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JAM

Sophomore Member
Joined
Apr 8, 2016
Professional Status
Certified Residential Appraiser
State
Florida
Hello Fellow Appraisers,

I received an email from a client who is a realtor that inquired how the builder did not ensure compliance with the county and water management district regarding elevation issues (not meeting the minimum requirements. There are homes that fall below the 17.2" minimum elevation as required by the water management districk and the 17.8" minimum elelvation required by the county's development order in this new project). The homeowner's association has not yet confirmed it, but have put a letter out to all owners informing them that the information they received cannot be confirmed whether the Study and survey table were signed or certified by a specific engineer.

The homeowners recommends or encourages an owner to hire their own surveyors. If the owners decide to sell, this information, it will have to be disclosed. If an owner is affected by this elevation issue, an attorney can be involved regarding a claim against the builder.

So, how does this affect an appraisal that I do? I know on the URAR, there is an area in the Improvements section where the form says, "Are there any physical deficiencies or adverse conditions that affect the livability, soundness, or structural integrity of the property?" I realize this is the area where I would disclose this information regarding the elevation issue I mentioned. Do I also put it in this section, "Does the property generally conform to the neighborhood (functional utility, style, condition, use, construction, etc.?"

Last, please enlighten me on how this affects the appraisal. How do I adjust for the subject property having the elevation issues compared to ones that don't in a brand new community / project that is difficult to do a paired sales analysis on?

Does anyone have any experience with dealing with this? Any insight you could provide me doing my job to make sure I cover everything? Or how to compensate when there isn't enough data to do an accurate comparable sales analysis in this situation since it is just happening in this project?

Thank you for your time and knowledge explaining this to me especially if and when the realtor wants to involve me. She also asked me this question. How much information is appropriate to disclose without her legally holding me responsible for a question like this on how it affects the appraisal for her customers or if she offers an assignment to me?

Any verbiage I should note to her or in the appraisal when answering this question on how it affects the subject property?

Thank you again!

JAM

Any advice is greatly appreciated.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Are you talking about foundation heights? Make report subject to elevation determination by an expert. Not your job.
 
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Dublin ohio

Senior Member
Joined
Mar 20, 2008
Professional Status
Licensed Appraiser
State
Ohio
What is the reason for the required elevation. Is it elevation above grade. Is it elevation above a set base elevation. I find it hard to believe that a builder could even get a permit if the plans did not meet the elevation requirements. Are there no building inspections in this area. Could it be that somebody involved in the permitting process "dropped the ball". Based on the information in you post. Something does not make sense. That being said. On the surface. I agree with Terrel. Not you job.
 
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KHS445

Member
Joined
Aug 20, 2011
Professional Status
Appraiser Trainee
State
Michigan
A potential issue has been identified, but not confirmed. I try to avoid problems wherever I can. If it were me I would find out as much information as I can about the issue and the current status of any research that has been completed regarding the issue. I would than inform the client of the results of my research and let them decide as to how they want to proceed. I seriously doubt the lender or the buyer, if they are made aware of this potential issue, will want to get involved in it prior to a final resolution being reached. Nothing but money, time, potential loss of value and headache on the line with no upside unless the sale price is heavily discounted. If the price is heavily discounted the seller may know more than they are letting on.

As the appraiser you have two options. First and the one I would take is to walk away telling your client that due to the nature of the potential issues you are unable to creditably estimate the subject's current market value. Second would be to complete the report and include whatever extraordinary assumptions you need to use to thoroughly explain the issues at hand and how your estimate of value may be impacted depending on the outcome of the known issues.

The impact could be minor and involve the cost of a new survey and a letter of determination from the governing authority or it could be major requiring the dwelling to be raised to meet the elevation requirements to even the dwelling being labeled uninhabitable. In my opinion too much unknown risk for way too little reward.

Good luck and let us know what happens.
 
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jay trotta

Elite Member
Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
JAM: "builder did not ensure compliance with the county and water management district regarding elevation issues (not meeting the minimum requirements. There are homes that fall below the 17.2" minimum elevation as required by the water management districk and the 17.8" minimum"

It would appear you have work to do, Is there a C. of O. ? When was the dwelling built ? prior to Elevation minimums or after ? How did Construction get approved without proper Elevation requirements being met ? There are many stages to construction approval, therefore I can't believe no inspections were done, especially when specific, "Flood Plain Standards" / Coastal Area Management waterways are required within the municipality. It becomes a Liability for the municipality, do your research, something does not sound right.
 
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CigarDad

Junior Member
Joined
Sep 10, 2007
Professional Status
Certified Residential Appraiser
State
California
Before the new HUD handbook 4000.1 their standard was 18".

"It is highly recommended that the minimum height of a crawl space be 18 inches from the bottom of the joists"
 
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jay trotta

Elite Member
Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
Before the new HUD handbook 4000.1 their standard was 18".

"It is highly recommended that the minimum height of a crawl space be 18 inches from the bottom of the joists"

What ? how does your quote impact Flood Plain Elevations ??
You may be required to "Improve" the quality of your cigar to something more flavorful and amusing
 
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JAM

Sophomore Member
Joined
Apr 8, 2016
Professional Status
Certified Residential Appraiser
State
Florida
What is the reason for the required elevation. Is it elevation above grade. Is it elevation above a set base elevation. I find it hard to believe that a builder could even get a permit if the plans did not meet the elevation requirements. Are there no building inspections in this area. Could it be that somebody involved in the permitting process "dropped the ball". Based on the information in you post. Something does not make sense. That being said. On the surface. I agree with Terrel. Not you job.

Hello everyone,

Thank you for the replies and good nuggets of wisdom inherited on how to deal with this. A realtor sent me the letter from the HOA to current homeowners in a new project where the HOA is not confirming, but has mentioned that a few homes that were built in the project do not meet the minimum elevation (for flooding purposes). There was a study and survey table provided to the HOA that wasn't official, but mentions that there are several homes that fall below the 17.2" minimun elevation as required by the County Development Order (DO).

The realtor wanted to know how this affects the appraisal and it appears that either I can not involve myself in this assignment or make sure I use the "extraordinary assumption" or "subject to" elevation requirements.
I am having a difficult time with all this as well, but I will get back to the realtor and let her know that I would make a notation in the report that I am not an expert and it would be "subject to" elevation requirements or an "extraordinary assumption." This realtor is not someone I work with often, so I may just walk away from the assignment anyways.

Thank you for your time and insight again helping me understand. I have another issue that I will be posting in a moment...

Have a great day!

JAM
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
I find it hard to believe that a builder could even get a permit if the plans did not meet the elevation requirements./QUOTE]
I don't....there was a very large subdivision where I used to appraise in Maryland in which a substantial number of homes were built that did not meet the setback requirements and or height requirements of the applicable zoning district, yet the development plans and building permits were all approved by the local municipality. By the time someone figured out there was an issue, hundreds of homes had been built and sold.
 
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D

Deleted member 130081

Guest
Hello Fellow Appraisers,

I received an email from a client who is a realtor that inquired how the builder did not ensure compliance with the county and water management district regarding elevation issues (not meeting the minimum requirements. There are homes that fall below the 17.2" minimum elevation as required by the water management districk and the 17.8" minimum elelvation required by the county's development order in this new project). The homeowner's association has not yet confirmed it, but have put a letter out to all owners informing them that the information they received cannot be confirmed whether the Study and survey table were signed or certified by a specific engineer.

The homeowners recommends or encourages an owner to hire their own surveyors. If the owners decide to sell, this information, it will have to be disclosed. If an owner is affected by this elevation issue, an attorney can be involved regarding a claim against the builder.

So, how does this affect an appraisal that I do? I know on the URAR, there is an area in the Improvements section where the form says, "Are there any physical deficiencies or adverse conditions that affect the livability, soundness, or structural integrity of the property?" I realize this is the area where I would disclose this information regarding the elevation issue I mentioned. Do I also put it in this section, "Does the property generally conform to the neighborhood (functional utility, style, condition, use, construction, etc.?"

Last, please enlighten me on how this affects the appraisal. How do I adjust for the subject property having the elevation issues compared to ones that don't in a brand new community / project that is difficult to do a paired sales analysis on?

Does anyone have any experience with dealing with this? Any insight you could provide me doing my job to make sure I cover everything? Or how to compensate when there isn't enough data to do an accurate comparable sales analysis in this situation since it is just happening in this project?

Thank you for your time and knowledge explaining this to me especially if and when the realtor wants to involve me. She also asked me this question. How much information is appropriate to disclose without her legally holding me responsible for a question like this on how it affects the appraisal for her customers or if she offers an assignment to me?

Any verbiage I should note to her or in the appraisal when answering this question on how it affects the subject property?

Thank you again!

JAM

Any advice is greatly appreciated.

You stated you do not have the data to solve the appraisal problem, so...sounds like you cant solve it. What you can do is incorporate an assumption, which would be the subject property is not affected by this potential condition. If you know in fact your subject has this condition, you would use a hypothetical condition. Not all clients will accept this course of action, so I would suggest to have a conversation with your client first.
 
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