I was questioned, by an underwriter, on a "cost to cure" for a foreclosure property that I appraised. She informed me my cost to cure was "too low" given the information she received from the Real Estate Broker who performed a BPO on the property. Apparently the Real Estate Broker took an inspector with her while she was viewing the property. Per the inpsector, the building has several code violations, i.e. electrical, plumbing and environmental. My appraisal states "the appraiser has made no special effort to discover any adverse environmental conditions and accepts no responsiblity for such discovery. I also go on to say that if such discovery is made, appraiser should be notifiied. I have an entire paragraph dedicated to the fact the appraiser is not an inspector and the appraisal is an observation and should not be regarded as a full property inspection. I would like some feedback regarding this topic and if anybody else provides a cost to cure. I dont think I will ever provide a cost to cure again. By the way, I did recommend an electrical, plumbing and mechanical inspection on the appraisal. I pointed that out to her as well.
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Cost to Cure
- Thread starter Cheryl
- Start date
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Chris Harrison
Senior Member
- Joined
- Jan 15, 2002
- Professional Status
- Certified Residential Appraiser
- State
- Utah
The cost to cure is standard in doing REO appraisals. Using the Home Repair and Remodel Cost Guide by Marshall & Swift is a good reference. Most lenders do not expect you to estimate major plumbing or electrical repair but do want a WAG (wild a** guess) if you can "see" problems. Estimating the cost to replace the furnace, water heater, rewiring the home, new plumbing, replacing drywall can be estimated by local contractors if you really want to be accurate. Remember this is an open ended "estimate". You should include the cost of doing these inspections in your cost to cure. Like many things in the appraisal business this is a special field that will take time and training to become a pro.
Chris Harrison
Chris Harrison
airphoto
Senior Member
- Joined
- Jan 15, 2002
- Professional Status
- Retired Appraiser
- State
- Pennsylvania
Cheryl,
Have your underwriter send to you a copy of the BPO, including the 'cost to cure' information provided by the real estate agency (to include the name and professional information for the person providing the 'cost to cure' referenced in the BPO.) Scan it into your report, with words in your addendum to the effect that this information was provided by the underwriter for inclusion in your report, and that you rely on this information as valid as the underwriter has attested to its validity and required that you should include it in the report.
And .. bet that it never happens ..
Have your underwriter send to you a copy of the BPO, including the 'cost to cure' information provided by the real estate agency (to include the name and professional information for the person providing the 'cost to cure' referenced in the BPO.) Scan it into your report, with words in your addendum to the effect that this information was provided by the underwriter for inclusion in your report, and that you rely on this information as valid as the underwriter has attested to its validity and required that you should include it in the report.
And .. bet that it never happens ..
Richard Carlsen
Elite Member
- Joined
- Jan 15, 2002
- Professional Status
- Licensed Appraiser
- State
- Michigan
Tell the UW that you are an appraiser and not a contractor or inspector.
Then ask the UW that if there is additional data available on the cost-to-cure from a reliable source, why this information was not given to you before you did your appraisal. Withholding information from a reliable source is not an acceptable business practice between an appraiser and the client. There has to be open and honest flow of information BOTH WAYS. I would become a little miffed in my conversation and let them know that you do not appreciate having relevant information withheld that would assist you in doing your job.
Appraising is forming an opinion of value. It is not checking to see if we can be super-slooths or contractors or engineers or private detectives to find out things that the client knows or should know.
I find that kind of with holding of information unacceptable on the part of the client.
Then ask the UW that if there is additional data available on the cost-to-cure from a reliable source, why this information was not given to you before you did your appraisal. Withholding information from a reliable source is not an acceptable business practice between an appraiser and the client. There has to be open and honest flow of information BOTH WAYS. I would become a little miffed in my conversation and let them know that you do not appreciate having relevant information withheld that would assist you in doing your job.
Appraising is forming an opinion of value. It is not checking to see if we can be super-slooths or contractors or engineers or private detectives to find out things that the client knows or should know.
I find that kind of with holding of information unacceptable on the part of the client.
Verne Hebert
Senior Member
- Joined
- Feb 25, 2002
- Professional Status
- Certified General Appraiser
- State
- Montana
Cheryl
I have alway found it interesting when somebody tells me I am "low". I have to ask myself, Lower than what ?. The BPO number may be high, low, or a good number--we won't know until the work is completed. In existing structures accurate estimation of repair is challenging because it is uncertain where the work will end because so much is concealed.
I thought Harrison's response was good. Repo's are one of may mainstays these days. I like them. The lender makes the rules on the requirement of cost to cure. I do not provide a cost to cure, ever, unless asked for one; and I expect to get paid for my expertise, and I do. Generally on the repo's 4 values are required with cost to cure and the accuracy of the cost to cure is critical in reconciling the "as-repaired" value and my recommendation to repair and list or list as-is. This aspect of the spectrum of appraisal work is interesting but requires considerable construction expertise.
Verne J. Hebert, MFLA[/b]
I have alway found it interesting when somebody tells me I am "low". I have to ask myself, Lower than what ?. The BPO number may be high, low, or a good number--we won't know until the work is completed. In existing structures accurate estimation of repair is challenging because it is uncertain where the work will end because so much is concealed.
I thought Harrison's response was good. Repo's are one of may mainstays these days. I like them. The lender makes the rules on the requirement of cost to cure. I do not provide a cost to cure, ever, unless asked for one; and I expect to get paid for my expertise, and I do. Generally on the repo's 4 values are required with cost to cure and the accuracy of the cost to cure is critical in reconciling the "as-repaired" value and my recommendation to repair and list or list as-is. This aspect of the spectrum of appraisal work is interesting but requires considerable construction expertise.
Verne J. Hebert, MFLA[/b]
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