Condo Budget Analysis

[ZZGAMAZZ]

How do peer appraisers address the Individual Condominium Unit form question pertaining to budget adequacy of the association?

Scuttlebutt in my condo development is that the HOA is dead broke, but I probalby wouldn't have become aware of this fact--if it's true--if I were conducting an appraisal of my own unit.

Posters on other threads routinely caution about contract analysis, comments concerning the arms-length-distance of of prior transfers, etc., etc., but the budget analysis of a condominum association stretches the SOW beyond anything that I could or would logically do in a routine residential appraisal.

 

[Joyce Potts]

Caveat the report that you are not qualified to render an opinion with regard to the budget. You are neither an accountant or a lawyer. All interested parties are encouraged to seek qualified financial and/or legal opinions.

 

[Don Clark]

How do peer appraisers address the Individual Condominium Unit form question pertaining to budget adequacy of the association?

Scuttlebutt in my condo development is that the HOA is dead broke, but I probalby wouldn't have become aware of this fact--if it's true--if I were conducting an appraisal of my own unit.

Posters on other threads routinely caution about contract analysis, comments concerning the arms-length-distance of of prior transfers, etc., etc., but the budget analysis of a condominum association stretches the SOW beyond anything that I could or would logically do in a routine residential appraisal.

I routinely ask for, and usually get a copy of the current budget when I do an appraisal of a condo. I also do analyze the budget to the extent that it is possible to do so. I have looked at many budgets over the years. Everything from million dollar apartment buildings that I did appraise prior to licensing to hundreds of condos. If you have any basic knowledge at all, it is not that difficult. But, if you are not comfortable in doing so you can always use the excuse that you are not qualified. I think it is a lame excuse.

If you live in a condo and do not have a current copy of the budget, shame on you. Any unit owner must be given a copy of the current budget. If you are refused a copy, seek the advice of a lawyer.

 

[Dennis J. Black ASA IFAS]

Howard,

Are you laughing yet?

 

[Joyce Potts]

I routinely ask for, and usually get a copy of the current budget when I do an appraisal of a condo. I also do analyze the budget to the extent that it is possible to do so. I have looked at many budgets over the years. Everything from million dollar apartment buildings that I did appraise prior to licensing to hundreds of condos. If you have any basic knowledge at all, it is not that difficult. But, if you are not comfortable in doing so you can always use the excuse that you are not qualified. I think it is a lame excuse.

If you live in a condo and do not have a current copy of the budget, shame on you. Any unit owner must be given a copy of the current budget. If you are refused a copy, seek the advice of a lawyer.

I'm not an occupancy, permit, construction, inspector or title policewoman either. I wish I had a $1 for every one of my condo questionnaires that are returned to me that have contrary information in them vs. the budgets, reserves, ownership of the clubhouse/pool/tennis courts and percentage of owner occupied units that I have from other sources.

The game has become to do the best job possible, but at the same time, to limit your liability. Lame? I think not.

 

[Randolph Kinney]

When an appraiser expresses an opinion within the appraisal report, whether qualified to do so or not, the appraiser is liable. Therefore disclaimers are necessary along with any extraordinary asssumptions.

Budget analysis is complex in that it presumes one has all the facts about the complex and any issues that are pending or issues that should have been known for the foreseeable future.

 

[Lloyd Bonafide]

With the number of REOs in some complexes, budgets may be a problem sometimes.

I almost never review a budget. For a typical complex, if there are no apparent problems, I will state:

"The current budget was not reviewed by the appraiser. Analysis of the budget is beyond the scope of the appraisal. The project appears to be adequately maintained with no deferred maintenance noted. The monthly fee appears to be reasonable and comparable to other complexes in the area."

 

[Randolph Kinney]

I will state:

"The current budget was not reviewed by the appraiser. Analysis of the budget is beyond the scope of the appraisal. The project appears to be adequately maintained with no deferred maintenance noted. The monthly fee appears to be reasonable and comparable to other complexes in the area."

How about the following:

The current budget was not reviewed by the appraiser. If there are concerns about the budget, a qualified expert is highly recommended. This appraiser is not an expert in accounting or budget analysis and does not represent himself to be so.

 

[Couch Potato]

With the number of REOs in some complexes, budgets may be a problem sometimes.

I almost never review a budget. For a typical complex, if there are no apparent problems, I will state:

"The current budget was not reviewed by the appraiser. Analysis of the budget is beyond the scope of the appraisal. The project appears to be adequately maintained with no deferred maintenance noted. The monthly fee appears to be reasonable and comparable to other complexes in the area."

I don't see how you can realistically make that claim given you agreed to report on a form that asks for an analysis of the budget. Plainly it is part of the scope of work to which you agreed unless otherwise arranged at the time of the order.

 

[Thomas Fiehler]

So exactly how many appraisers are giving budget analysis without any formal training in that matter? After 32 years of appraising, teaching and taking hundreds of classes/seminars, I have never even seen one advertised on Budget Analysis. If you do not disclose your lack of experience, or associate yourself with someone who has such expertise (like your CPA) I can only think there are thousands of misleading reports floating around. Glad my name in NOT on one of those.