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Ever See An FHA Deal Where All You Can Do Is Laugh?

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Frognosticator

Freshman Member
Joined
Feb 12, 2013
Professional Status
Appraiser Trainee
State
Texas
Longtime lurker, but I inspected one today that I have to share.

Request comes in from the client for an FHA appraisal in a rough part of town. I'm immediately suspicious, because the contract they sent over is for over $100k, which is about twice what typical properties of this sq ft sell for in that area.

Well I show up and the house is a mess. All the typical stuff you'd expect. No heat. No smoke detectors. Exposed electrical everywhere. Evidence of a rat infestation.

What really got me with this one was all the little details.

The house had an addition (built on the patio foundation no less) where one of the exterior walls intersected with a window. What I mean is, you could stand in the kitchen, look out the window, and see into the interior of an exterior wall that had been added on. One side of the window looked into the added bedroom, and the other side looked out to the back yard.

One of the exterior walls was leaning so badly, that had I put my weight into it it might have collapsed. Oh, and then there was the beautiful view of the power relay station from the front porch.

What are these people thinking? What is going through the realtor's head, first when they sign a contract on something like that for that price, but then how do they expect it to pass a freakin' FHA appraisal? I am legitimately shocked, confused, and entertained.

I'm happy to do the work since the lender still wants it, but this is insanity.
 
Last edited:

Riick

Elite Member
Joined
Aug 14, 2007
Professional Status
Certified Residential Appraiser
State
Delaware
LOCATION:
Subject property does have frontage on a high traffic street,
however, (Skippy) can find no evidence that this has any measurable
negative effect on the property's market value, or marketability.


BTW... is house considered 2 sty? or is 1st floor, inset into hillside, considered the basement
 
Last edited:

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
LOCATION:
Subject property does have frontage on a high traffic street,
however, (Skippy) can find no evidence that this has any measurable
negative effect on the property's market value, or marketability.


BTW... is house considered 2 sty? or is 1st floor, inset into hillside, considered the basement
Looks like an old fashioned "Prairie house, like the ones with the cows standing on top.

In reality, knowing the asking price for many properties along the coast in California, it may well be a Million Dollar property. I own a property in Kitty Hawk, NC that is a block and a half from the Ocean. I asked a visiting relative from California who lives along the coast what it might be worth around his(LA) are and he said easily a million. It is currently worth about $175+-. BTW, I grew up in California. Not the coat area though, but farm country in the San Jauquin Valley.
 

Non Sequitur

Elite Member
Supporting Member
Joined
Feb 14, 2002
Professional Status
Certified Residential Appraiser
State
Louisiana
They need a crossing guard to open the front door and I think there was a walk/don't walk button instead of a doorbell.
What's the backstory CAN? Is building into a hill typical construction? People didn't want to move? It's hard for me to wrap my mind around that photo.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
What's the backstory CAN? Is building into a hill typical construction? People didn't want to move? It's hard for me to wrap my mind around that photo.

The improvements encroach about 15 feet into the road ROW. If the city engineer ever decided they my go the owner must remove at their own expense. It's built into an almost solid rock hillside with a 70 degree ± slope. So there is nowhere to go. It's a 2-unit in low density single family zoning but it's grandfathered - could be a house and granny, can also be a duplex as grandfathered. The distinction is without a difference. If destroyed by more than 50% of it's value it would have to be rebuilt to current code which requires a 20' set back at the front. So it would have to back into the hillside another 30 feet or so. But that's virtually impossible due to the slope and the fact that there is a parallel street above with houses on it. It would destabilize the slope if you didn't engineer a retaining wall probably 30 or 40 feet high. So if it burns it become a useless lot.

It's in contract at about $130k which is mid-range for two unit properties in this market.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Here's a image from the GIS
 

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RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
I just looked at one this morning where the subject property is on a well and septic tank. The well is located in the crawlspace and there is no record of the septic tank with the Health Department. Fortunately, Public water and sewer are available. It would be expensive, but it is possible to connect.
 
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