Flooded Basement, as-is value.

[23Degrees]

I would not touch this if an "as is" report was required. That being said, if you are not bound by FHA guidelines and you are willing to proceed "as is" I have some thoughts that at least in part are due to my recent visit to the DeSaix University of "cost to cure" in a recent thread:

Do not come to the "as is" value by applying a cost to cure within the market grid that is based on a cost estimate. If the lender requires a cost to cure (hopefully you are being adequately compensated to determine this) then by all means, include it within the report, but not in the sales grid where the adjustments are being based on market effect, not cost. What you need to determine is the market effect of the flooded basement and related damage and adjust within the grid for it. You indicate you might have some comparables with a similar condition. This sounds like a lucky and good start. You might want to consider locating and contacting agents in the area who have dealt with this issue and ask them for their read on gauging market effect from this condition. Perhaps your MLS will let you screen for terms like "flooded" thru the years and you can develop a market effect based on historical data as well.

While I sit back and see if I get a passing grade on that I will say that if you do proceed "as is" give full consideration to any potential liability you could acquire if your cost estimates turn out to be way off or your determination of market effect was underestimated based on the actual condition of the home once the water was removed and everyone gets to see the bottom.

 

[Six Flags]

I would not touch this if an "as is" report was required. That being said, if you are not bound by FHA guidelines and you are willing to proceed "as is" I have some thoughts that at least in part are due to my recent visit to the DeSaix University of "cost to cure" in a recent thread:

Do not come to the "as is" value by applying a cost to cure within the market grid that is based on a cost estimate. If the lender requires a cost to cure (hopefully you are being adequately compensated to determine this) then by all means, include it within the report, but not in the sales grid where the adjustments are being based on market effect, not cost. What you need to determine is the market effect of the flooded basement and related damage and adjust within the grid for it. You indicate you might have some comparables with a similar condition. This sounds like a lucky and good start. You might want to consider locating and contacting agents in the area who have dealt with this issue and ask them for their read on gauging market effect from this condition. Perhaps your MLS will let you screen for terms like "flooded" thru the years and you can develop a market effect based on historical data as well.

While I sit back and see if I get a passing grade on that I will say that if you do proceed "as is" give full consideration to any potential liability you could acquire if your cost estimates turn out to be way off or your determination of market effect was underestimated based on the actual condition of the home once the water was removed and everyone gets to see the bottom.

I dont have any market data to formulate the effect the flooding has on the property. I did not find any comps in similar condition. I am using cost manuals and online calculators to estimate the needed repairs and I'm documenting all my sources. I'm also calling for inspections by professional contractors to verify the scope of damage. I've also stated that the needed repairs/cost does not include any hidden repairs not seen or discovered during the inspection based upon limited access to the damaged area's.

What I intent to do, and the way I've done it before is to base the sales approach on the extroadinary assumption that the subject is in average condition (with no needed repairs). I then report the appraised value in the sales approach. I then subtract the cost to cure from the sales approach value to give me my "as-is" value. I report this as my final estimate of value. So basically my sales approach value is the "as-repaired" value and the final appraised value is my "as-is" value. As I stated, I've done similar assignments with similar SOW this way before and it was acceptable by the client.

Does anyone else do it this way? Or does everyone make an adjustment in the sales approach grid?

 

[Six Flags]

I also need a way to estimate the cost to remove the water from the basement itself.

I have the MS/B Repair Handbook but there isn't pricing for this type of damage. I haven't found anything online yet either.

The basement is 819 sq.ft. The water is approximately 1-2 inches deep from wall to wall.

I've never had to pump water from a basement but I suppose I could do it with a shop-vac and a free afternoon. But, I have to have a source and document my pricing. Any idea's?

If I cant find anything online I will call some local places that do it and try to get a quote over the phone.

 

[CANative]

It's some water in the basement for goodness sake. Probably from all the rain we've had. It's reasonable to assume the water will receded when things dry out.

Complete the appaisal under an EA that no changes or alterations are necessary and condition the appraisal on inspection. The value is "as is" as long as the assumption is true. It's up to the client to decide how to procede from this point. You have given them some choices.

 

[Michigan CG]

Lenny,

You might be overthinking this. Is there a sump pump? Does it work? Two inches of water in a cement basement might only have the damage of a water mark.

Market reaction? You will not find it and most likely unless there is damage you will not be able to measure it.

Ever had water in your basement? I had a foot of water in my basement once because of a failed sump pump. Didn't affect the value at all.

 

[23Degrees]

If he makes an EA and calls for inspections he's checking CB4. Client wants CB1. With CB1 you would indicate a market effect if present, or no market effect due to the situation. If he's confident its no big deal then go for it. Cite C2C if needed - off grid. Not sure I see the need to subtract C2C in recon if there is no market effect.

 

[Six Flags]

Lenny,

You might be overthinking this. Is there a sump pump? Does it work? Two inches of water in a cement basement might only have the damage of a water mark.

Market reaction? You will not find it and most likely unless there is damage you will not be able to measure it.

Ever had water in your basement? I had a foot of water in my basement once because of a failed sump pump. Didn't affect the value at all.

There is no sump pump. There is standing 1-2 inches of water in a full below ground unfinished basement. I believe it's been from heavy rain, but it has not rained in days.

I thought to include a sump pump installation in the c2c but now I believe that's not necessary.

I'd like to omit the "removal of water" from the needed repairs all together and just state that the water in the basement is a natural occurance which will recover on its own. But, I dont think thats the case. The property is not in a flood zone. There is no sump pump to correct flooding and obviously no adequate drainage. There is standing water in the basement from wall to wall, that to me is a problem which needs to be corrected.

 

[CANative]

They don't want CB1. They want an appraisal with no conditions. You can't do that unless you're prepared to take the responsibility for any adverse affect caused by the water in the basement or damages caused by a basement flooding going forward. At this point you don't know so you really can't make a unilateral decision to accept responsibility.

FHA is simple because the handbooks and protocols limit what you can and can't do.

 

[Mr Rex]

Find market value for like properties without wet basements. Provide a cost to cure to include exterior waterproofing and installation of subsurface drainage and interior installation of a sump pump, then add incentive costs to come up with your "market reaction" adjustment for "As Is". Stop trying to minimize the issue, you are liable for things with your signature. MHO

 

[CANative]

There was four feet of water in my basement last week. Today the basement is bone dry. It's been doing that since Rutherford B. Hayes was in office.