Condominium Conundrum

[residentialguy]

Ducks like to quack...apparently quack isn't an exclusive term for the medical field.

 

[Carnivore]

There is critical information in Condo Doc's and HOA Rules that must be reviewed to properly and completely fulfill your SOW on a 1073. Recently we had another inquiry here about how he/she could submit the report without that Information. All I could think was 'REALLY' Mr/Ms. Appraiser Slick! You get no sympathy from me because you can only get 59 reports finished in one month as opposed to your 60+ monthly normal goal. That's another story that winds me up pretty tight.

Some of that information is so critical that you could and should be sanctioned by your State for not complying.

 

[Howard Klahr]

could you use fee simple townhomes that are similar in build, design, etc., or would you expand the boundaries,

The answer is both. You'd need to determine what properties/projects actually compete with your subject within the immediate market area. In addition you would need to evaluate if the is a property rights adjustment applicable for fee simple vs condo.

 

[Peter LeQuire]

I can call my wife Sophia Loren, but she isn't, and calling her by that name doesn't make her so. If the real property interest being conveyed - as the OP indicates - it is not a condominium and use of the 1073 form for a GSE-related appraisal is not appropriate. I don't know how shared structural elements are handled in California, but in the states I'm familiar with, that;s generally through cross easements.

As to reading the recorded condominium declaration, any addenda to them, the HOA organizational documents, any addenda to them, and analyzing the budget and reserves, and reaching a conclusion about its adequacy - piffle. In more than 25 years of appraising, I never did so, unless it was read the recorded master deed to address the real property interest appraised to answer the condo question. And, unless the assignment/agreed scope of work for an individual unit in a condominium includes the project analysis, the SOW implied by the use of the 1073 allows an appraiser to not review those documents/budget/reserves, but does require her to give a reason for not doing so.

I would suggest that the credible analysis of those documents/budget/reserves is not something the great majority of residential appraisers are competent to do. The first question of the project analysis portion of the 1073 is more properly posed to some other professional. (In fact, the last question in the project analysis section of that report form seems to assume that anyone answering it has knowledge of what's gone on at HOA meetings, either by attending them, or reading the minutes of them.)

I've never had a client who would pay an appraiser for that level of work for an appraisal of an individual condo unit.

 

[Carnivore]

Peter, Overall I don't disagree with your post. There is one area on form that is super important to a lender. You must indicated the number of rentals and indicate wether any one owner has numerous units. I think its 10% or more of an individual. This is very significant because it can cause a complex to be ineligible for Loan Securitization by the GSE's. I think I recall FHA having a list of non-eligible projects.

For example I have one complex in my home county where 90% of the units are owned by numerous investors. The whole dang complex is nothing but an apartment complex with 30 different landlords. The place is a shambles. Tenant eviction is so high that I jokenly suggested to the Sheriffs department to put a substation in the complex to make it easier to serve eviction papers.

So on the HOA analysis I agree, we are not qualified to go over that stuff. In Charlotte there are several companies making a good living doing just that type of analysis.

 

[Peter LeQuire]

Like the OP, I have gotten really frustrated with lenders' and their agents' employees who don't know the difference between a condo and some other ownership interest. One significant change that I saw in the past two years was the centralization of project data into reporting services that charge a fee for providing the unit and occupancy mix, fees, etc. These firms simplify the process of getting that information: it's a very simple matter to lay that burden back on the client, or to upcharge the appraisal fee to cover the cost of the third party report. It is a significant pain to try to pry that information out of a leasing agent or a project manager.

 

[Basically Rectangular]

Like the OP, I have gotten really frustrated with lenders' and their agents' employees who don't know the difference between a condo and some other ownership interest. One significant change that I saw in the past two years was the centralization of project data into reporting services that charge a fee for providing the unit and occupancy mix, fees, etc. These firms simplify the process of getting that information: it's a very simple matter to lay that burden back on the client, or to upcharge the appraisal fee to cover the cost of the third party report. It is a significant pain to try to pry that information out of a leasing agent or a project manager.

I agree it is a roll of the dice as to whether project managers are willing to share the info. Does anyone have experience with the 3rd party info service route? I have not used one, just curious as to how accurate the data would be. I would feel better getting the information directly from the property manager, even if recently I couldn't even get a valid number of parking spaces, not because they didn't want to tell me, but because the manager didn't know! Yikes!

 

[Dublin ohio]

I agree it is a roll of the dice as to whether project managers are willing to share the info. Does anyone have experience with the 3rd party info service route? I have not used one, just curious as to how accurate the data would be. I would feel better getting the information directly from the property manager, even if recently I couldn't even get a valid number of parking spaces, not because they didn't want to tell me, but because the manager didn't know! Yikes!

Most of the condo projects in my area use third party service (condocerts,homewise). Accuracy is hit and miss. Recently had one where condo questionnaire said project was complete. Funny thing was is that the unit I was appraising was still under construction and not even in the drywall stage. There were also about 16 additional units still under construction. Obvious in photos that questionnaire was wrong. Lender was also provided same info. Filled out the form using info provided and explained. No pushback from lender at all. Questionnaire was signed by project manager.

 

[Peter LeQuire]

I agree it is a roll of the dice as to whether project managers are willing to share the info. Does anyone have experience with the 3rd party info service route? I have not used one, just curious as to how accurate the data would be. I would feel better getting the information directly from the property manager, even if recently I couldn't even get a valid number of parking spaces, not because they didn't want to tell me, but because the manager didn't know! Yikes!

I believe the process is for the third party gatherers of information do so and try to sell that info to lenders and appraisers: the on site manager or property management firm is freed from dealing with lenders and appraisers, and the third party gatherer charges a fee. When I did a condo and the listing broker or on-site property manager told me to get the info from the third party, I'd inquire about fee and what information they provided, the I'd contact the client, and tell them to get the project info themselves. If they wanted me to incorporate that information into the 1073, I'd gladly do so with the data source disclosed and properly hedged. Most of the clients with which I dealt would get the project data and provide it to me.

Carni - in the past, I was always nervous about calling the number of rented units. Counties do report unit owners' mailing addresses, and in the past, I've used that as an indication of occupant mix .(though this probably overstates the number of rented units.) But, I think lenders have become very careful about property and project eligibility: and while everybody in the loan production process is fee sensitive, the lenders appear to have accepted the fact that occupancy mix is crucial to the marketability of the loans they originate in condos. I'd guess that the companies which accumulate and sell project data are reasonably closely scrutinized, just as appraisers are.

 

[bnmappraisal]

I do a fair amount of condo's in my market

I recently received this from a direct client of mine:
"We no longer require the complete condo questionnaire be provided. Please complete the report using public records as best as you can. If unable to complete the report in this manner, please ascertain what the fee is from the Condo Association to provide you with the information and then request a fee increase for this amount thru the (*edited for confidentiality*). We will convey that request to our Branch. Thanks!"