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"affordable" Housing Question

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PhysicalDepreciation

Junior Member
Joined
Jun 6, 2008
Professional Status
Certified Residential Appraiser
State
Rhode Island
The subject is deemed to be "affordable housing". This means the subject has deed restrictions in relation to who can purchase the property and what the property can sell for. There is an income ceiling on who can purchase it and, the property can not sell higher than 3 times the median established price. There are zero other "affordable houses" that have sold in the past 10 years in this town. I did the appraisal on the only way I see possible..... on the basis of a hypothetical condition that the property rights being appraised are without resale and other restrictions that are terminated automatically upon the latter of foreclosure or the expiration of any applicable redemption period, or upon recordation of a deed-in-lieu of foreclosure. The client wants me to get rid of the hypothetical condition and do it as is claiming the following: Per deed resale restriction, it states that in the case of a foreclosure or transfer of title due to deed in lieu or etc, the resale restriction goes away. Any advice here???? Thanks in advance!!
 
Run! Mucho research to find a comp...Mucho stips after the appraisal.
 
PhysicalDepreciation said:
The subject is deemed to be "affordable housing". This means the subject has deed restrictions in relation to who can purchase the property and what the property can sell for. There is an income ceiling on who can purchase it and, the property can not sell higher than 3 times the median established price. There are zero other "affordable houses" that have sold in the past 10 years in this town. I did the appraisal on the only way I see possible..... on the basis of a hypothetical condition that the property rights being appraised are without resale and other restrictions that are terminated automatically upon the latter of foreclosure or the expiration of any applicable redemption period, or upon recordation of a deed-in-lieu of foreclosure. The client wants me to get rid of the hypothetical condition and do it as is claiming the following: Per deed resale restriction, it states that in the case of a foreclosure or transfer of title due to deed in lieu or etc, the resale restriction goes away. Any advice here???? Thanks in advance!!
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I have done a handful of these, not a lot but enough to help you. Find at least one comp that is similar. You mentioned none in the last 10 years in town. Go outside of town. Then use comps in town and apply the percentage adjustment between full market value to those comps. You will exceed net adjustment guidelines but that is ok as long as you adequately explain it.

I know what you are thinking, did he fire six shots or only five. No wait, that is Clint Eastwood. You are thinking that you won’t find another affordable housing comp. Well, affordable housing is a state program so if you found it in your subject, you will find it somewhere else, I am betting close by. Good luck.
 
Tom, thanks for the reply and I guess that is the path I woukd have to take if they demand I scrap the hypothetical condition. My question is, why do I have to scrap it? Can't I stick to my guns on it?
 
PhysicalDepreciation said:
The subject is deemed to be "affordable housing". This means the subject has deed restrictions in relation to who can purchase the property and what the property can sell for. There is an income ceiling on who can purchase it and, the property can not sell higher than 3 times the median established price. There are zero other "affordable houses" that have sold in the past 10 years in this town. I did the appraisal on the only way I see possible..... on the basis of a hypothetical condition that the property rights being appraised are without resale and other restrictions that are terminated automatically upon the latter of foreclosure or the expiration of any applicable redemption period, or upon recordation of a deed-in-lieu of foreclosure. The client wants me to get rid of the hypothetical condition and do it as is claiming the following: Per deed resale restriction, it states that in the case of a foreclosure or transfer of title due to deed in lieu or etc, the resale restriction goes away. Any advice here???? Thanks in advance!!
Click to expand...

In this neck of the woods (MA & NH), the local Housing Authority ( for each city/town) manages the qualifying and transfers of these properties. They do not typically go through MLS.
 
Noreen said:
In this neck of the woods (MA & NH), the local Housing Authority ( for each city/town) manages the qualifying and transfers of these properties. They do not typically go through MLS.
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:clapping::clapping:

Ditto here,
"the market"
is artificially narrowed by eliminating those who can afford more, to keep them from pushing up the prices for those that need subsidizes.

Which is something that really needs to be discussed in your "market conditions" addenda, because typical buyers -between the market that will sell to anyone, and the market that will only sell to section 8, do not necessarily move in conjunction with each other. There isn't any amount of "adjustments" between the subsidized market and the non-subsidized market that will make the "typical buyer" the same people. The comps are just other subsidized housing, unless of course your housing authority will subsidize any house, in any neighborhood, and advertises those available properties to the entire pool of buyers, without restricting them by income.
 
As you seem to already be aware, here is the information from fannie mae:
The lender must ensure that the borrower and appraiser are aware of the resale restrictions and should advise the appraiser that he or she must include the following statement in the appraisal report:

  • “This appraisal is made on the basis of a hypothetical condition that the property rights being appraised are without resale and other restrictions that are terminated automatically upon the latter of foreclosure or the expiration of any applicable redemption period, or upon recordation of a deed-in-lieu of foreclosure.”
In cases where the resale restrictions survive foreclosure or deed-in-lieu of foreclosure, the appraisal must reflect the impact the restrictions have on value and be supported by comparables with similar restrictions.

The appraisal report must note the existence of the resale restrictions and comment on any impact the resale restrictions have on the property’s value and marketability.
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Source: https://www.fanniemae.com/content/guide/selling/b5/5.3/03.html

Provide the details to your client and inquire as to how their situation varies from this direction from fannie mae.
 
Howard has provided the better advice on the issue and would recommend his suggestion to quiz the Client. It would appear they are trying to land a Big Fish for a future "Get Out of Jail" card, and are blowing hot air in your direction, which can only fog the mirror.
 
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