Flooring allowance in purchase contract

[Alexx]

I received an FHA request today. The property is a short sale and the home is in average condition. The sellers have given the buyers a flooring allowance to install new carpet and tile, and I believe that the buyer wants the house to be appraised as if it has new flooring.

I believe that you can complete a "subject to" appraisal on an FHA (203b), but I wanted to get some more opinions. I also believe that I am correct in my assumption that there will need to be a recertification of value once the flooring installation has been completed.

Any thoughts?

 

[RSW]

It is not up to the appraiser to mandate the terms of the contract. The appraiser is to report what is there and if it meets HUD's min. requrements. Floor coverings is considered to be cosmetic now and does not call for repair.

 

[stefan olafson]

I agree with Scott, FHA doesn't really care about cosmetics any longer. What is in the contract? What is the allowance? Does it cover the cost? Do you really care? If it's a short sale, then your value may well exceed the purchase price in the first place.

Check out the new FHA requirements.

 

[William K]

I received an FHA request today. The property is a short sale and the home is in average condition. The sellers have given the buyers a flooring allowance to install new carpet and tile, and I believe that the buyer wants the house to be appraised as if it has new flooring.

I believe that you can complete a "subject to" appraisal on an FHA (203b), but I wanted to get some more opinions. I also believe that I am correct in my assumption that there will need to be a recertification of value once the flooring installation has been completed.

Any thoughts?

MY BOLD

Why do you care what the buyer wants? Is the buyer your client? Since it is an FHA appraisal I can answer ,NO!
Does your client want it to be done "subject to"?
No recertification's of value on FHA appraisals!
They are Good for 6 months.
Carpeting is considered to be cosmetic now in the eyes of FHA, but since you accepted the assignment as a competent FHA appraiser you knew this.

 

[Mr Rex]

If the contract includes a provision for new flooring then that means the buyer is paying for new carpeting via the allowance. Sure FHA doesn't care about cosmetics, but they do care that they are insuring what the buyer is paying for within the contract. Subject to.

 

[realbiz]

Do not appraise the property as if the carpet was installed, unless you make the report "subject to". What happens if the buyer uses the money for something else, and never install the new carpet? Appraise the property in its current condition, like said above if its truly a short sale value should be no problem. FHA has done interior reviews in the past. I have not seen it in a while, but I sure this will start up again soon.

 

[Mr Rex]

You folks are missing the boat. If the contract included an allowance for a 12 x 12 deck to replace a set of perfectly safe and sound steps, then you wouldn't be clouding the issue with cosmetics. Subject to. The contract price includes new flooring via an allowance. The buyer could and would have offered and contracted for a lower price without the new flooring. Subject to.

 

[RSW]

It is not our job as an appraiser to enforce the terms of a contract.

 

[William K]

OK, lets try this. It is what it is. If they were giving a car as incentive to purchase would you then make it subject to them getting the car? Appraise it "as-is" your job is to present an Opinion of Market Value. If they are giving $20,000 as a credit it wouldn't affect the value just the price! Just remember if you use it as a comp there was a concession! Remember we adjust the comp to the subject not the subject to the comp!

 

[RSW]

Good Point!