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Cost to Cure

CPJ

Freshman Member
Joined
Apr 19, 2018
Professional Status
Licensed Appraiser
State
California
Can someone please remind me about cost to cure?

Subject recently bought and now refinancing as an "As is" appraisal for a conventional loan. It is obviously just prior to being fixed up with no flooring, carpets ripped up, exposed concrete subfloors everywhere. Baseboards removed. Several other deferred maintenance items such as holes in wall, cracked tiles, stucco repair, and rest are cosmetic. It is my opinion there are no health and safety concerns and nothing affecting the structural integrity and it can be lived in (Not sure anyone would want to). It is in C5 condition. (Here comes the stupid questions). Do I apply cost to cure for the deferred maintenance and rate it C4? or since there are other C5s to compare it to, just show deferred maintenance in pics, explain and leave it C5 with no cost to cure on the sales grid? Thanks for your time on this....
 
Last edited:

Jeffrey Hilborn

Junior Member
Joined
Sep 19, 2015
Professional Status
Certified Residential Appraiser
State
Illinois
Fannie and FHA will insure a C5 property if the issues do not affect the property's safety, soundness, or structural integrity. Many lenders will not lend to C5 properties and have rules in the engagement letter.

What does the engagement letter say?
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
AS IS means AS IS...warts and all... if there is a repair problem, state it and say it is part of the C 5 rating. I would leave it a C 5 because this much of a re finish product appeals mainly to investors an contractors who would finish it off and sell it as a spec home, most likely buyer for a property like this
 

CPJ

Freshman Member
Joined
Apr 19, 2018
Professional Status
Licensed Appraiser
State
California
Fannie and FHA will insure a C5 property if the issues do not affect the property's safety, soundness, or structural integrity. Many lenders will not lend to C5 properties and have rules in the engagement letter.

What does the engagement letter say?
Does not speak to to C5.
 

Jeffrey Hilborn

Junior Member
Joined
Sep 19, 2015
Professional Status
Certified Residential Appraiser
State
Illinois
Does not speak to to C5.
As-is value then, no problem. Just make sure to emphasize the safety/soundness/structural integrity is not affected by the deferred maintenance.
 

CPJ

Freshman Member
Joined
Apr 19, 2018
Professional Status
Licensed Appraiser
State
California
As-is value then, no problem. Just make sure to emphasize the safety/soundness/structural integrity is not affected by the deferred maintenance.
Thank you for your time.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
As-is value then, no problem. Just make sure to emphasize the safety/soundness/structural integrity is not affected by the deferred maintenance.
Why should an appraiser take on the liability by making such a statement? We can't know if structural integrity is affected. If they want to lend on a deferred maint house, let them take the risk for the decision.

At most state something like " No visible safety or repair issues noted, however users are recommended to get inspections due to deferred maintenance . "
 

Jeffrey Hilborn

Junior Member
Joined
Sep 19, 2015
Professional Status
Certified Residential Appraiser
State
Illinois
Why should an appraiser take on the liability by making such a statement? We can't know if structural integrity is affected. If they want to lend on a deferred maint house, let them take the risk for the decision.

At most state something like " No visible safety or repair issues noted, however users are recommended to get inspections due to deferred maintenance . "

It's implied by the rating, otherwise, it would be C6. I hated it so much when my supervisors told me "don't say that, you might open up a can of worms"
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
Why should an appraiser take on the liability by making such a statement? We can't know if structural integrity is affected. If they want to lend on a deferred maint house, let them take the risk for the decision.

At most state something like " No visible safety or repair issues noted, however users are recommended to get inspections due to deferred maintenance . "
Exactly we don't get into structural integrity because we are only doing a visual observation of the property not a home inspection and when talking about structural integrity it involves either a contract or engineers in many cases to make that determination. As J.G. stated just reported the deferred maintenance .
 

Jeffrey Hilborn

Junior Member
Joined
Sep 19, 2015
Professional Status
Certified Residential Appraiser
State
Illinois
Exactly we don't get into structural integrity because we are only doing a visual observation of the property not a home inspection and when talking about structural integrity it involves either a contract or engineers in many cases to make that determination. As J.G. stated just reported the deferred maintenance .

So the GSEs give us guidelines that are impossible to follow? We can't determine if something affects structural integrity?
 
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