Flooded Basement, as-is value.

[Six Flags]

FHA appraisal, client is requesting "as-is" report only, with any needed repairs itemized and included.

The house is vacant. The basement was flooded wall to wall about 1-2 inches. I could not identify the cause of the flooding (it was probably from heavy rain), I'm not positive on what damage this has caused. Grading around the home appears adequate.

I'd like to: state the problem and recommend an inspection by a quailified individual, but the client wants an "as-is" value taking into account its current condition. How can I estimate a cost to cure without knowing the cause?

As of right now, I plan to: State there was water in the basement. Recommend an inspection by a professional to diagnose. And, I suppose I will omit the flooding in the "as-is" value with a disclaimer stating that additional costs could be required to rectify any basement problems discovered by the basement inspector.

What do you old pro's think about it.

 

[stefan olafson]

Is the property marketable in its "as-is" condition? 1" - 2" of water is not what I would consider flooded, it's very typical in vacant homes.

Cost to cure? What will it cost to drain and dry the basement? If the cause is not known it's virtually impossible to provide a cost to fix what isn't known.

What are neighboring houses similar in design and age selling for? Did any of them have water problems? Are there other homes that have sold in the market, but in a different neighborhood with a similar problem? Extend your neighborhood if there is/are any similar sales.

This is a job that will take longer than a cookie cutter, but it also may teach you about appraising.

One other thing, did you discuss and arrive at a scope of work with your client prior to accepting the assignment? Did you understand from the start what they wanted?

Good Luck

 

[Lee Lansford]

... How can I estimate a cost to cure without knowing the cause?

...

Good question.

When you find the answer, let me know.

 

[Ted Martin]

State what you know and add a comment that costs could escalate because of hidden damage.

 

[RSW]

You will not be able to complete the appraisal as an "AS IS" appraisal if there is water present in the basement. You will either need to make it subject to repair and provide a cost to cure or CB4 the report subject to an inspection by a qualified professional. It is clear that your client does not want you to do the appraisal "Subject To". You will need to tell them you cannot do that according to the FHA protocol.

 

[Six Flags]

Is the property marketable in its "as-is" condition? 1" - 2" of water is not what I would consider flooded, it's very typical in vacant homes.

Cost to cure? What will it cost to drain and dry the basement? If the cause is not known it's virtually impossible to provide a cost to fix what isn't known.

What are neighboring houses similar in design and age selling for? Did any of them have water problems? Are there other homes that have sold in the market, but in a different neighborhood with a similar problem? Extend your neighborhood if there is/are any similar sales.

This is a job that will take longer than a cookie cutter, but it also may teach you about appraising.

One other thing, did you discuss and arrive at a scope of work with your client prior to accepting the assignment? Did you understand from the start what they wanted?

Good Luck

The purpose of this assignment is to close out a reverse mortgage which was FHA. The bank just wants to know its current value and requires it "as-is". Because this is not an appraisal to approve lending in an FHA mortgage it isn't necessary to follow FHA protocol in every circumstance. At least this is what I've been told in my scope of work.

I can definately include the cost of draining the basement into the cost to cure.

I think I will comment that hidden costs could exist.

Not sure if there are comps with similar issues, I doubt there are because the subject isn't in a flood zone, nor is it in a neglected area. I will try to find one, maybe as a 4th or 5th sale if its comparable at all.

More advice is appeciated.

 

[RSW]

I would call the HOC and ask them about this if this is the case. I have never had to do an appraisal where it was a close out reverse mortgage deal. I don't think I would insert the FHA case # in the right hand corner of the appraisal report. But, rather I would make reference to it in an addendum page.

I would go on to state that this appraisal report is not being done according to FHA protocol per request of the lender/client.

 

[Happy Val]

Because a typical buyer may not be able to finance, you may need to calculate an entrauprenural (sp?) incentive for a cash only buyer as most banks would not lend on property with such drainage issues.

 

[james stephens]

FHA appraisal, client is requesting "as-is" report only, with any needed repairs itemized and included.

The house is vacant. The basement was flooded wall to wall about 1-2 inches. I could not identify the cause of the flooding (it was probably from heavy rain), I'm not positive on what damage this has caused.

For me, I would consider the "as-is" report as an unacceptable assignment condition. This could likely end up being a big mess that I wouldn't want to get involved with.

If you have to do it you'll have to employ a few EA's. Cause of the flood, extent of damage, cost to cure, mold and mildew problems associated with problem, etc.

If you can... pass on it.

 

[RSW]

For me, I would consider the "as-is" report as an unacceptable assignment condition. This could likely end up being a big mess that I wouldn't want to get involved with.

If you have to do it you'll have to employ a few EA's. Cause of the flood, extent of damage, cost to cure, mold and mildew problems associated with problem, etc.

If you can... pass on it.

I have to agree with you on that. It would be an unaccptable assignment condition as far as I am concerned.