Again, correct.
I trust that those who closely monitor for permits in the subject property are doing the same for the comparable properties.
Actually, when I use the BuildFax service, that's exactly what I do! :laugh:
But, after re-reading some of the posts, I think there is an incorrect perception about "checking permits to solve a value problem" and being the "permit police".
I'm not a code-enforcement officer, and I don't consider myself one.
Many times, features that were not done with the permits have value in the market; if I'm doing an as-is value, I analyze what the non-permitted item contributes and factor that into my final opinion of value.
I've yet to find where a remodeled kitchen, done without permits, doesn't contribute value to a property vs. one without the remodeled kitchen. And, in many cases, that contributory value is the same as if the kitchen were done with permits.
I have found that an addition or second structure was not permissible, and its non-permissibility has an impact on value and marketability; if that's the case, I analyze it and factor it into my final opinion of value. Many times a situation like this requires that I research zoning and building requirements, and speak to a planner or the building department.
I had a drive-by for a bank (it was an assignment that was to be performed under the "Bank Evaluation" guidelines... yes, yes, yes, because they ordered it from me, it was an appraisal... you'll have to trust me that it was credible and USPAP complaint; it was not completed on the GSE forms
but was used for a mortgage finance decision). The subject in question had no public records information, but from the street, 3-sides could be observed, it could easily be measured from GoogleEarth Pro, and the the two non-profits that were involved in the transaction had some information about the size/configuration that was consistent with everything else I could verify up-to-that point.
So, I went to the building department to see if there were any permits. The building inspector spent about 15-minutes with me reviewing the permits, etc., etc (they were little help as this are was previously unincorporated and was constructed before the city was incorporated, and not all the county records found their way into the current city's archieves... that happens a lot).
All the building inspector could confirm to me was that it was a house, not a manufactured home, and that my research is probably fairly accurate as to what exists. This property had some upgrades (DP windows) but he didn't care about that.
I felt confident about what I could verify, I felt, given the intended use it was sufficient to employ an EA about the size and configuration of the property, I documented what research steps I took, and finished the assignment.
The EAs had already been pre-agreed to by the client, under the assumption that I would do my due diligence to ensure their use was appropriate; I did, they were, done deal.
Now, what would happen in that case had I not done the due diligence and something was amiss? I don't know, but my analysis could have been wrong.
I do know this: given the assignment situation , the extra 30-40 minutes total (driving from the subject's neighborhood to the building department, researching the information, and leaving) was necessary IMO to use the EAs with confidence. In other words, it was necessary for me to do what I did to produce credible assignment results. So, I did it.
And that's what I think is missing from part of the discussion here.
One part is if there is any added liability when one, in their practice as an appraiser, researches specific property information with the authorized jurisdictional authorities; specifically, some liability of being sued by a homeowner if the inquires alert the authorities to something amiss? I don't think there is. One poster is going to check his/her sources. We'll see.
Another part is some implication that appraisers may think they are obligated to be the "permit police": that is to say, to be part of the enforcement mechanism of ensuring everything is permitted. Maybe for some, but not for me, and I'd hazard a guess that not for many.
I (and others whom I've spoken with) research the permits and property specifics when we think it is necessary for the analysis.
And, like I said, the intent of determining permits/permissibility is to measure that affect on value. Past that, I could care less what the lender requires or doesn't require.
In cases where I've done what I consider the appropriate level of due diligence, that's it. If the lender wants more, I'll refer the lender to do the research itself, have the borrower due it, or engage me separately to do it. They almost never choose the last option (almost never, but sometimes they do).
The "rebuild" letter is a classic example. I won't get them; that's beyond the scope. I have a standard statement in my appraisals when the property I'm appraising is legal, non-conforming; usually, so are half the other homes in the neighborhood, so any impact has already been measured using similar sales.
My threshold for research may be higher than others. That's fine too.
There are some that say they don't get paid enough to do any of that research; ok, that may be.
Some argue that the limiting conditions precludes any additional obligations for being responsible for legal matters; I don't interpret it that broadly, but that's fine as well.
So maybe its a difference in threshold?
I set my threshold on research to the point where I feel confident that I've met my due diligence and standard of care responsibilities, and that I've done enough so that however I complete the assignment, the results are credible and not misleading.
Others may have a higher threshold as to what is necessary for credible and non-misleading results, and others may have lower thresholds.
And if that is the case, what's the hub-bub about? :mellow:
