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Excess Land - Hypothetical Condition But "as Is"?

Can the appraisal report be completed on a Fannie Mae Form 1004 and be "as is"

  • Yes. Complete the appraisal "as is" and clearly state the hypothetical condition in the report.

  • No. Complete the appraisal "subject to" and clearly state the hypothetical condition in the report.


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Joseph King

Freshman Member
Joined
Jan 10, 2007
Professional Status
Certified Residential Appraiser
State
Florida
Working on an assignment where the property features a half acre total which is made up of 2 lots (1/4 acre each) that are all under the same legal description and parcel id number. These 2 lots were joined together within the past couple years and could likely be split again with little to no significant issues from the city or county. One lot (1/4 acre) features the dwelling while the second 1/4 acre lot would be considered excess land. FHA instructs the value of the second lot be excluded from the final value conclusion on the basis of a hypothetical condition.

Can the appraisal report be completed on a Fannie Mae Form 1004 and be "as is" ? I am disagreeing with someone on this and would like some additional opinions.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Do you have a copy of the Handbook? (note: You should check to see if this version has been updated, which I believe it has)-
upload_2016-12-27_10-18-11.png
 

Joseph King

Freshman Member
Joined
Jan 10, 2007
Professional Status
Certified Residential Appraiser
State
Florida
I am aware of the directive. The question is what check box would you select? I was to the understanding that if you do a hypothetical condition the report would need to be "subject to". Someone is disagreeing with me and stating the report should be "as is" with the hypothetical simply stated in the report.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Since you are aware of the directive, how do you interpret this section (p. 510)?

upload_2016-12-27_10-30-25.png
 

Joseph King

Freshman Member
Joined
Jan 10, 2007
Professional Status
Certified Residential Appraiser
State
Florida
I am interpreting it that the report should be "subject to the following repairs and alterations" which is how I have completed this in the past. Am I interpreting this incorrectly? I have someone disagreeing with me and would like to find the correct way to proceed. Is that screen shot from USPAP?
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
I interpret it the same way as you do.
In my opinion, an "as is" value using a "hypothetical condition" cannot exist. I would cite the relevant passages in handbook as the reason for reporting options I selected.

However, if I were unsure, I'd call my local HOC.

Good luck!
 

Joseph King

Freshman Member
Joined
Jan 10, 2007
Professional Status
Certified Residential Appraiser
State
Florida
Thanks Denis. Where can I view the page you posted? I could not locate it on my files. I wanted to do this as a poll as I have heard of other appraisers completing them "as is". I was not willing to bend and change my report which created a disagreement.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Download the handbook (PDF) from the FHA website.
Do a word search with "excess" and "hypothetical". Took me less than 5-minutes.
This way, You'll have it at the ready the next time you need it.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I am aware of the directive. The question is what check box would you select? I was to the understanding that if you do a hypothetical condition the report would need to be "subject to". Someone is disagreeing with me and stating the report should be "as is" with the hypothetical simply stated in the report.

Imo, for this specific situation since HUD FHA instructs appraiser not to include the excess parcel, this is correct. (make report as is with explanation of the HC per FHA instructions not to value the excess lot )

Normally what Denis said would be true, that a HC would be marked "subject to". however, this is not conditioned on a repair, nor inspection, nor completion.

It is a client/user imposed requirement that the report be made "as is", with the value of the primary lot and house only, with the HC that the second lot of excess land excluded.

It is not therefore subject to anything, it is a HC in play as a requirement by FHA for the appraisal assignment type ( FHA lending purpose). As suggested, if possible to get an answer via email or phone from the HOC always good to confirm with them.
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
FHA specifically says "As Is" means no conditions. A Hypothetical Condition is a condition.
 
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