Competency for "as-completed"

[rockydysart]

I have an order where the lender request an as-is value, come to find out that the owner has started a remodeling project and has already tore out the kitchen, bathrooms etc. They sent me a budget for over $500k for the project. I have done many new construction and feel that this could give me the competency level to complete the assignment but I wanted some confirmation from others, or I hope so.
If I do complete the assignment I am going to ask for more documentation as the "budget" is not detailed, then I was going to ask for the sketches/drawings of the work to be completed and whatever was submitted to the city for the permit. Is there anything else you would recommend?

As always, thank you for your input. The couple of posts that I have posted have created great conversations and I have learned a lot.

 

[Terrel L. Shields]

Is there anything else you would recommend?

Verify their estimated costs BUT if "as is" - does the remodeling impact the "as is" value ? I mean if they are doing a half million remodel of a half million dollar house, then the net value is zero. So 'as is' means a 'cost to cure' deduction.
You should verify that they only want the "as is" value. It is possible to do both "as is" and "as completed" which I suspect the lender wants. "As is" is a requirement of the FDIC, OCC, et al, in addition to any "hypothetical" values.

 

[George Hatch]

The subject that is currently in pieces will not qualify for a garden variety conventional financing and it won't be directly marketable to the happy homeowner. The typical buyer will be a flip-oriented contractor, so you'll need to be mindful of how they operate when it comes to the acquisition of a project like this. You will most likely have to back into the "as is" off of the "as completed". There's effectively no other way to get to the "as is" because you're not going to be able find direct comparables in similar condition.

Just the fact that you're getting such an assignment from a lender at this point is ..... interesting.

Whatever you do, don't just take their cost estimates as gospel because sometimes they're wrong - intentionally. Run your own cost analysis as a check/balance and don't forget to include the investor's ROI, that factor being above and beyond the hard costs to cure. Nobody works for free or invests for free.

 

[Frederick R. Ruffell]

I have an order where the lender request an as-is value, come to find out that the owner has started a remodeling project and has already tore out the kitchen, bathrooms etc. They sent me a budget for over $500k for the project. I have done many new construction and feel that this could give me the competency level to complete the assignment but I wanted some confirmation from others, or I hope so.
If I do complete the assignment I am going to ask for more documentation as the "budget" is not detailed, then I was going to ask for the sketches/drawings of the work to be completed and whatever was submitted to the city for the permit. Is there anything else you would recommend?

As always, thank you for your input. The couple of posts that I have posted have created great conversations and I have learned a lot.

Who is "they"? If THEY are the lender one would have to ask why THEY are sending you a "budget" on an "As-Is" assignment. If "THEY" are the borrower I would not accept the "budget". This type of information/data, IF REQUIRED, for the assignment should come to you directly from your client. Not sure what you mean by "as-completed"?? perhaps Subject-To completion per plans and specifications??? If so you would need said plans and specifications, again supplied to you from the CLIENT.

 

[George Hatch]

Then there are the assignments where there is no budget or plans. All you have to work with is the subject's current condition.

 

[Tom4value]

The subject that is currently in pieces will not qualify for a garden variety conventional financing and it won't be directly marketable to the happy homeowner. The typical buyer will be a flip-oriented contractor, so you'll need to be mindful of how they operate when it comes to the acquisition of a project like this. You will most likely have to back into the "as is" off of the "as completed". There's effectively no other way to get to the "as is" because you're not going to be able find direct comparables in similar condition.

Just the fact that you're getting such an assignment from a lender at this point is ..... interesting.

Whatever you do, don't just take their cost estimates as gospel because sometimes they're wrong - intentionally. Run your own cost analysis as a check/balance and don't forget to include the investor's ROI, that factor being above and beyond the hard costs to cure. Nobody works for free or invests for free.

"Just the fact that you're getting such an assignment from a lender at this point is ..... interesting."

I will bet my license that if the OP called the lender and asked, "hey, did you know that the owner has the placed ripped apart?" They would answer after a curse word, "nope!"

 

[Tom4value]

I have an order where the lender request an as-is value, come to find out that the owner has started a remodeling project and has already tore out the kitchen, bathrooms etc. They sent me a budget for over $500k for the project. I have done many new construction and feel that this could give me the competency level to complete the assignment but I wanted some confirmation from others, or I hope so.
If I do complete the assignment I am going to ask for more documentation as the "budget" is not detailed, then I was going to ask for the sketches/drawings of the work to be completed and whatever was submitted to the city for the permit. Is there anything else you would recommend?

As always, thank you for your input. The couple of posts that I have posted have created great conversations and I have learned a lot.

Good call. I have a lot of experience of knowing the pitfalls of "being nice" and accepting what they give me as information. Ask for and demand everything you noted above before continuing. So, yes, assuming you already told the lender about the present condition, you are doing it correctly.

 

[Frederick R. Ruffell]

HMMM??? Has the client changed the SOW changed from As-Is to Subject-To yet?