can I do this?

[c w d]

While the owner can tell you what the property may or may not be the commercial listing for the property really tells us otherwise. Does it not?

You can of course appraise it as a residential property so long as you caveat the appraisal appropriately in light of the facts as they exist.

However, I can pretty much guarantee that this is a dead deal as far as the lender is concerned. Why? First, the home is currently listed for sale. Most lenders don't like lending money on a property that could sell tomorrow. Second, the property is listed for sale as a commercial property. A residential lender isn't going to lend money on a commercially used property.

 

[Richard Carlsen]

Its all about H&BU.

Answer this question and then decide. If H&BU is SFR, you can proceed with a 1004 under FNMA assignment conditions. If H&BU is anything other than SFR, based on the assignment conditions for a FNMA standards appraisal using the 1004 reporting form, you have to stop the assignment at that point and notify the client. Assuming the assignment was for a refinance of an owner-occupied SFR, that is the only thing that you can appraise it to is as a SFR since that is all the client wants.

Understanding the assignment and understanding the assignment conditions will tell you exactly what you should do.

 

[The Warrior Monk]

Most bed and breakfast properties are simply houses with a use permit for the commercial use as a bed and breakfast. If it is not an ongoing enterprise with the current owner, and you would need to make sure the current owner doesnt have a bed and breakfast permit on the property. If not, and the city doesnt have one on the property, I think you can appraise it as a house if all the above is true.

It depends on the area. Sometimes bed and breakfasts are located in older historic areas. In some of these cases, the zoning is commercial, and the use could be preexisting, nonconforming, or legal by special exception permit.

 

[The Warrior Monk]

the problem: under the commercial tab on MLS, the property is currently listed.

How some broker lists a property in MLS is not relevant to the assignment.

can I appraise this house as a SFR? (I am not a commercial appraiser)

It all depends. If the HBU of the property is as SFR use, then a market value appraisal can be done. If not, the value of the property as under a SFR use can be determined, but the resulting value is a value in use (not acceptable by a lender).

do I disclose the commercial listing?

You are required to discuss current listings of the subject property.

and if so, are we required to search each property under commercial to see if there is any past sales/listings?

I have no idea how your MLS system is set up. The one year has a public record tab. When the property record card for the property is pulled up, one can see all prior listings of the subject property.

 

[Terrel L. Shields]

the problem: under the commercial tab on MLS, the property is currently listed.

Seems to me that it is still "commercial" However, every B & B I have ever appraised was a B & B for one reason. Tax benefits. Not profit. By building a B & B, you can accellerate depreciation, take off expenses, etc. Usually this is someone who say, returned to the US after working abroad, or who sold a business and still needed some residual tax discounts. But, the problems are many fold. A - MLS and owner do not say the same thing (its a commercial vs residential property now) B - the property is listed...as commercial. So if it looks like a duck and quacks like a duck, then don't get 'goosed' into a losing situation. This will not fly for residential loan, and you will be blamed.

 

[Lee Lansford]

im not asking if I should ignore it. I was just asking since it is listed commercially, and I am appraising it residentially.

ok, obviously I include that it is listed commercially...now, can I appraise it as a residential property?

when you do a history search on every subject, do you also check and see if it has a commercial history?

I do offer this with some humor intended, but, consider:

If you visited a residential property and the owner had a variety of animals in residence...would that indicate that the property should be appraised as a Zoo?

OK, of COURSE the answer to the question is NO. BUT, WHY is the answer no?

Glancing at some of the responses that you have received, others are pointing you in the right direction. Keep in mind that this assignment may be fairly complex and if you are not prepared to follow the proper methodology, analysis and communication, you may wind up with a big mess.

Suggest: Find another local appraiser who really knows what they are doing (this may be difficult). Stay clear of the appraiser who says (without researching and analyzing) "I would appraise it this way because blah-blah-blah..." Many residential appraisers who "specialize" in serving the MB community may be clueless on how to approach the problem.

 

[Richard Carlsen]

It all depends. If the HBU of the property is as SFR use, then a market value appraisal can be done. If not, the value of the property as under a SFR use can be determined, but the resulting value is a value in use (not acceptable by a lender).

David is right.

Keep it simple.

The assignment is to do an appraisal using the FNMA 1004 reporting form for lending consideration of a SFR owner-occupied house.

If the H&BU is other than SFR, you cannot do the assignment and you certainly cannot report any appraisal on it using the FNMA 1004. Period. Nothing else happens. You stop when you determine H&BU and notify the client.

If the H&BU is as a SFR but it is being used legally as a B&B, then you note the present use in the report but you appraise it as a SFR which is a legal use. You let the lender worry about getting the owner to close the B&B or do whatever lenders do. If it is legally being used for any purpose other than SFR but SFR is the H&BU, you simply follow the assignment conditions and perform the appraisal. Just make sure you disclose the present use and the current listing as a B&B. The decision (and concern) as to loaning the money under it's present use, is not yours. All we do is appraise the property.

 

[ghrousseau]

Most bed and breakfast properties are simply houses with a use permit for the commercial use as a bed and breakfast. If it is not an ongoing enterprise with the current owner, and you would need to make sure the current owner doesnt have a bed and breakfast permit on the property. If not, and the city doesnt have one on the property, I think you can appraise it as a house if all the above is true.

Correct. And part of the Bed and Breakfast business is the established client base and the advanced bookings for the year. The properties are typically not modified in any way, but they may have a conditional use permit or a zoning that will allow for the use. If the rights, client bookings, and use permits convey to the new owner, they you may have to consider the assignment as a B&B and partner with someone else or decline the assignment.

 

[Phirel]

How about "Highest and Best Use" ?

 

[Kevin A. Spellman]

Bed and Breakfast properties have value for the management, personal property and the ability to maintain a lodging license. There could be an interim value for the use. Most lenders request residential value as a single family home.

The problems you will encounter are the indicators of value. Will you use B&B properties or single family homes? The number of bedrooms and the number of baths with single family use may indicate the subject to be over-improved in comparison to a single family home.