Duplex vs SFR

[glenn walker]

Thank you for your input! The owner is now in a nursing home. I will appraise it as a duplex. This will be a fun one!! Thanks!

I have done quite a few FHA and VA reverse defaults. What happens is once the owner has been in a nursing home or assisted care facility for say like 6 months the property has to be purchased by a family member or its sold and liquidated. I did not mean to be rude but not only are these properties usually in real poor condition but most will never be taken to a higher and better use as its not economically feasible. BUT for future H & B Use analysis do not confuse what your assignment conditions are versus a hypothetical future use.

 

[kjk]

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[kjk]

I have done quite a few FHA and VA reverse defaults. What happens is once the owner has been in a nursing home or assisted care facility for say like 6 months the property has to be purchased by a family member or its sold and liquidated. I did not mean to be rude but not only are these properties usually in real poor condition but most will never be taken to a higher and better use as its not economically feasible. BUT for future H & B Use analysis do not confuse what your assignment conditions are versus a hypothetical future use.

That absolutely makes sense. I'm not a VA appraiser (VA confirmed that I don't need to be for this assignment) but I'm trying to make sure I cover all my bases so there aren't any issues. Will the VA give me a hard time for functional utility adjustments? The lack of separate utilities will likely require a significant one.

 

[Dublin ohio]

That absolutely makes sense. I'm not a VA appraiser (VA confirmed that I don't need to be for this assignment) but I'm trying to make sure I cover all my bases so there aren't any issues. Will the VA give me a hard time for functional utility adjustments? The lack of separate utilities will likely require a significant one.

From the condition you describe. I doubt that it would really make much of a difference if any. C5 is usually an investor or flip purchaser. With needing a complete rehab. Something like that is probably already baked into the cake.

 

[glenn walker]

From the condition you describe. I doubt that it would really make much of a difference if any. C5 is usually an investor or flip purchaser. With needing a complete rehab. Something like that is probably already baked into the cake.

I would not get into functional utility adjustments as you will have no data or comps to extract them from.
I would Just make condition adjustments. Or you will lead yourself down a never ending rabbit trail into appraisal purgatory. All they want to know is how much can they sell it for to try and pay off the reveres mortgage loan balance.

 

[sputnam]

If it's a market value appraisal, then first you have to do the Highest and Best Use analysis and come to a conclusion. That will guide how you approach the valuation analyses. Whether you appraise it as a single family or as a two family dwelling. Once you've made that determination then, you can think about what is needed to either repair it or convert it.

 

[J Grant]

We dont appraise -VA-FHA -GSE or their potential REO Properties for higher and better uses.
We only report if there is a potential higher and better use. The Assignment conditions are what directs us not hypothetical what ifs. This is even more critical on REO -Reverse Mortgage defaults etc as who is going to bring this property up to its higher and best use ? The VA will list it and sell it as fast as they can unless a family member can take up the loan deficit and purchase it from the VA .or lender servicing it.

You invented a potential REO higher and better uses thingy.

HBU is highest and best PRESENT use. It is not a hypothetical exercise, it is done to understand how the typically motivated buyer views the property and thus what they would probably pay.. A well informed buyer is assumed for MV meaning the buyer grasps the HBU of a property. Determining the HBU is a separate issue from the fact that an REO or reverse mortgage appraisal is done AS IS regarding physical repairs and condition .

The subject is in poor condition, is the extent so bad the likely buyer will raze the subject and buy it for land value ? The zoning is SFR or MF, but if the area trend is SFR , then the typically motivated buyer will purchase with that in mind. And with that said, the typically motivated buyer for a poor condition structure is an investor/flipper , so price accordingly

 

[J Grant]

Going by the info posted, I might conclude that HBU is existing use , that even though subject is in poor condition, the trend is to keep a building and remodel rather than tear it down for land value. I'd write that per RE agent feedback, predominant sale type and which type of property sells for more $, the HBU, conclusion is SFR ( if that is the conclusion).

From there, state the most likely buyer an investor/property flipper and use SFR comps, hopefully finding some that sold in similar poor condition .

 

[J Grant]

For many res properties, tract homes, existing homes in a conforming neighborhood ( even if a subject is custom or odd, the area is SFR dominant ). The buyer assumes with a tract house in a suburban subdivision the HBU is residential. These buyers are well informed wrt to how much they need to be for type of purchase.

In a more complex situation, a changing neighborhood or zoning change brining in new construction or density or houses in poor condition, the HBU is more complex, but then the buyer is typically more sophisticated. Property flippers, investors, and buyers with an eye on zoning change/redevelopment are sophisticated and astute about HBU. A well informed buyer. While a HBU includes future benefits or future zoning change, the HBU is still the present current date, aka a buyer pays today for future benefits anticipated.

 

[glenn walker]

Going by the info posted, I might conclude that HBU is existing use , that even though subject is in poor condition, the trend is to keep a building and remodel rather than tear it down for land value. I'd write that per RE agent feedback, predominant sale type and which type of property sells for more $, the HBU, conclusion is SFR ( if that is the conclusion).

From there, state the most likely buyer an investor/property flipper and use SFR comps, hopefully finding some that sold in similar poor condition .

Its a VA liquidation LMAO