Detached Condominium

[Hank Henry]

If I am not mistaken, FNMA allows you to use the 1004 for detached condos. Check the selling guide.

 

[Couch Potato]

Originally posted by Daniel An@May 3 2005, 06:57 PM
Now, the same lender requests 'Cost Approach Analysis'.

Since it is a condominium, I stated it on the report as 'The cost and income approaches were considered to be unreliable for a condominium.'

Do you ever do 'Cost Approach Method' on Condominium?

<Daniel>

The thing that makes a condominium a condominium is that the land in the project is jointly owned by all of the owners in the project. The ownership of the individual unit may or may not include the entire structure of the improvements. Given that you are dealing with a detached unit, estimating the cost of constructing the improvements is fairly straight forward, but valuing an undivided interest in the land in the project would be quite a pain; you might be able to do it, but I doubt the cost approach would add anything to your report.

If you truly believe the cost and income approaches are unreliable for this condominium, they are not applicable and should not be used. You need to consider whether the client is making a reasonable request or asking for something beyond the normal scope of the assignment. You took a short-cut that caused you to incorrectly classify the property, that doesn't give the client a license to ask for anything they feel like.