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Cost approach and VC sheets

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Craig Sewell

Freshman Member
Joined
Feb 6, 2002
I am about to appraise a new townhouse for an FHA loan. Do I need to do a cost approach for a townhouse? The cost approach has always seemed irrelevant to me when dealing with attached housing(can't see the buyer saying he is going to go build himself a townhouse?). Also, do I need to fill out all the VC sheets with new construction? I have done a number of FHA appraisals but I think this is the first "new" construction. Thanks in advance for your help.
 

rtubbs

Junior Member
Joined
Jan 15, 2002
Craig, take a look at the HUD Homeownership Reference Guide regarding new construction. I think you'll find your answer there.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Craig,

I have to ask, Are you a certified appraiser that has taken and passed the FHA test and are on the FHA approved appraiser list?

If so, you should already know the answer to your question or know exactly where to find the answer.

If not.... WHERE IS YOUR SUPERVISOR WHO IS SUPPOSE TO BE DOING THIS APPRAISAL HIM/HER SELF??? I hope you fully understand that if you are not the assigned FHA appraiser, you are party to fraud by working on this by yourself.

If your supervisor is FHA approved, went on the inspection with you and is allowing you to help write this one up, you should be asking him/her. Once you have the correct answers to your questions, you will understand why you've received the answers here that you have.
 

Ben Vukicevich SRA

Senior Member
Joined
Feb 9, 2002
Professional Status
Certified General Appraiser
State
New Jersey
Craig,

If it is a condo:No

If it is a regular townhouse or in a PUD, then YES, you need to complete a Cost Approach. You do not have to complete the VC sheets or Homebuyer's Summary Form for proposed or under construction units.

Now, the kicker is if the CO has been issued. If the unit is complete and the CO has been issued, it is considered existing and you will have to do the Cost Approach, plus the VC Sheets and the HBS, just as you would in a regular FHA appraisal.

If there is no CO, then ..no VC or HBS as it is still considered by FHA to be under construction until the CO is issued

Take Ron's advice and read the stuff he mentioned in his post on the HUD website.

The Cost Approach is to be completed on the specific form of a nationally recognized cost service. Most use Marshall and Swift and their form number is 1007. Make sure to reference the pages that you obtained the cost figures from...you no longer have to submit copies of the actual pages as in the old days as it is supposedly a copyright infringement.


Also, make sure you have a complete set of plans and specs, DOM's and the Builders Certification form. You must review the Builder's Cert form for accuracy. If it is not accurate, then state so in the URAR for the DEU to review the inaccuracies. Hey, builders have been known to overlook railroad tracks, main roads next to their homes....

Ben
 

Craig Sewell

Freshman Member
Joined
Feb 6, 2002
Finally got someone in the Richmond HUD office and yes the cost approach and VC sheets were required. I still say the cost approach in attached housing is silly; it goes against the theory of substitution. How can someone go out and build himself an attached house? However, if that is what the bureaucrats want, that is what they will get. At first I thought the VC sheets were silly for a new house (what would be wrong with a new house) but I can see why they would be useful. I live in a rural area and do about 10-12 FHA reports a year so don't get your panties in a twist Pamela if I ask what appears to be a stupid question. I know what the 4150.2 says but I simply disagree with some of it. If I didn't do these silly FHA reports some folks might not be able to get an FHA loan in this area. There are some appraisers in the area that simply quit doing them when they required the testing and began using the VC sheets. Oh that's right, nothing was really changed? Ha!
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
:lol:

OK Craig. Forgive me? :redface:

I'll try real hard to remember your not a newbie on his own doing a FHA without your mentors help!

:rolleyes:
 

Ben Vukicevich SRA

Senior Member
Joined
Feb 9, 2002
Professional Status
Certified General Appraiser
State
New Jersey
Craig,

You need to define "new" to solve your problem. If the unit is under construction or proposed, you do not complete the Homebuyer Summary or the VC Sheets. If your subject is a new existing townhouse with a Certificate of Occupancy issued by the municipality, then you do have to complete the HBS and VC Sheets as it is considered existing construction by HUD/FHA.

Now, if you have a smart builder...they'll leave some minor item unfinished to keep the home in the under construction catagory so they avoid the HBS and the VC Sheet dilemmas... :) :)

Ben
 

Brad Pack

Junior Member
Joined
Jan 15, 2002
Professional Status
General Public
State
California
Good answer(s) Benny! There's hope for you yet! lol
 

Ben Vukicevich SRA

Senior Member
Joined
Feb 9, 2002
Professional Status
Certified General Appraiser
State
New Jersey
Yikes Brad P!!!! A voice from the wilderness!!

You're back????? Nice to see you still read some FHA posts!!! After reading some posted here, it's OK to stop laughing to yourself....The NAIFA fourm is pretty dead over there....Brad #1 has also been missing for awhile....or is he Brad #2? I forget.

Hey, how's life in CA?????


I knew you'd like that CO thingee...we old FHA guys know how to skin a cat...when it comes to avoiding those dumb HBS and VC Sheets...on new homes.

Now, how about a call to your Richmond counterparts to set them straight....VC Sheets on new construction....Ha!!!

Even if it's 100% complete, the appraiser will never see a CO from the builder and I don't chase CO papers...so it's always under construction :eyecrazy: :eyecrazy:

Ben
 
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