Conventional

[Surf Cat]

All this for $300 bucks.....sheesh. What does "the client" want?

 

[sputnam]

What if the client intends to sell the loan to the GSE's? (A fact we need to be aware of prior to accepting the assignment). Would you still say that it's okay to do the appraisal "as is" knowing that it has a defective roof?

The Client is responsible for requesting what they need from the appraiser. As the appraiser, it's fine to, um, counsel them. If they tell you they want it as-is, that what you do. If a GSE won't then buy that loan, that's on them... not on the appraiser.

Conventional can be conforming (secondary market) or non-conforming (in house bank). The in-house banker requires an "as is" value under FDIC rules. And that can be in addition to the "subject to repairs" value. But again, the FDIC REQUIRES an "as is" value in all appraisals. Ask @BRCJR - he is a banker.

You conveniently omitted the context of my post. As I said... Ask the Client.

 

[Sandra Koutsopoulos]

1) Kentucky has a lot of snow on the ground at the moment in many areas. Can't put on a roof that's covered in snow.
2) As another poster stated, temps have to be above 40*F or whatever the roofing material instructions state.
Therefore, installing a roof at this moment is unlikely. Further, if there's ice/snow on the roof, it might not leak until that melts, plus the additional time required to creep along the timbers before soaking through the drywall/plaster walls & ceiling. As a non-professional roofer, we are unlikely to know the true condition of the roof (unless we can see daylight through it.)
3) Escrow 1.5-2X contractor written estimate may be a practical solution for the transaction, but that isn't our problem. I used to see that all the time years ago, but rarely these days.
4) If appraiser's visual inspection notes watermarks, curled shingles, worn & patched shingle areas, then I'd say it has to be appraised as a house with a lousy roof, and that will significantly impact value, as a roof is a major expenditure. For practical purposes, Seller/Buyer should have a contractor's written quote to know where they actually are financially in the transaction. But again, that's their problem, not ours.
5) If appraiser's visual inspection sees no signs of leakage or damage (hard to determine if there's snow on the roof), then he may make & state an extraordinary assumption that it is functional... but if it is FHA, lender will likely want a 3-year roof cert anyhow. And if it looks tired, the house might appraise on the lower end of the similar comps range in anticipation that a roof will be needed soon. That being said, for practical purposes, the buyer's new loan amount is likely to be lower, so the Buyer would have to pay for the roof out of pocket after he's already paid down payment, closing costs, and a house payment or two. That could be a squeaker. But their financing structure isn't your problem either, and hopefully they have agents and lender/escrow ppl that know this stuff and can come to a practical solution.

 

[BRCJR]

Conventional can be conforming (secondary market) or non-conforming (in house bank). The in-house banker requires an "as is" value under FDIC rules. And that can be in addition to the "subject to repairs" value. But again, the FDIC REQUIRES an "as is" value in all appraisals. Ask @BRCJR - he is a banker.

"As is" values are required for a regulated lender.


IAEG page 9 of 45:


Be based upon the definition of market value set forth in the appraisal regulation. Each appraisal
must contain an estimate of market value, as defined by the Agencies’ appraisal regulations. The
definition of market value assumes that the price is not affected by undue stimulus, which would
allow the value of the real property to be increased by favorable financing or seller concessions.
Value opinions such as “going concern value,” “value in use,” or a special value to a specific
property user may not be used as market value for federally related transactions. An appraisal may
contain separate opinions of such values so long as they are clearly identified and disclosed.
The estimate of market value should consider the real property’s actual physical condition, use,
and zoning as of the effective date of the appraiser’s opinion of value. For a transaction
financing construction or renovation of a building, an institution would generally request an
appraiser to provide the property’s current market value in its “as is” condition, and, as
applicable, its prospective market value upon completion and/or prospective market value upon
stabilization.²⁵ Prospective market value opinions should be based upon current and reasonably
expected market conditions.
When an appraisal includes prospective market value opinions, there should be a point of reference
to the market conditions and time frame on which the appraiser based the analysis.²⁶ An institution
should understand the real property’s “as is” market value and should consider the prospective
market value that corresponds to
the credit decision and the phase of the project being funded, if applicable.