 1004 was completed. Doing so as far as I can figure out requires the software to over-write the signature date of the 1004 with the signature date of the 1007/216 if those products are added on to the original report.

 

[robert higgins]

I would say since it is a new assignment with a new effective date, as a stand-alone report, and have not done a 1004D. I would say you will need to do a new inspection as if you never seen the place. This would be the same as if you never did a 1004 appraisal in the first place. I would not presume anything is this market.

 

[c w d]

I'm not saying you have to develop an income approach. You don't unless that is what the client wants.

 

[Marcia Langley]

ZZ,

If the status of the completion items affect the development of the new assignment (affects the rentability of the property), either the original effective date must be used or a new visit is required.

The absence of a completion report is not proof that none of the items are complete.