C5 Condition Appraised "as-is", Now They Want Me To Rate C4 "subject To".

[Tom D]

i agree, wouldn't the condition be more better than c4 with completion. per order, you did the right thing. you had to note everything not completed. not doing it might be misleading to the state board axe opinion. you have done enough for this order. tell them you'll do a new repairs "to be completed" appraisal for 1/2 the fee. maybe everyone would be happier with a higher value. this sounds more like a 203k or hard money to finish, then refi.

 

[J Grant]

To be honest, this assignment sounds screwed up the first time...never take direction from a RE agent or owner about whether report is "as is" or subject to; that has to come from the client. In addition, sounds like you did not differentiate between a house needing repair and one in the midst of remodeling for comp choices for as is report.

I can understand asking for a fee increase as the re do is part client fault as well, imo no need for a new assignment (though it can be if client agrees), or at least no need for a new inspection date.

For your own sake consider revising this report regardless of fee because the "as is" appraisal you did may have issues if you used deferred maintenance comps and then applied a cost to cure to arrive at the as is value .

 

[J Grant]

No structural issues noted. It was an unfinished remodel, all of the interior doors & jambs missing, all baseboard missing, bathroom & kitchen flooring missing, green pool.
I did an EA and made an itemized list "estimating" a total of $50k would bring the subject up to C4 and appraised it as-is.

50k sounds high for putting in doors, baseboard and floors in a kitchen and bath. What is wrong with pool...green from algea? Needing a pool pump?

Using a cost to cure as an adjustment is not a good way to arrive at market value because the impact of repairs or completion as a contributory value found in the market can be less or more than cost to repair. In addition, if cost to repair estimate is "off" by a significant amount, a major adjustment was based on that .

 

[KBright]

Ugh! Same situation here. C5 condition, and the amazing lender wants C4 condition. My report was "as is" with stated repairs. As staff, I have been deemed uncoachable because I have refused to change it. After 29 years, I think I'm pretty aware of the difference between the two ratings, yet have been forced to take remedial CE about ratings. Should I have made it C4 subject to repairs? Now I'm doubting my own expertise! One last question: Didn't I read that Fannie respects local custom with regard to what is and is not considered a built-in appliance? I.E a free standing stove in a cabinet slot built specifically for that appliance. Thank you for your help. My job is now on the line over this issue.

 

[Meandering]

Appraisals Completed “As Is”

Condition Ratings C1, C2, C3, C4, and C5 as previously defined are eligible for delivery in “as


is” condition. Properties with the initial Condition Rating C6 indicate one or more deficiencies

that impact the safety, soundness, or structural integrity of the property. Therefore, the appraisal

must be completed subject to completion of the deficient item(s).

See Physical Deficiencies That Affect Safety, Soundness, or Structural Integrity of the Subject

Property in this topic for additional details when completing appraisals on properties with safety,

soundness, or structural integrity deficiencies.

Page 605
https://www.fanniemae.com/content/guide/sel052615.pdf

.

 

[Meandering]

Physical Deficiencies That Affect Safety, Soundness, or Structural Integrity of the Subject


Property

The appraisal report must identify and describe physical deficiencies that could affect a

property’s safety, soundness, or structural integrity. If the appraiser has identified any of these

deficiencies, the property must be appraised subject to completion of the specific repairs


or alterations. In these instances, the property condition and quality ratings must reflect the

condition and quality of the property based on the hypothetical condition that the repairs or

alterations have been completed.

If the appraiser is not qualified to evaluate the alterations or repairs needed, the appraisal

must identify and describe the deficiencies and the property must be appraised subject to a

satisfactory inspection by a qualified professional. The appraisal may have to be revised based


upon the results of the inspection. If so, the report must indicate the impact, if any, on the final

opinion of value. The lender must review the revised appraisal report to confirm that no physical

deficiencies or conditions that would affect the safety, soundness, or structural integrity of

the property are indicated. A certification of completion is required to confirm the necessary


alterations or repairs have been completed prior to delivery of the loan.

page 607
https://www.fanniemae.com/content/guide/sel052615.pdf

.

 

[J Grant]

Ugh! Same situation here. C5 condition, and the amazing lender wants C4 condition. My report was "as is" with stated repairs. As staff, I have been deemed uncoachable because I have refused to change it. After 29 years, I think I'm pretty aware of the difference between the two ratings, yet have been forced to take remedial CE about ratings. Should I have made it C4 subject to repairs? Now I'm doubting my own expertise! One last question: Didn't I read that Fannie respects local custom with regard to what is and is not considered a built-in appliance? I.E a free standing stove in a cabinet slot built specifically for that appliance. Thank you for your help. My job is now on the line over this issue.

That sucks , and is a completely different situation than the OP post. Fannie allows C5 to be appraised as is ( they changed it from original where it had to be subject to), and they left it up to lenders to determine if they as a lender want to make C5 loans as is, or subject to repair into C4 condition.. Which means each time we encounter a house in C5 condition we have to check with the lender to see how to complete the report. What the lender can't do is force us to change a C5 rating into a C4 "as is" rating just to push a loan through...not sure if that is the case here or they wanted it as repaired to C4 ?

 

[The Bob]

Seller and agent informed me sale was "as-is" they would be making no repairs. Order instructions say only C6 are required to be made "subject to", so am within order guidelines to appraise it C5 / as-is.

Now....lender is balking on the C5 condition loan, and seller is scrambling to make all the repairs I called out.

They want me to go back into the 23 day old appraisal, and revise it to C4 / subject to repairs.

It was a lot of work bracketing the C5 subject, and it will be no easy task to revise the report to C4. And I would have a new C4 value.

QUESTION: Can I even obligated/required to do this? I think it should be a new assignment.

Thank you in advance for any experience and advice.

See this.....https://www.fanniemae.com/content/FAQ/appraisal-property-report-faqs.pdf.
Q-30 and Q-31
If the condition affects the safety, soundness, or structural integrity, the appraisal has to be made "subject to" and the condition rating would reflect condition AFTER repairs are made.

 

[glenn walker]

Sound like it may have been a C-4 subject to work being completed . Not done "AS IS " but subject to the items you listed being repaired , replaced etc. Then you would have simply gone back out after all work was completed and done a 1004D and been done. Fannie, Freddie, FHA , nobody but hard money will purchase a C-5 or C-6 property until it is at minimum a C-4. In this case it just does not sound like it was a C-5 "IF" the work had been completed.

The lender should probably have not ordered the appraisal until the work had been completed but everyone is looking for a fast close and a commission. This may have been a cash , hard money or 203-K loan at the date you inspected but now since you did it "AS IS" C-5 the lender is going to try to get you to change the report. I would consider this as a new assignment "BUT" since you already measured the home and know its market area I would not charge a full appraisal fee BUT consider a 1/2 fee . If it's a good client I would probably be fairly reasonable on the additional cost and in the future don't ever believe a conventional lender, FHA, or VA that says C-5 "AS IS" will fly because it wont.

 

[Mile High Trout]

I ran a thread on this a while ago. "C4 is the new C5".

I never put c5 on anything. In practical terms, if you're performing mortgage lending appraisals, the lender cannot loan on C5, regardless of what FNMA UAD guidelines state.

So either it's c6 or c4.

And for the FNMA UAD on subject to requiring a c6, that's where it get's messy. Because they cannot fund the loan to roll out an escrow on c6. They need c4 and subject to, to even get the funding rolling.

It's Wacky Wednesday in appraising, and has been for some time now. Every day is Wednesday.

http://appraisersforum.com/forums/threads/c4-is-the-new-c5.197052/