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CB4 Question

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
Right...the HC is the "pretend part," but it needs a real life final inspection that the repairs were completed..
Actually, it needs a real life statement that the property is not being valued "as is", a requirement when the improvements exist, but rather is being valued based on an HC that it is repaired, along with the EAs of the repairs that are needed to satisfy the HC ( note: "the following repairs" as part of the check box response). However, the "appraiser" has not addressed any possible source or reasoning for the water stained walls and carpets, so, did a pipe burst and it has been fixed? Or does it flood every time there is a heavy rain? Is the (AMC term) staining, (Perfered terms) organic growths, easily wiped, from a surface, permeating a surface, or did someone spill some paint? We don't know, but all of the EAs of what caused, and what is required to fix the issues, are necessary for residential lending because that's what the report form requires. And without "professional" opinions of some of the issues, the EAs need to be very detailed, and in any other type of situation could offer multiple if/then options for repair/treatment/costs/time, but in res lending, such possibilities would styme the client who can only accept one black and white answer to each question.



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andrew81

Senior Member
Gold Supporting Member
Joined
Dec 5, 2008
Professional Status
Certified Residential Appraiser
State
Illinois
Is this a joke?
it is not a joke. the scenario was oversimplified, yes. and as for lending work, yes, it would require evidence that the condition was met.

for non-lender work this is not always the case.

say im doing an estate appraisal and they want to know what the value would be today based on the hypothetical condition that renovations are completed. the valuation "pretends" the renovations are completed.

say im doing an estate appraisal effective on the date of death, this would have a retrospective valuation. 12 months ago there wasn't a manufacturing plant next door. since that time there is a new manufacturing plant next door and the appraisal would be completed based on the extraordinary assumption that the public, buyers and sellers, didn't know it was going to be built.
 
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andrew81

Senior Member
Gold Supporting Member
Joined
Dec 5, 2008
Professional Status
Certified Residential Appraiser
State
Illinois
as for the original post:

using a hypothetical condition the lender would know what would an informed buyer would pay given the defects didn't exist

using an extraordinary assumption the lender would know what would an informed buyer would pay given the defects do exist but do not pose a livability, soundness, or structural integrity issue
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
it is not a joke. the scenario was oversimplified, yes. and as for lending work, yes, it would require evidence that the condition was met.

for non-lender work this is not always the case.

say im doing an estate appraisal and they want to know what the value would be today based on the hypothetical condition that renovations are completed. the valuation "pretends" the renovations are completed.

say im doing an estate appraisal effective on the date of death, this would have a retrospective valuation. 12 months ago there wasn't a manufacturing plant next door. since that time there is a new manufacturing plant next door and the appraisal would be completed based on the extraordinary assumption that the public, buyers and sellers, didn't know it was going to be built.
Agree on your first HC example - the second application of EA not so much. (imo EA is often over used )
An EA requires the appraiser to have reason to believe assumption is true. In above example ,since the MV definition references informed or well advised buyers and sellers the question is what existed on adjacent site / zoning 12 months retrospective before plant was built, that a reasonably well informed or well advised party could be aware of. Typically there would have been a large vacant site or old building on the site adjacent zoned commercial or industrialist. So the seller would know, and an informed buyer/ their agent have a good idea a manufacturing plant or similar building could be built at some point on that adjacent site..
 
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J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
For Econobot : Limiting condition # 5 is our friend. It makes the assumption for us, that unless appraiser reports an obersved or learned during research adverse condition, for valuation assumed subject not affected by defects. In other words, the assumption is already made, no need to make an EA about it

I like to re read from time to time the certification and limiting condition /statement of assumptions they contains a gold mine of info. :cautious:i

cert 5. The appraiser has noted in this appraisal report any adverse conditions (such as needed repairs, deterioration, the presence of hazardous wastes, toxic substances, etc.) observed during the inspection of the subject property or that he or she became aware of during the research involved in performing this appraisal. Unless otherwise stated in this appraisal report, the appraiser has no knowledge of any hidden or unapparent physical deficiencies or adverse conditions of the property (such as, but not limited to, needed repairs, deterioration, the presence of hazardous wastes, toxic substances, adverse environmental conditions, etc.) that would make the property less valuable, and has assumed that there are no such conditions and makes no guarantees or warranties, express or implied. The appraiser will not be responsible for any such conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because the appraiser is not an expert in the field of environmental hazards, this appraisal report must not be considered as an environmental assessment of the property
 
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J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Page 4 of the URAR:
This appraisal report is subject to the following scope of work, intended use, intended user, definition of market value, statement of assumptions and limiting conditions, and certifications. Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted. The appraiser may expand the scope of work to include any additional research or analysis necessary based on the complexity of this appraisal assignment. Modifications or deletions to the certifications are also not permitted. However, additional certifications that do not constitute material alterations to this appraisal report, such as those required by law or those related to the appraiser’s continuing education or membership in an appraisal organization, are permitted.

Like it or not, that is what we sign off on. One thing we are all bound to no matter what our license level, experience level or type of properties we cover is this: Do what we say and say what we do . That is how to stay out of trouble. Above signs you did not add, modify or delete the existing assumptions in the URAR form, yet do it anyway? Why ask for that kind of problem, just because a low rent AMC did not catch it... The reality is as not perfect humans, we might make mistakes we are not aware of, but here we are aware of what the cert and limiting conditions say.
 
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Tom D

Senior Member
Gold Supporting Member
Joined
May 22, 2015
Professional Status
Certified Residential Appraiser
State
Pennsylvania
if you have that dreaded black mold in the basement, with a hot air system, it has probable spread spores thru out the entire house. if it is the mold that is really bad, you gotta rip everything out of that house including the heating ducts. even the perception that it may be bad mold is a marketing problem. you didn't mention the value, so is it fixable, or a not, a doable gut, tear down.
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
The mold spores may have spread, but the active mold will not spread unless the correct conditions exist including the high moisture levels that will support the growth otherwise its dormant dust. Most testing for mold requires taking samples outside the house as well as inside, with the outside setting a baseline etc. Inactive mold spores can be removed through routine cleaning and vacuuming etc. It's everywhere! It's everywhere!
 

Solo Flight

Thread Starter
Freshman Member
Joined
Feb 27, 2019
Professional Status
Certified Residential Appraiser
State
Indiana
Thank you for all your responses and input.
 
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