"AS IS" appraisal & cost to cure?

[Fred]

If the assignment were not for mortgage lending it would be a different ballgame. If I were a homeowner, for example, I would not get my "cost to cure" from an appraiser.

It is not quite another ballgame, but whether you need a pinch hitter. It is not unheard of that sometimes you need the findings of another professional to complete an appraisal assignment.

 

[Marcia Langley]

Steven,

I agree. My comments were too general. In the case of O. Doug's example, if my client were the HO, I personally would not agree to estimate his likely cost of repairs for him. Some appraiser's might be comfortable with that.

That's not to say that my development decisions would totally ignore the cost.

 

[The Bob]

Not because of 06 USPAP.

Imagine you are a prudent and rational buyer looking at two properties that are otherwise similar, but one is very beat up. Which one is worth more?

What does that have to do with "cost to cure" being relevant to an "as is" appraisal?

 

[Fred]

Imagine you are a prudent and rational buyer looking at two properties that are otherwise similar, but one is very beat up. Which one is worth more?

What does that have to do with "cost to cure" being relevant to an "as is" appraisal?

You answered a question with a question.

 

[Oregon Doug]

And, the silver dollar goes to Pam! (most of the rest of you caught on too.)

When a client requests an "AS IS" appraisal - that means "as is" - there is no "cost to cure" associated with "as is" (otherwise, it would be "subject to").

Oregon Doug

p.s. Clients - you can't file a complaint against an appraiser for doing exactly what you asked him to do (& he did a pretty good job of it, too.)

 

[The Bob]

You answered a question with a question.

Steven,

If you are having trouble with this concept, PM me and I will attempt to explain.

 

[Fred]

Jim

Steven, If you are having trouble with this concept, PM me and I will attempt to explain.

I’d rather have my “lesson” in public.


This previously posted statement is incorrect on its face, for several reasons.

there is no "cost to cure" associated with "as is" (otherwise, it would be "subject to").

1. Appraisals are not either: “as is” or “subject to.” (I know that is how Fannie wrote up the form). All appraisals are “subject to” something: subject to at least one assumption, subject to at least one limiting condition, subject to whatever effect the scope of work has the meaning of the results, and on and on.

2. Let’s say what ‘subject to” actually means in the quoted phrase – it is the as-if-cured (hypothetical) value, the after-construction value. And this is where the quoted phrase has it backwards. An estimate of the hypothetical after-construction value (that some want to call “subject to”) needs and includes no separate cost-to-cure and no separate cost-to-construct estimate.
Example: This is what subject will look like after construction. This is what properties that look like that sell for. Therefore, that prevailing sales price is what subject would be worth after construction. I didn’t see any cost-to-construct or cos-to-cure estimate in that appraisal.