COMPLEX question: Extraordinary assumption???

[Pat Butler]

Lee Ann-- USPAP has various references to proposed construction that would give you more guidance. Check the index in USPAP...

Pat

 

[Russ]

lol.........

 

[Tony in Ohio]

Take a deep breath everybody, take a deep breath.

O.K. Lee Anne, I did one a while back that sounds somewhat similar in complexity, although at the other end of the financial spectrum. It was a refi of a condo in a complex of only three units, and none had sold since being (custom) built a few years earlier. To top it off the units were the only condos in the exclusive suburban city, and were built in the footprint of a historical barn (Yes, the turn of the century barn (stable?) was 15,000 SF so you can see that the neighborhood had been high end for quite a while). While I had no “Comps” I was able to reference Competitive sales and address marketability issues by referencing comments from the Town Planning director (That they were making it easier to get zoning changes due to the good response the builder had with this project), and by referencing the increase in high end cluster homes (the owners had “Downsized” into this 5,00+/-SF $X million home :roll:, as you guessed they were not appraisers.) :lol: I also clearly disclaimed that there was no reliable market data, that I made assumptions, and that the reliability of the final estimate of value would naturally be less reliable.

But,

The most important thing I did was talk to the local banks chief review appraiser throughout the process and keep him up to date. If you have a knowledgeable end user, who can read and understand your report, and they know about the situation and want to proceed, then it can be fun, because you really get to stretch your legs and do something you can be proud of. If you are doing this for a broker that wants to try to put it into a conforming pigeonhole, it will be nothing but trouble for you and them. You said it may be better to go a head and do it so you can at least be looking at the same page. Thats ideal, and works if the reviewer/underwriter knows and respects you, but will kill any future if you don't, and subject yoou to a lot of liability you dont need.


Good luck, and if you continue, think competitive, not comparable, and disclose,disclose,disclose.

 

[jtrotta]

Lee Ann
These are the jobs that make & develop you as an appraiser; you are looking here for an answer, when you already poses the answer, take a look around your area; ask your self those questions that you can back up positively; THINK, THINK, again it's already there, this job's a piece of cake -double your Fee, now that you know no one else can do it :!:


There is no Finish Line 8)

 

[Kim Grant Matarazzo]

Lee Ann: I don't know what the right way is but I can tell you what I would do. This does not sound like ANY situation ANY of my clients would wish to lend in.

A. Call your client and inform them of the facts you have thus far and offer to submit a letter outlining the situation. Charge them a fee for this service. Chances are they will not want to lend in this situation.

B. If you decide to go forward with this appraisal on a form report complete the report SUBJECT TO COMPLETION of the development.

C. You are an appraiser, not a magician, do not use duplex, triplex or SFR ownership in comparison..... someone will nail you at the state level, rest assured.

D. There is nothing wrong with informing your client that you cannot complete the assignment due to complexity or that this assignment cannot be adequately completed on a 1073 form. Suggest a narrative report and if you do that type of work quote them an appropriate fee.

In my years of practice I have many times turned an assignment back after inspection. Better safe than sorry, it does not sound like a situation that a conventional lender would wish to be involved.

Good Luck.. Kim

 

[Farm Gal]

thanks to all who provided POSITIVE commentary, even if it translates into Don't GO there, or Run Bambi Run!
------------

Ray:
I DID request such comments from several folks, and on those I DID receive I noted from whom I received them in terms of thier 'forum handle) and WHEN I THANKED THEM and how...

If for some reason you did not receive a thanks, it was entirely due to either my non-receipt of same, or some technological error in the delivery therof, not due to any discortesy on my part...

In fact if I remember correctly you stated that you were heading out of town for some private function but would respond upon your return FOR which notification I THANKED YOU! (I may be confusing you with another respondant.

Go ahead and ask the forum in general if I responded with thanks...

I DID make this initial post for the purpose of getting advice or cautions, but your initial and subsequent responses appear more intended to belittle the questioner than to provide positive (even if not necessarily germaine) feedback.

Glad your digestive processes function well.

I do expect a variety of responses when posting to this forum, I also play devils advocate or warning system to many posters... but please reread yours and see if you think the recipient is going to feel uplifted or gain education or feel belittled.

Lee Ann

 

[Ray Ohler]

The way the original "question" was posed, I gave what I BELIEVED to be an appropriate answer. I am not going to get into whether you were going to attempt to appraise the one unit under sale agreement (for permanent financing) or whether or not you were going to try to appraise the completed job (for construction financing). That point is STILL not clear to me but it really doesn't matter. Your own statements regarding the problems (TOTAL of sales data (whether competitive OR comparable), two closed sales within the job (from my reading - the only two that were completed other than the subject which was under agreement to the tenant), the fact that there were "other" elements involved (i.e. - common elements, recreational? just access roads? whatever - assumed no estimates or reserves) complicated the appraisal (whatever you were appraising - be it one unit or trying to appraise the entire job). READ your FIRST response AFTER my response and a few others - Reference to : THE BAMBI APPROACH. THAT, in my not so humble opinion was meant to BELITTLE and DEMEAN anyone who "suggested" that you might want to reconsider getting involved. I really do not care whether or not I was thanked OR not thanked for faxing the attachments I use. I didn't send them for "thanks". I only sent them because someone requested them. Period.

 

[Austin]

Lee Ann: There are two ways to approach an appraisal problem like this one. You can prove what it is worth or you can prove what it is not worth. Based on the information you have given, you can nail the rental income down and based on the over priced units you know what the upper limit of price is. In other words, you can show what it is not worth leaving a gap to show what it is worth. It is worth about what an apartment unit is worth with similar income/expense ratios and less than what the builder was asking for the over priced units. The gravity of the data indicates a rental unit as the highest and best use as I see it under the uncertainty.
Actually, this is an easy appraisal assignment make impossible by USPAP. As I have said many times before; USPAP has turned the appraisal profession into a slave labor camp of legalistic crap to the point that everybody is afraid to state what time it is without writing a caveat in case the battery in the clock is weak.

 

[Farm Gal]

:lol: :lol:
Thanks Austin!

I agree with you completely! Haveing conclusively proven that we are SURE that the value is not X what we have left is to solve for is value= X-unknown buyer discounting for 'wierd title'... I believe that the low end of value is some point slightly higher than the rent of a comparable unit: because SOME individual buyer is going to care more about their monthly payment and potential for acquireing SOME sort of equity (not to mention the tax writeoff) as opposed to renting some other unit. Ergo we wind up with a 'home' owner!

Actually when I posted this I was mostly looking for assistance on the CYA end: disclaimer sugestions ... Hmmmm I suppose I could work in the battery on my watch on the 'effective date of the appraisal' portion!!

 

[Austin]

Lee Ann: I think that first paragraph you just wrote should work nicely to CYA. With the available data and market situation, what else can you add? I once had a college professor on loan from Harvard in a class on Macro economic theory. We had to write a term paper to answer a question. My paper was hand written on one page and everybody else's was over 25 pages of pure crap neatly typed. They all laughed when they saw my term paper. Guess who got the highest grade on their paper? I was the only one that answered the question. If you can answer the question with one page, why write 25? My dad use to have a saying: "Blessed is the person that has nothing to say but has the discretion to refrain from giving verbal evidence of the fact that they have nothing to say."