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"affordable Housing" Resale Price Restriction

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Oh No Not Him

Member
Joined
Jun 21, 2006
Professional Status
Certified Residential Appraiser
State
Maine
So, I get an order to appraise a condo that was built/sold as "affordable housing $180K in $300k project. There is a restriction in the deed that the re-sale price can not exceed initial sale price x ratio of HUD median income for that part of county, divided by HUD median income for that part of the county.

Im thinking there is really no way to "appraise" this property in the traditional manner since the value/price is fixed/restricted. I would Imagine the lender could just obtain the median income figures & ratio & apply it to the initial sale price.
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
*** SEE ABOVE - I Also attached the full PDF below which gives general underwriting and appraisal guidelines BUT please Note- Each State-County has different programs with differing deed restrictions - FHA and Fannie do have loan programs for these projects BUT many lenders don't want involved - So first make sure the lender knows this is a low income or deed restricted project -- NEXT STEP : Decide if you want the assignment personally I won't do them for less than a thousand dollars unless I am hurting for money and guess what I have bills looking at me so maybe $700.00 : ) LOL
 

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Davy

Sophomore Member
Joined
Oct 3, 2016
Professional Status
Certified Residential Appraiser
State
North Carolina
You will want to find out what guidelines pertain to your state as Glenn suggested. When I worked for a lender that portfolio'd all of their loans, I would come across one of these types of appraisals once in a while a scratch my head about them. The restricted value/sales price is predetermined and has nothing to do with "market" is one way to look at it. The other way to look at it is that the "market" for that unit is limited and predetermined by government, so the price is the value. The appraisal is somewhat of a formality. The issue used to be how to appraise it and what to adjust for. We tried to use the same deed restricted comps if they were available, but if they were less than three available we used the FMV sales and adjusted massively for the restriction. So a $300K otherwise identical comp had a $120K terms of sale adjustment to account for the difference. Looks crazy on the form, but we explained why we did what we did and never had issues. That was back then. Not sure how appraisers are handling this now.
 

AMF13

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
I've done a couple in Ventura. Fortunateley the city has the needed info online. In those cases the market values were below the affordable limit, so was kind of a moot point.
 
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