Fair Condition vs Poor

[Charles Knutson]

this report was ordered as income property. The owner says she plans to put her son in there but as we all know at this point, this home is not habitable. So......how do I handle this aspect as far as doing a rent schedule and operating expense report?

Since it is not habitable, the rent schedule and operating expense report may not be relevant at this point in time. Since the report will be "subject to" repairs or a report on the residual value of the structure, the rent schedule and operating expense report can wait until the habitability issues are resolved.

This could easily be an HBU land value only report. If the cost of repairs and the present land value exceed the value of the home after repairs, there is no residual value in the structure.

What are the repairs that need to be done? New Heat/A-C system; new kitchen appliances (kitchen cabinets and countertops?); new floor coverings; new roof; window repair (and replacement?); porch soffit; thorough cleaning and paint; new plumbing fixtures?

If you know any fix n flip investors, they might be able to give you a ballpark figure. To me, that looks like $20k to $30k worth of work; maybe more, maybe less.

With a ballpark figure for the repairs, you have enough for a basic HBU analysis -- determine whether the structure has enough residual value to warrant the repairs (market value after updating) or whether the land value exceeds the contributory value of the updated improvements.

When comparing the building site value, be sure to give it credit for having water, sewer, and other utilities in place. Many raw land building sites don't have any utilities or tap fees paid. Those expenses can be substantial.

If there is no residual value to the structure, the property owner could look at modular homes as a replacement. Everything would be new, and it should be worth more than a repaired cinder block structure.

 

[Karl]

Just follow everything Frank A said & you'll have a report that is descreptive, understandable, reliable, & limits your liabilty. I too would say qualified individuals with expertise in whatever areas your describing.

Thanks Frank I picked up some useful info from this thread.

I would NOT use a "BallPark" figure without having a resourse to quote such as Home Repair Remodel guide from M&S Biggest complaint being filed in REO's iis the Cost Repair is to low.

 

[Mike Boyd]

FrankA's response says it all. You should remember that security bars with locks that require a key to open them is not code compliant, at least in my market area. They must be installed in such a way that it is always easy to open. There is specific wording to describe "easy opening," but I cannot recall exactly what it is. A keyed lock is definately not easy opening..

 

[Webbed Feet]

<snip>.................
In any case, I don't think it is a good idea to get into the security bars thing as you are making a recommendation that you can be liable for;........

What? She has to get into the security bar issue if these are on any sleeping rooms! Avoiding it would be foolish.

Webbed.

 

[Webbed Feet]

That Depends

Ms. Swain,

That depends. What type or class of client do you have and what is the client's intended use? So you have a SOW for this?

Glad you told us not to be shy.



Webbed.

 

[Joyce Potts]

Who said it did? I was always told that "the the value is the value is the value," regardless of the intended use of the report.

You said said/suggested to me the 'intended use' made a difference. Mine were foreclosures, your was a refi. Different philosophies--remember?

 

[Bobby Byrd]

This is an easy one:

Fair - loan might go through
Poor - Snowballs chance in he**

 

[Webbed Feet]

P.E.

I don't see any clear SOW for this thread. I can think of three or four different paths that could be taken depending on the SOW needed. So I fail in seeing the point in posting solutions to undefined problems via guessing what the SOW is supposed to be for an intended use I don't know either. There is very little difference between "Hi, how do I appraise real estate?" and "Hi, how do I appraise real estate with a nonhabitable house on it?"

I suppose being nice means just answering back "That depends" and waiting for the original poster to get it.

Webbed.

 

[Farm Gal]

Allison:

I usually follow up my 'end of life roof comments' with: No evidence of current roof leakage was observed based on the extent of the inspection performed, the appraiser did/did/not view the interior of the attic area. Drywall ceilings did/did not show staining as of the effective date.

Like Pam & Frank said, DODGE the bars issue other than to state: The appraiser observed locking security bars, and was informed that the owner lacked keys to unsecure those units. Consult local code professionals for determination of legal occupancy under the circumstances, and a local installation company for cost to cure. Some bar installations are difficult to remove due to the nature of the installation (in-only screw systems). Removal may damage exterior surface and finishes. Custom replacement to include welding may exceed normal installation of new bar systems.

 

[Couch Potato]

SOW details.

I have one with some similar issues to Alison's. The appraisal is for the trustee's of an estate who are looking for list price for selling the property. Both of the trustees are real estate professionals in bordering states. They simply needed someone with local knowledge and data to do a FSBO, so they said. The house was under construction at the time of death. The interior is finished, and very nice; however, the exterior was never completed. It has been vacant for more than a year. I'm looking for suggestions of things to cover in a revised SOW discussion.

I'm leaning toward requiring them to provide me with at least one estimate from a local contractor. Although I have the ability to estimate the job, I don't think I want the liability. Any thoughts or suggestions appreciated.