Form 216?

[CATHY ZACCARDELLI]

I have had three appraisals in the last two weeks where the lender has requested form 216. The properties were not to be investment properties. One case was the tenant was purchasing the home. The lender wants us to come up with a rent figure in order to complete the 216. Coming up with a rent figure requires searching MLS for similar properties, etc. Does anyone think I need to do a 1007 before I can complete the 216? I told the lender that I would need to complete a 1007 first and here is the response:

"despite your note requesting 1007, it will not be ordered & we have no current or prospective leases to send you. Please give us a reasonable rent and fill out the rest of the 216 as an opinion or cash flow based upon the form as requested in LOE; which will likely be adjusted by underwriting anyway for income qualifying purposes."

Any thoughts????

 

[Mr Rex]

You could call a few local rental management companies and do a rent survey very quickly to determine a reasonable rent.

 

[Randolph Kinney]

Form 216 needs to have what expenses the landlord had on the property for 12 months. That's why it is called an operating income statement.

Are utilities included as part of the rent the tenant was paying?

Check Craig's List for rentals.

 

[TJSum]

Just charge more to complete the 216 as you need the additional research to come up with a proper market rent. If the client doesn't accept the fee, don't accept the assignment.

 

[CATHY ZACCARDELLI]

Randolph, I totally get that. But the first line of the NOI is what is the yearly rent, less vacancy loss, etc. Isn't giving a rent figure an appraisal of sort? Don't I need a "paper trail" for the "appraisal". Don't I need to adjust for differences in sq footage, garages, basements, etc. in order to get an estimated rent. Its with a 1004 not a 1025. Plus, the property isn't even a rental home, why would they want this form? Maybe I am delving too much into it?

 

[Ca Ar Independent]

Is the fee for the 216 sufficient to allow for the extra work in completing the research in coming up with a market rent for the subject? You still need to do the work, even if they don't want the form! I've never seen this before. I've had 1004 + 1007 and no 216, but never the way you have it. Rents in my area are vastly different from what they were even 6 months ago, and current ACTUAL rents may be very different from those in the file. Work=pay

 

[HF Mudd]

I would charge a fee appropriate to completing the 1007 and 206, complete the 1007 and 206, and keep the 1007 in my workfile while shipping the 206 with the report.

 

[Jill Kinnaird]

Seems to me you're thinking too much. These days it matters not 'why' a client wants a specific service; sometimes they don't even know themselves. They are requesting a service that, though reported in a 'restricted' format, requires you to obtain and analyze data. If the request for the 216 was not included in the original assignment, have them send the 'new assignment' request with the fee for this 'new assignment'.
In the good old days an appraiser could actually talk with the lender to assist with determining if the 216 would be the most cost effective, or even necessary, route to assist with the lenders problem. Of course that was also the time when appraisers where held in high esteem by the clients they had spent years cultivating relationships with.

 

[Corbyn Reece]

Either charge more for the 216 (best option) or simply state "I do not know what a reasonable rent for that area would be"

 

[Financially Feasible]

Either charge more for the 216 (best option) or simply state "I do not know what a reasonable rent for that area would be"

I have a better idea. Either charge more or decline the assignment. Stating what I bolded above, to me, would not put you in a good light with your client. They're asking you to do your job and come up with a rent which, as others have advised, you can do with or without the inclusion (in the report) of the 1007. Further, if the OP does decide to do it this way, I would certainly make reference to the presence of the 1007 in your workfile (in case any questions arise later). You may even want to provide a brief summary of what is on the 1007.

Just my $0.02.