Contract calls for new roof; can the appraisal be made as-is?

[Jim Edwards]

Good morning, my client wants me to change their appraisal from "subject to" completion of re-roofing to "as-is." He stated that the existing roof is not deficient, and FNMA only requires making the appraisal "subject to" if there are deficiencies. The contract stipulates that the seller will replace the roof surface prior to closing. My assertion is that because it is a contract stipulation, the appraisal must be made "subject to" completion of the roofing work. Can anyone steer me to the section of the Selling Guide that might address this?

 

[J Grant]

your client is right and you are wrong -I do not recall any contract section in selling guide but FNMA has their own condition/repair standards of what they accept or not and that is what we appraise to as assignment condition. The contract of sale is a contract between parties and is not reflecting what exists as of the effective inspection date.

If the contract were to fall through and it not close, for example, the house would be in same condition as the eff date and value would reflect that condition. BTW strange a seller would agree to replace a roof prior to closing and fwiw you have no idea if they will do it - if they don't, terms of contract enforcement is a lawyer matter not an appraiser matter.

Mention the contract clause in comments, and that since as of eff date the older roof was in place that was what you appraised " as is".

 

[Terrel L. Shields]

"As is" means "as is" regardless contract stipulations. Download the selling guide in pdf, then hit Ctrl F - brings up the search and then try to find any reference...

 

[Jim Edwards]

Thanks guys.

 

[Michigan CG]

Good morning, my client wants me to change their appraisal from "subject to" completion of re-roofing to "as-is." He stated that the existing roof is not deficient, and FNMA only requires making the appraisal "subject to" if there are deficiencies. The contract stipulates that the seller will replace the roof surface prior to closing. My assertion is that because it is a contract stipulation, the appraisal must be made "subject to" completion of the roofing work. Can anyone steer me to the section of the Selling Guide that might address this?

Your "client" is who? How does he know the roof is not deficient? Did he go to the property and did he climb on the roof and is your CLIENT a roof expert?

It appears you have a situation where the seller and buyer agree the roof needs to be replaced. How many sellers would agree to replace a roof that was not bad?

The agreement to replace the roof is IN THE CONTRACT and therefore the appraisal should be made subject to. This is very obvious.

 

[Michigan CG]

BTW strange a seller would agree to replace a roof prior to closing and fwiw you have no idea if they will do it - if they don't, terms of contract enforcement is a lawyer matter not an appraiser matter.

It is not strange at all that a seller would agree to replace a roof if both the buyer and seller agree that the roof is bad. Most likely the home inspection noted the roof to be bad or it was just obvious that the roof was bad.

I only quoted this part of your post but your entire post makes no sense at all.

 

[J Grant]

IF the roof is bad ( appraiser noted less than 2 years remaining life or leaks ) then the appraiser should make it subject to inspection /repair or new roof.
But if the roof is functional and has more than 2 years remaining life, the appraisal is " as is" , per the assignment condition. ( though the client should not be determining roof condition, that is up to the appraiser at inspection )

Buyers and sellers -Their contract is not our appraisal. That is why we do not include furniture/personal property in our value if in a contract, or concession etc.
AS IS or "subject to " is an assignment condition, and per OP their client wants it" as is" . The OP should have asked the client before making it subject to a new roof just because the sales contract has it-.
OP did not say what condition the roof is in so we do not know, so many of these help inquiry posts give only partial info.

 

[Mark K]

I don't know about what the selling guide may or may not say but common sense tells you that the roof is deficient. Otherwise, they wouldn't be replacing it. The buyer knows it need replaced, the seller knows and has agreed to replace but your client doesn't want to deal with troublesome little issues like an expensive roof.

Personally I'd give your client two choices: 1) "Subject -to" replacing the roof or 2) "As-is" with a condition adjustment equal to the cost of installing a new roof.

You know the roof is bad; you can't 'unknow' it. You need to address it appropriately.

 

[J Grant]

I don't know about what the selling guide may or may not say but common sense tells you that the roof is deficient. Otherwise, they wouldn't be replacing it. The buyer knows it need replaced, the seller knows and has agreed to replace but your client doesn't want to deal with troublesome little issues like an expensive roof.

Personally I'd give your client two choices: 1) "Subject -to" replacing the roof or 2) "As-is" with a condition adjustment equal to the cost of installing a new roof.

You know the roof is bad; you can't 'unknow' it. You need to address it appropriately.

they also can condition if on a roof inspection. It may need replacement, it may need a repair, it may not need anything, just an older roof still functional. The OP should have asked seller, agent etc about why the contract calls for a roof replacement. It certainly is unusual for that to be in a contract - what if the deal does not close - seller spent 15k or whatever on a new roof ?

The appraiser does not know if roof is deficient, though it might be - the OP still has not said what they observed at inspection.

 

[J Grant]

Something feels "off " about the situation - not my assignment, not my client, so idk but - if the seller really intends to put a new roof on prior to closing, then why is the lender client not willing to simply make it subject to the new roof ? Did the OP read the contract correctly, is it prior to closing or after--

Sometimes RE agents or a seller with buyer cook up a scheme where seller agrees to do X in a contract but does not "really" intend to do it-, it is just a way to inflate a purchase price or get cash back to someone. That might not be the case here, but it is possible - Perhaps that is what lender is balking at...?.

In any event, regardless of what a SC says, or when there is no SC,-making the appraisal as is or subject to is an assignment condition. A house needing repairs can be appraised as is. It will be rejected for conventional FF financing, but that is not the point, it can be appraised as is if a C5 or even a C 6. Which those of us who have done REO , or 203k /other similar assignments know.