1007 only (Certifications needed?)

[Airstream]

I am doing a 1007 only. No 1004. The bank is verifying the acceptability of income on a rental property for the purchase of another home in another state. So they want me to come up with an estimate of market rent. I've always done this with the 1004 and have used those certifications. What certifications should I use if I only do a 1007? Or do I need any? I've never done just a 1007. I'm not coming up with an opinion of market value; just opinion of market rent.

 

[Artemis Fowl]

I am doing a 1007 only. No 1004. The bank is verifying the acceptability of income on a rental property for the purchase of another home in another state. So they want me to come up with an estimate of market rent. I've always done this with the 1004 and have used those certifications. What certifications should I use if I only do a 1007? Or do I need any? I've never done just a 1007. I'm not coming up with an opinion of market value; just opinion of market rent.

You are pulling comps and providing a value...That IS an opinion of value. USPAP applies.

Certifications: It is basically a list of things you "certify" to have done to develop your opinion.
What is the purpose of including a signed certification in an appraisal report?


A signed certification is required by USPAP in all appraisal and appraisal review reports. A signed certification provides evidence of an appraiser's acknowledgement of his or her ethical obligations and performance requirements.

Your client may have some required certs. Your state may also have some required certs. Google for some examples and use those that apply.

 

[DWiley]

I am doing a 1007 only. No 1004. The bank is verifying the acceptability of income on a rental property for the purchase of another home in another state. So they want me to come up with an estimate of market rent. I've always done this with the 1004 and have used those certifications. What certifications should I use if I only do a 1007? Or do I need any? I've never done just a 1007. I'm not coming up with an opinion of market value; just opinion of market rent.

See AO-21. An opinion of market rent is an opinion of the value to use and occupy space for a specified period. In short, it is an appraisal. Hence, when you communicate it you need an appraisal report that complies with the applicable requirements in STD 2. There are several threads here with suggestions on how to do that

 

[BRCJR]

delete as several already answered while I was typing.

 

[Elliott]

Whenever I get a request for a 1007 only, I just say, "sorry, not interested."

 

[alebrewer]

I get the 'rent is an estimate of the value of a property to be used for a specific period of time', and understand the thought process, but I disagree with it. I adhere to the requirements, but disagree nonetheless. In my mind an estimate of market rent for a particular piece of property would fall under 'Appraisal Practice', but not 'Appraisal' as an estimate of market rent has no relation to a property's overall value sans any kind of quantification of the relation of that rent to the overall value (GRM, cap rate, DCFRR). That's just me, though.

 

[Airstream]

I get the 'rent is an estimate of the value of a property to be used for a specific period of time', and understand the thought process, but I disagree with it. I adhere to the requirements, but disagree nonetheless. In my mind an estimate of market rent for a particular piece of property would fall under 'Appraisal Practice', but not 'Appraisal' as an estimate of market rent has no relation to a property's overall value sans any kind of quantification of the relation of that rent to the overall value (GRM, cap rate, DCFRR). That's just me, though.

I would agree that his would fall under appraisal practice, since not everything in Standard 2 really applies for the particular scope of work. But after reading AO-21 I will follow Standard 2 and kind of CYA.

 

[DWiley]

I get the 'rent is an estimate of the value of a property to be used for a specific period of time', and understand the thought process, but I disagree with it. I adhere to the requirements, but disagree nonetheless. In my mind an estimate of market rent for a particular piece of property would fall under 'Appraisal Practice', but not 'Appraisal' as an estimate of market rent has no relation to a property's overall value sans any kind of quantification of the relation of that rent to the overall value (GRM, cap rate, DCFRR). That's just me, though.

You are not the first to say that.

It is important to remember that what we actually appraise are property rights - not the physical property. A lease establishes property rights, an an opinion of market rent reflects the value of those rights. Hence, it is an appraisal, as that term is defined in USPAP

 

[Elliott]

But if HO complains, and since the "1007 Only" appraiser doesn't know the magic number, then good luck with the investigation and your board, and all for what? $100? or $125 or $175?? : )

 

[sputnam]

If it's just a rent survey.. then you don't need certifications. If you provide an opinion of the subject's market rent, then it is an appraisal and you need to meet all the requirements of SR 2-2