"Affordable Housing" hypothetical condition

[shrubberyvaluation]

In short, they are a PITA to value.

In the case that people are lining up to pay the maximum the seller is allowed to sell it for wouldn't that be the value? The sales comparison would seem to be less useful in this scenario.

 

[TerryRohrer]

In the case that people are lining up to pay the maximum the seller is allowed to sell it for wouldn't that be the value? The sales comparison would seem to be less useful in this scenario.

How does that fit with the definition of market value?

 

[shrubberyvaluation]

How does that fit with the definition of market value?

I didn't claim it was, I said value. The market is being blocked by the government.

 

[Terrel L. Shields]

the definition of market value?

You would have to redefine the very term as something limited by legal fiat.

 

[Leon Marcus]

I'm doing a purchase on a house that is deemed "affordable housing". The buyer has to be under a certain income level AND the house can only sell as high as a certain number. There are zero other similar sales with these type of restrictions. The lender has advised to value it as of there were no restrictions on it. If I do it this way I'll have to value it using a hypothetical condition that these restrictions don't exist. The market value without these restrictions is going to be like a couple hundred thousand higher than the contract price (property max allowed price). Does this make sense to do it this way? There isn't really a "market value" for this since the sales price is already set. How would you guys attack this
Thanks

IS that on the order? Affordable housing? Isnt that a trigger to the weak and not allowed in appraisals now?

 

[shrubberyvaluation]

IS that on the order? Affordable housing? Isnt that a trigger to the weak and not allowed in appraisals now?

Have to call it the program whcih cannot be named to protect the offended.

 

[Tom4value]

It makes sense if the restrictions come off in foreclosure.

Most programs have this restriction in perpetuity (others for a certain number of years) and most survive foreclosure so it would be something to consider.

 

[J Grant]

Danny's post #20 is the gold standard so the OP needs to get the info from the lender do the restrictions survive foreclosure or not , which decides if it is a HC as if the restrictions are not in place or appraise with the restrictions.

Though how one is allowed an HC when the forms state no additional HC is allowed idk, I suppose one just goes ahead and does it in this case.

 

[ZZGAMAZZ]

The contract price is the result of a debt service coverage calculation, not the result of negotiation or comparisons with alternative properties. Unless the fee simple comps are priced lower than this contract price it doesn't matter what they show because the value of the unit is still limited to that DSCR calculation. As far as I can tell they're only getting the appraisal to ensure they haven't overencumbered the property.

Is "Market Value" pertinent?