2-4 Unit Form

[normando]

I got more than $700 and there aren't any similar comps. Good thing is I can rely on income approach to get value.
As for rent control, it's a touchy issue in which it may it's difficult to predict and may not be worth it to bring up the issue since nothing is final.
USPAP has only been around since 1990 providing us minimum standards to abide by. As long as I meet the minimum (not my higher standards), I'm fine.

 

[KYLECODY]

The main thing the 2-4 unit appraisals taught me was that I would never want to own one..and I have and like rentals but only one unit at a time, SFR.

In both major metro areas I've worked the multis tend to be in "lesser" areas and the tenants tend to be way shadier than typical. I won't do them anymore just due to the fact that roughly 2/3 were gross, filled with odd/difficult tenants and the issues management companies have with getting the ducks in a row for access at the same time. Have seen two property managers climb through windows to unlock the doors. Granted they had posted the 48 hour entry notice on the doors but the tenants had changed the locks without permission in two of the units.. I made them walk it first so they could take the first bullet.

 

[coolhandluke]

Is there anything in USPAP requiring me to disclose the community may pass rent control. Without USPAP, I would mention it.
With USPAP, I'm under no obligation to disclose since it hasn't passed and I'm appraising at this time without rent control.

Why would you you need to disclose something that may or may not happen at some time in the future? USPAP does not address phantoms in it's Rules

 

[J Grant]

USPAP is minimum standards guidelines, it does not meant to cover every possible actual situation in an appraisal. USPAP says not to be misleading. A market is made up of influences on property. If a manufacturing plant is moving in or shutting down, that would affect value. If rent control is up for a vote with a possiblity of being passed, that would affect value, not just in future if it passes, but as of todays' eff date.

How did the OP come to know that rent control might be passed? If he knows, would other informed buyer's know, would an investor care about it? Would you care if you were about to buy a property? Are investors holding off buying to see if rent control passes? Or nobody in the market cares , if they dont' care then report that.

If I bought a property thinking it would rent for $1000 a month, next week rent control passes and all it can rent for is $600 a month, and I found out the appraiser knew rent control was a possible vote, I'd sue the appraise for not disclosing it. An appraisal intended use is so client can evaluate a property. How can the client evaluate a property if known facts in the market (it is a fact that rent control will be voted on ) are not disclosed?

Do whatever you want but. I can't think of a single reason why it's a good idea to not at least disclose the information. Say that rent control is going to be voted on X date and if it passes it might affect values, however there are sales going on and rents are based on non rent control rates of Y$.

 

[coolhandluke]

USPAP is minimum standards guidelines, it does not meant to cover every possible actual situation in an appraisal. USPAP says not to be misleading. A market is made up of influences on property. If a manufacturing plant is moving in or shutting down, that would affect value. If rent control is up for a vote with a possiblity of being passed, that would affect value, not just in future if it passes, but as of todays' eff date.

How did the OP come to know that rent control might be passed? If he knows, would other informed buyer's know, would an investor care about it? Would you care if you were about to buy a property? Are investors holding off buying to see if rent control passes? Or nobody in the market cares , if they dont' care then report that.

If I bought a property thinking it would rent for $1000 a month, next week rent control passes and all it can rent for is $600 a month, and I found out the appraiser knew rent control was a possible vote, I'd sue the appraise for not disclosing it. An appraisal intended use is so client can evaluate a property. How can the client evaluate a property if known facts in the market (it is a fact that rent control will be voted on ) are not disclosed?

Do whatever you want but. I can't think of a single reason why it's a good idea to not at least disclose the information. Say that rent control is going to be voted on X date and if it passes it might affect values, however there are sales going on and rents are based on non rent control rates of Y$.

But we don't (or shouldn't) value what if's. What if the appraiser was wrong about the Rent Control legislation? What if the legislation was just proposed and no vote was upcoming? What if the residential subject property would not be affected by the Rent Control (In NJ and NYonly commercial properties of 5 or more units are subject to Rent Control).
What if placing hearsay into an appraisal report caused an underwriter or buyer to back out of a legitimate refinance or sale based on erroneous information put in a report by the appraiser? What if's are not actionable and do not require disclosure as per USPAP or just plain common sense.
Seriously? As a buyer of the property you would sue the appraiser, for not performing your own due diligence in a purchase you were about to make? Would you also sue the appraiser if you were the owner of the home and were turned down for a refi based on something that "might" happen and was hapahazardly included in an appraisal report ?
Maybe you would have the appraiser perform a hypothetical Income approach based on imagined future market rents. Real estate valuations are based on what is, not what might be.

 

[J Grant]

But we don't (or shouldn't) value what if's.

When a "what if" is part of market concern and can affect value,then it should be at least mentioned in an appraisal. If theOP learned about rent control pending vote, how did he learn of it? Would other informed buyers, in case of an income property, invesotrs, know about pending rent control vote, and is the "what if" of pendign vote affecting their decisions as of effective date?

Why not ask if of the agents with active or pending listings? I am not saying put a value on the"what if", because the market may not be showing any reaction. But why not at least report it?

And what if the market is showing a reaction, such as if past sales had a marketing time of 90-120days, and listings now are on market 200 days, it means buyers are waiting for the vote , (that was an example of how market can react to a known "what if".


Maybe you would have the appraiser perform a hypothetical Income approach based on imagined future market rents. Real estate valuations are based on what is, not what might be

Since buyers pay now for anticipated future benefits, and an investor buyer is buying for future income , then yes, it;s not about "imagined" future rents, , it's about buyer concern of possible impact of pending legislation on rents.)

 

[normando]

After the effective date, the ballot is officially put for this coming November election. Thus, technically there was no rent control vote at time of effective date.

 

[J Grant]

After the effective date, the ballot is officially put for this coming November election. Thus, technically there was no rent control vote at time of effective date.

I get it, I got it the first time. But YOU know about the upcoming vote on rent control...how ? How did you come to know this?

Would a well informed or well advised buyer looking to invest in subject area likely know there is a ballot for this upcoming Nov election?
Being aware of potential significant changes in an area, (whether or not the changes come to pass) is part of what makes an informed buyer, and that is the buyer the MV definition references.

 

[normando]

I keep up with all political shenanigans in this area more than the public or even other appraisers. I also have some inside knowledge with local politician agendas.
I have to decide what my peers would do and not what I know.

 

[J Grant]

This peer would mention it.

Why wouldn't you mention it? What is the big deal to write a one sentence description of it.?
Do what you want I just don't get it since you know it why you wouldn't at least write a brief comment that it is on the ballot. It's not in play or passed so no impact on value at present time.

Would an informed buyer know it, or is it closely guarded insider knowledge