Appraising In An Airbnb World

[The Warrior Monk]

Every summer code enforcement is very busy handing out citations for just the very issue; short term rentals of unrelated parties.

 

[J Grant]

Every summer code enforcement is very busy handing out citations for just the very issue; short term rentals of unrelated parties.

Then that is your market area, does not mean it applies to other areas....they all differ.

In any case, why is what an owner does with their property our concern? Are we the code enforcement police if they are renting out without a permit ? If they have not physically changed the configuration of a property, they may be ( gasp ) illegally renting it and we dont' know ! OMG....what difference does it make to value ? A buyer looks at the property in a residential area and evaluates it , including the zoning and enforcement, if they have anything in mind other than owner occupant

. If buyers are aware permits are strict about renting to unrelated parties they are less likely to buy it with airbnb in mind (unless the permit process is simple and they just apply for a permit )

 

[Terrel L. Shields]

The fact Uber drivers are often working illegally does not mean they do not need to have insurance or that they may fall under taxi and chauffeur laws, or that AirBnB may also be working under the regulatory radar does not mean these properties are not illegally operating.

The fact the property is worth what it is worth is not an issue. Is it legal or not? I would put Illegal use, and let the lender know before proceeding with the report.

 

[J Grant]

An owner's insurance is their business. Are we now the police of what an owner does in their house? What if their 14 year old teen is ILLEGALLY sneaking liquor - do we report it to the authorities, or to the lender ? This is ridiculous.

Air bnb is a borrower INCOME qualification, the end. It has NOTHING to do with evaluating the property ( unless client wants it appraised as income producing property)....the airbnb income is considered an Income qualifier for loan purposes for owners of RESIDENTIAL properties. Yell at Fannie for their decision but the fact that an owner rents it out under an airnbnb program does not change a residential property into something else for appraisal purpose

If an owner lives in a zone where laws were passed against using residential properties for airnb and owner sneaks around and rents it anyway under that program, why is that our business? Since we are valuing it as a residential property and not valuing it as an income producing property.

Chances are many of us have already appraised properties where an owner is renting it out for airbnb. Since it is an income qualifier and nothing else , we wouldn't know.

Of course if we become aware during the appraisal the owner is renting it out, for airnbnb or otherwise, disclose it and let lender know. But lenders per fannie allow airbnb income so whether to proceed is their call.

 

[Overimprovement]

The fact Uber drivers are often working illegally does not mean they do not need to have insurance or that they may fall under taxi and chauffeur laws...

So? What would that have to do with the value of the car???

Cars and homes don't break zoning laws. People do, and we aren't valuing people.

 

[Overimprovement]

Every summer code enforcement is very busy handing out citations for just the very issue; short term rentals of unrelated parties.

As JG said, that is your area, certainly not mine or most. Doesn't affect value if someone is 'sneaking' or breaking that law anyway.

 

[Terrel L. Shields]

What would that have to do with the value of the car???

I made it plain. The value isn't the issue. The loan program is, and as a bed and with or without food, breakfast there are laws, potential issues (renter risk) for the lender. And boards have ruled this is CG territory. Hard to argue Airbnb isn't a bnb when it is in the name.

 

[Overimprovement]

Hard to argue Airbnb isn't a bnb when it is in the name.

You really want to use THIS as your proof? Regardless of the actual facts involved?

I guess your argument would completely change then for VRBO and Homeaway?

 

[The Warrior Monk]

In any case, why is what an owner does with their property our concern? Are we the code enforcement police if they are renting out without a permit ?

It is necessary, and essential, that an appraiser understand the legal use of the property, as it is required to properly evaluate a property.

 

[The Warrior Monk]

Are we now the police of what an owner does in their house?

Consideration of the governmental/legal aspects that affect the valuation of real property is a separate issue from code enforcement. We do the former, not that latter.

Most property that we come across does not have allodial title; it's use is restricted by governmental/legal restrictions. If the use of the property is contrary to the governmental/legal issues, the appraiser would note and consider that as part of the appraisal process.