• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

"As Is" Condition?

Status
Not open for further replies.

TXCBoy36

Thread Starter
Junior Member
Joined
Oct 3, 2007
Professional Status
Certified Residential Appraiser
State
Colorado
I just finished an inspection on a Ranch home with a full basement. This appraisal is for a conventional loan. It is not FHA. The property is a foreclosed property and it is an area of other foreclosed properties, so the homes in this market area survive in a declining market.

Anyways, while I was doing the inspecton, I found numerous concerns, but they are typical cosmetic concerns that typically are found when doing a foreclosed property. Carpet needs to be cleaned and/or replaced. Found some picture hanging holes that need to be repaired, etc. I went in the basement and found that the hot water heater is not functional and that there is some existance of rust at the top of the HWH and the water supply lines to the HWH have been cut. So, before anyone can do anything, these water lines would need to be repaired and the HWH would need to be inspected to see if it will even operate or the HWH would need to be replaced.

My question is this...should the appraisal be marked "As Is' or "Subject To"?

To my knowledge, no known repairs are planned or at least it has not been brought to my attention. I know that these repairs will need to take place eventually.

There are other properties in the area, that according to the MLS, need some repairs also. Of course the MLS does not speak of what these repairs are, so I do not know if these comps have the same similar concerns as this property has.

I have brought this to the lenders attention, but I am not sure if I should mark it "As Is" or "Subject To", since there are no known repairs planned at this time. It would appear that someone wants to purchase this property and fix it up.

Any suggestions would be appreciated.

JC:blush:
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Why not provide two values..."as is" and an "as repaired"?
 

TXCBoy36

Thread Starter
Junior Member
Joined
Oct 3, 2007
Professional Status
Certified Residential Appraiser
State
Colorado
Okay, with all of the repairs?

How would you fit that into the format of a typical 1004 format. Would you include an addendum, discussing a cost to cure estimate and a suggested value with all of these repairs performed?

JC
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Yes, use an addendum.
 
Joined
Jun 3, 2005
Professional Status
Certified Residential Appraiser
State
Colorado
Is this report for purchase financing valuation?

The needed repairs you describe could be handled with an As-Is Cost to Cure.

If the CtC is 3% or less of the total value, most lenders will make the loan. If the CtC repairs exceed 3%, most lenders want a "Subject To" report. (Portfolio lenders are an exception -- I've done reports with $200k CtC's that were accepted by the lender.)

Unless the needed repairs are extensive or serious health and safety issues, I'll generally address them with a cost to cure.

In cases like this, I usually include the minimal repairs needed to make the home safe and habitable (i.e., a new water heater) as opposed to the full cosmetic upgrades. Cleaning the carpet and patching nail holes is inexpensive, but repainting the house is more of a potential value created by extensive remodeling -- I try and stick with the basics, with minimal changes in the subject property condition.
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
<snip>

My question is this...should the appraisal be marked "As Is' or "Subject To"?

JC:blush:

TXCBoy,

My wonder is why posters expect forum answers to questions like this without bothering to tell us if they are working on an REO or on a sale transaction. If the SOW is for the secondary market requiring Fannie forms, or if it is for a private party.

Surprisingly, these things make a difference! But forum members are expected to continue to be mind-readers and make guesses about it.

Webbed.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
TXCBoy,

My wonder is why posters expect forum answers to questions like this without bothering to tell us if they are working on an REO or on a sale transaction. If the SOW is for the secondary market requiring Fannie forms, or if it is for a private party.

Surprisingly, these things make a difference! But forum members are expected to continue to be mind-readers and make guesses about it.

Webbed.

:)
This appraisal is for a conventional loan. It is not FHA. The property is a foreclosed property and it is an area of other foreclosed properties,
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
:)
This appraisal is for a conventional loan. It is not FHA. The property is a foreclosed property and it is an area of other foreclosed properties,

Mr. Kennedy,

LOL.. guess I needed more coffee this morning! Must be a sale. Maybe I should not post on Sunday mornings! I went to bed early too!

Webbed.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks