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Extraordinary Assumption- Condo Report

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RAYTAFT

Freshman Member
Joined
Sep 12, 2003
Professional Status
Certified Residential Appraiser
State
Virginia
I have a question. Just completed a condo report and there was information that was unobtainable in the normal course of business and was not on the lender questionnaire either. I made the report subject to the extraordinary assumption that the information did not materially affect the value and used CB4 on the reconciliation section. Now the lender is giving me a hard time saying, it has to be as-is since you aren't requiring an inspection. I know there is something in the Fannie Mae guidelines about this, but I can't find it and am hoping that one of the braintrust on here has it readily at hand. If you have something I can cite from the Fannie Guideline, please let me know. I explained that making it "as-is" would be misleading and that I would not submit it that way.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
I assume you checked the box "Extraordinary Assumption" at the bottom of page two.

What extraordinary assumption did you use in your report?
 

RAYTAFT

Freshman Member
Joined
Sep 12, 2003
Professional Status
Certified Residential Appraiser
State
Virginia
I assume you checked the box "Extraordinary Assumption" at the bottom of page two.

What extraordinary assumption did you use in your report?
I stated that the information (budget, amount of commercial space, number of phases) was unavailable in public records or through the normal course of business and checked CB4 at the bottom of page 2, with the assumption that there was no negative information that would have an adverse affect on value. Client is coming back stating has to be as-is since I am not requiring an inspection. I have asked a couple of people and most are telling me just to change it, but that doesn't seem right. No one has been able to cite a guideline for me to give the lender.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
I stated that the information (budget, amount of commercial space, number of phases) was unavailable in public records or through the normal course of business

I cannot speak to your market. But what you cite as issues is available during the normal course of business in my markets. That "course of business" might mean more investigation than a simple condominium project.

That's my market. Your market may vary.

On the surface of the issue as presented, I agree with your client.
 

RAYTAFT

Freshman Member
Joined
Sep 12, 2003
Professional Status
Certified Residential Appraiser
State
Virginia
I cannot speak to your market. But what you cite as issues is available during the normal course of business in my markets. That "course of business" might mean more investigation than a simple condominium project.

That's my market. Your market may vary.

On the surface of the issue as presented, I agree with your client.


So, for clarification, you agree with the client because they are correct, or because you think my research is inadequate?
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Should have asked lender to provide, as I believe such is the obligation of the mortgagee to provide to the appraiser, or just turn it down and let someone else deal with it.
 

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
FTR I absolutely hate a Condo assignment. I avoid them like the Plague. Mostly because Clients cant understand the High Fee I demand.

Uhhhh your just flat wrong here. Condo Project legal doc's have almost all the info you need to complete your assignment. They can be difficult to get and sometimes costly but you need this Condo Project info. Saying you cant get in the normal course of business is lame excuse IMO. These requirements are standard factual data needed to complete any 1073 assignment. Which means to me 24-48 turn n burn in most cases is an unreasonable turn time. Exception is that you have completed all the data collection for a previous assignment/. I will give you this one though...analyzing the project financials are way above our pay grade. In Charlotte NC, there are two companies that I know of that provide this specialized service to Condo projects hoa for a handsome fee. They wont give it up to an appraiser unless a fee is paid and the Project HOA approves the release of that info.

Here are two critical/essential data points a lender/GSE need; 1. Number of units owner occupied/rented 2. Number of owners that own 10% or more of the units. These are important because if numbers get high enough it disqualifies the project for certain Loan Programs. I am pretty sure FHA is one of them(could be wrong).

So the normal course of business for a Condo is time from start to completion is longer and data collection is more complex and almost always takes longer than a SFR.

Bottom line is 1. Charge a much higher fee, extend your turn time.
SOME SOLUTIONS: Make the owner provide Condo HOA info/budget. The HOA can not deny that to owner, but they may charge the owner for it and still drag their feet. Also Most but not all HOA's know the number of Owner occupied/Non-owner occupied(rentals) and who they are.
 

RAYTAFT

Freshman Member
Joined
Sep 12, 2003
Professional Status
Certified Residential Appraiser
State
Virginia
Should have asked lender to provide, as I believe such is the obligation of the mortgagee to provide to the appraiser, or just turn it down and let someone else deal with it.

Information was requested at assignment. The information provided was incomplete. Multiple reminders send.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
I have a question. Just completed a condo report and there was information that was unobtainable in the normal course of business and was not on the lender questionnaire either. I made the report subject to the extraordinary assumption that the information did not materially affect the value and used CB4 on the reconciliation section. Now the lender is giving me a hard time saying, it has to be as-is since you aren't requiring an inspection. I know there is something in the Fannie Mae guidelines about this, but I can't find it and am hoping that one of the braintrust on here has it readily at hand. If you have something I can cite from the Fannie Guideline, please let me know. I explained that making it "as-is" would be misleading and that I would not submit it that way.

There is no Fannie Guideline about this, there is common sense. And peer practice. Most of your peer appraisers do not make a condo report "subject to" missing information about a condo questionable. In fact, I've never heard of it until this post. Unless a building is in a state of change, such as during a condo conversion, there would be no need to do so. Whatever is present in building with commercial use etc is already reflected in the prices and marketing times of the units. Simply write your efforts to obtain the information, that it was not available, and estimate of commercial space is na or 10% ( whatever you observed )r
 

James Micozzi

Member
Joined
Jan 13, 2005
Professional Status
Certified Residential Appraiser
State
New York
I have a question. Just completed a condo report and there was information that was unobtainable in the normal course of business and was not on the lender questionnaire either. I made the report subject to the extraordinary assumption that the information did not materially affect the value and used CB4 on the reconciliation section. Now the lender is giving me a hard time saying, it has to be as-is since you aren't requiring an inspection. I know there is something in the Fannie Mae guidelines about this, but I can't find it and am hoping that one of the braintrust on here has it readily at hand. If you have something I can cite from the Fannie Guideline, please let me know. I explained that making it "as-is" would be misleading and that I would not submit it that way.

I routinely do condo assignments. I have never used an extraordinary assumption because I was not provided with a questionnaire. I obtain the number of owner occupied vs. rented units from my data sources, such as MLS, etc. In my market, I am able to obtain the condominium complex declaration, which typical has a Schedule A of all the units, residential and commercial, with percentages of overall square footage of the complex. I just explain that certain information was not provided via a questionnaire and identify the sources used to provide the information.

If you think condominiums are a PITA, try appraising a cooperative apartment unit:cryingsmiley:
 
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