"As Is" and "As Complete" Advice

[juck224]

Hello,

I am in search of some advice regarding an order I received for a 1025. The lender is requesting an "As Is" value and "As Complete" for some updating and renovations. I have actually completed some of these as 1004's before no issue, but this is my first time completing it on a 1025. I am familiar with the sales comparison approach as far as this goes, using Comp#1-3 for the as support for the as complete value, and comps#4-6 for the as is value, but for the 1025 I am wondering if it is necessary to use two separate set of comparables for the market rent and income approach? Or if this is more lender dependent, and if one way is more common than another? I am assuming the income approach will be based off the as completed value along with the opinion of market rent, but just searching for some advice.

Similarly, I am doing another 1004 for the same purpose, and have a question regarding this (which likely will need to be deferred to the lender). It is currently in average condition all things considered, no major updates, but no major items of deferred maintenance, but the previous owner ripped out the kitchen sink and cabinetry in the kitchen. Wondering how to handle this portion for the as is value, as its now technically a c6, with no other comps similar to this in the area as the rest of the dwelling would be similar to a c4 condition property in this area. Thanks in advance for any advice, I will be sure to ask my mentor when I have a chance before completing the reports, but was hoping to get some advice in the meantime.

 

[J Grant]

Sounds like you have a good handle on the two values for the 1025, I have never been asked to so the two value on a rental property and do not know if providing two rents is part of the assignment, ask your mentor that , ditto for the other assignment as some clients want as repaired and others would use as is and a cost to cure and adjustment fro the not finished kitchen. Good luck !

 

[juck224]

Sounds like you have a good handle on the two values for the 1025, I have never been asked to so the two value on a rental property and do not know if providing two rents is part of the assignment, ask your mentor that , ditto for the other assignment as some clients want as repaired and others would use as is and a cost to cure and adjustment fro the not finished kitchen. Good luck !

Thank you, I think it will be best course to ask my mentor, was hoping to get these assignments started over the weekend here so looks like Im good to go with the 1025 at least and will have to figure out the 1004 Monday.

 

[Tom D]

Typically, the rehab people only want a line, somewhere, stating the 'as is' value. They are more concerned with the finished value. Of course, you should have some proof of your 'as is' value in your work file. I deal with this a lot.

You need to ask the lender how they want the as is value, gridded or just a comment. Don't assume gridded.

 

[sputnam]

You do not have to grid separate sales or rental comparables although, that is one good way to support your conclusions. You can also write narrative explaining what you did, why you did it, and what the data is.

What you don't do... and it appears you already know this... is simply state one of the values without providing any support.

 

[Tom D]

All my hard money people only want a statement about the as is value. I live in an old city that was rehabed in the last 10 years. The lender only cares about the finished value. But you do as you need to do. Ask the lender what they want to see. If just a comment, your support for the as is value, in a renovation loan, can be in your work file and not in report. Don't waste time gridding it if they only want a statement. Besides gridding, or narrative as is, what support do you need to provide in the report besides your as is opinion. I do mostly uban row homes, there isn't much to adjust when you get to those c5-6 homes, bottom values. You can tell the as is value just looking at the few comps you have in that condition without gridding..

But i know not what i speak of being myself a flip and fix person more now, and helping people get those renovation loans.

 

[Terrel L. Shields]

Lenders in the non-conforming conventional space (aka not secondary market) require the 'as is' value under the bank regulations of FDIC et al.

 

[Tom4value]

Hello,

I am in search of some advice regarding an order I received for a 1025. The lender is requesting an "As Is" value and "As Complete" for some updating and renovations. I have actually completed some of these as 1004's before no issue, but this is my first time completing it on a 1025. I am familiar with the sales comparison approach as far as this goes, using Comp#1-3 for the as support for the as complete value, and comps#4-6 for the as is value, but for the 1025 I am wondering if it is necessary to use two separate set of comparables for the market rent and income approach? Or if this is more lender dependent, and if one way is more common than another? I am assuming the income approach will be based off the as completed value along with the opinion of market rent, but just searching for some advice.

Similarly, I am doing another 1004 for the same purpose, and have a question regarding this (which likely will need to be deferred to the lender). It is currently in average condition all things considered, no major updates, but no major items of deferred maintenance, but the previous owner ripped out the kitchen sink and cabinetry in the kitchen. Wondering how to handle this portion for the as is value, as its now technically a c6, with no other comps similar to this in the area as the rest of the dwelling would be similar to a c4 condition property in this area. Thanks in advance for any advice, I will be sure to ask my mentor when I have a chance before completing the reports, but was hoping to get some advice in the meantime.

I would ask the client. I have had this and my client wanted most of the appraisal “as completed”, with rentals and on markets. The fact that you are asking this means that you are a good appraiser and likes to cover the bases.