"affordable" Housing Question

[ucbruin]

I've only been assigned 2-3 affordable housing appraisals (all while living in MA)....
As soon as I found out the subject property was a MA Chapter 40B home, I let the lender know....
Lender cancels....

 

[PhysicalDepreciation]

And just to be clear, even though a hypothetical condition is being made the report is completed as is and the subject to box is not checked correct?

 

[NJ Valuator]

It is pointless to complete an appraisal of an affordable housing unit; whatever appraised value is placed on the subject is meaningless because it is going to be overruled by the formula the Council on Affordable Housing uses to determine the resale price or refinance amount.

In NJ, affordable housing resale prices/refinance amounts are calculated based on what year the current owner purchased the property, the price paid by the current owner, and the county where the subject property is located. Therefore, there is not one standard across the board resale price/refinance amount of an affordable housing unit as of a particular date even if the units are identical in every aspect. In other words, the resale price/refinance amount of a particular affordable housing unit set by the DCA/COAH/UHAC that is for sale today will most likely be different from an identical unit that is also currently for sale because the prior sale price and previous year purchased of these two affordable housing units were different. Since this is the case, using affordable housing sales would not be appropriate and would result in misleading conclusions.

 

[hastalavista]

It is pointless to complete an appraisal of an affordable housing unit; whatever appraised value is placed on the subject is meaningless because it is going to be overruled by the formula the Council on Affordable Housing uses to determine the resale price or refinance amount.

Depending on the terms/conditions of the restriction, I couldn't disagree with you any more.
A lender (in most cases) needs to know what the market value of a property is to determine how well they are protected in the case of foreclosure. This is their worst-case exit plan.
With restricted properties (Below Market Rate), they need to know how the program is structured so their credit extension is based on the program parameters; this is where the formula-calculation comes into play.
With the restriction, they need to know what the demand and supply is for such properties.

These are definitely questions that cannot be answered by a PIW, AVM, or most other alternative valuation tools (although an evaluation could do the trick).