Duplex vs SFR

[J Grant]

Thank you for your thoughtful reply. I know we are all very busy, so I appreciate everyone taking the time to help me out! Though the subject is not currently used as a duplex, it is configured as one so I will appraise it as a duplex. I will also add my H&BU analysis. The last issue I am running into is the form. Due to the poor condition, I believe using rental comps and the income approach would be misleading. Is using a standard GPAR an acceptable form for this use?

Again, thank you EVERYONE for your replies. I have found the appraiser world to be more of an island- so I am very thankful for the help here!

The fact that the subject is configured as a duplex is not the same as the HBU as a duplex. We appraise to HBU not just to a current configuration - though current configuration should be disclosed and commented on.

 

[alebrewer]

The fact that the subject is configured as a duplex is not the same as the HBU as a duplex. We appraise to HBU not just to a current configuration - though current configuration should be disclosed and commented on.

Although current configuration does affect the H&B use 'as improved' decision....

 

[J Grant]

Although current configuration does affect the H&B use 'as improved' decision....

the current configuration can affect HBU analysis, however it should not drive it nor be the only consideration. The poster's HBU analysis begins and ends with the current configuration

And from that they are now having trouble with what form to use,, should they use rentals etc.

 

[kjk]

the current configuration can affect HBU analysis, however it should not drive it nor be the only consideration. The poster's HBU analysis begins and ends with the current configuration

And from that they are now having trouble with what form to use,, should they use rentals etc.

My opinion of the highest and best use is SFR. I am appraising the subject as MFR as that is its current configuration and the report is as-is. I am also stating in the report its HBU differs from its current use. I am running into questions when using a GPAR for a duplex instead of a GP 2-4. I don't want to leave an entire page blank on the GP 2-4 because I am not completing a rental comparison analysis or the income approach.

 

[J Grant]

My opinion of the highest and best use is SFR. I am appraising the subject as MFR as that is its current configuration and the report is as-is. I am also stating in the report its HBU differs from its current use. I am running into questions when using a GPAR for a duplex instead of a GP 2-4. I don't want to leave an entire page blank on the GP 2-4 because I am not completing a rental comparison analysis or the income approach.

NO!!!!!!

If your opinion of HBU is SFR, then you appraise it as a SFR!!!!!!!! Regardless of current configuration.

AS IS means appraise the subject in its AS IS PHYSICAL CONDITON , NOT MAKING IT SUBJECT TO REPAIR.

The current configuration and or Physical condition can affect the analysis of HBU, but the assignment for as is refers to physical condition- you Appraise in the current crappy condition.

Sorry to say but per your comments may not be competent for this assignment and one of the reasons for your struggles is you chose to take Glenn's advice over that of nearly everybody else here.

 

[glenn walker]

NO!!!!!!

If your opinion of HBU is SFR, then you appraise it as a SFR!!!!!!!! Regardless of current configuration.

AS IS means appraise the subject in its AS IS PHYSICAL CONDITON , NOT MAKING IT SUBJECT TO REPAIR.

The current configuration and or Physical condition can affect the analysis of HBU, but the assignment for as is refers to physical condition- you Appraise in the current crappy condition.

Sorry to say but per your comments may not be competent for this assignment and one of the reasons for your struggles is you chose to take Glenn's advice over that of nearly everybody else here.

Well unlike Grants advice my advice is based on actually doing VA Liquidations at former lenders and a former ( SAR ) and their engagement of how they normally want a defaulted reverse mortgage with borrower who is now in a nursing home completed. In most cases a VA or FHA reverse default mortgage engagement letter and assignment conditions are for its legally permitted use and its physical condition being in " as is " -- A Higher and Better Use is not appraised its only reported what that potential future use may be.

Whats Critical is this must have an- engagement and assignment condition letter from the lender who is servicing the defaulted reverse mortgage. That will lay out what the assignment conditions are-what form they want it on and what the ORIGINAL VA loan was made on--was it a mortgage or A VA owner occupied duplex. All the other stuff is just road noise as nobody on here including me has read your engagement letter and assignment conditions.

 

[George Hatch]

You can approach the "as is" value of a property that is flip-bait from two directions. One way is to find other properties which are in directly comparable condition - what you see is what you get. The challenge there is finding enough of such properties and then trying to adjust for their respective variations of "beater". You often won't be able to do either due to the general lack of such sales data. However, if you can find enough such data this will usually be the more directly indicative approach.

The other way to do it is to work backwards from the "as completed" condition by finding properties in finished condition and discounting via cost+profits. That's a more indirect approach and it requires a better handle on repair/rehab costs.

If you have some data for each but not enough to make a definitive case with either one then you might have occasion to do both.

 

[J Grant]

Well unlike Grants advice my advice is based on actually doing VA Liquidations at former lenders and a former ( SAR ) and their engagement of how they normally want a defaulted reverse mortgage with borrower who is now in a nursing home completed. In most cases a VA or FHA reverse default mortgage engagement letter and assignment conditions are for its legally permitted use and its physical condition being in " as is " -- A Higher and Better Use is not appraised its only reported what that potential future use may be.

Whats Critical is this must have an- engagement and assignment condition letter from the lender who is servicing the defaulted reverse mortgage. That will lay out what the assignment conditions are-what form they want it on and what the ORIGINAL VA loan was made on--was it a mortgage or A VA owner occupied duplex. All the other stuff is just road noise as nobody on here including me has read your engagement letter and assignment conditions.

I already stated in this thread we appraise it with physical condition as is so we are on the same page as that.

I've done reverse mortgage appraisals and I've done REO appraisals and with either if it is MV we develop HBU - unless VA instructs the appraiser not to develop HBU I don't see where that applies. You reference a higher and better future use -but for MV it is present highest and best use.

 

[J Grant]

OP - My subject is a 1900 build, originally built as a single-family home. It was converted to an up/down style duplex in the '60s but hasn't been rented in 20 years. The city records it as a duplex. Zoning allows SFR and two-family. It has been owner-occupied with the owner using both units since then (there is an interior staircase leading to the upper level). There is only one elec. meter and one set of mechanicals (not

Here is how to handle the poor condition and HBU vs current configuration.

"Both MF and SF zoning is present, and legal. The subject was originally a SFR, and was converted to a duplex in teh 60's, but could be retrofitted back to a SFR. The subject is in poor condition and needs repairs. Because of the condition , the typically motivated buyer is a property flipper /investor. SFR is determined to be the HBU ( state why). Because a buyer would have to spend a substantial amount on repairs, the nominal cost to retrofit configuration to SFR does not affect the market value opinion. "

 

[George Hatch]

The HBU of an asset and its value in the market is independent of a lender's guideline or preference. If a user is asking for a different type of value then they should be providing that different definition along with the different assumptions involved.