Form Question

[Howard Klahr]

the loan isn't going to the GSE's so the form doesn't matter.

This is wrong as well. If the form doesn't matter if not a GSE transaction then why would it be improper to use the for for an estate assignment, divorce assignment or tax appeal assignment. It is also improper for a hard money loan assignment as well. To do otherwise would be misleading and imply conformance with GSE guidelines/requirements especially since the inedible portions of the form specifically state that they are not to be edited or altered.

The use of the proper form for the proper purpose and the proper property type is a necessary reporting requirement.

A single family structure exists on the site.

Try reading Fannie Mae appraisal guidelines - Fannie Mae will only purchase or securitize a mortgage that represents the highest and best use of the site as improved. For improvements to represent the highest and best use of a site, they must be legally permitted, financially feasible, and physically possible, and must provide more profit than any other use of the site would generate. All of those criteria must be met if the improvements are to be considered as the highest and best use of a site.

... the present improvements contribute to the value of the subject property so that its value is greater than the estimated vacant site value,

 

[Michigan CG]

Duplicate.

 

[Michigan CG]

Only resistance is the lender wants and requested it be a 1004.

Lender or AMC?

Anyone ordering this, a land appraisal, on a 1004 is an IDIOT.

Educate your client.

no disrespect intended to my esteemed colleagues but since when do you pick your form based on HBU? The property is now a developed parcel. If you want to remove the improvements on it there is a significant cost to do that. and it is common in this neighborhood for buyers of similar improved parcels to tear down said improvements. and, if you really think about it the HBU of the property is to be developed with a different nicer house. The HBU is not to leave the land vacant. and, the most relevant comparable sales are other parcels with worthless improvements. all things being equal true vacant lots would be worth a lot more because you would not have to incur the expense of removing the improvements. i think i would be fine with the 1004 as the property really is a crappy house on a nice lot. it is not just a nice vacant lot, as much as everyone would like it to be.

And you would be very, very wrong with this advice.

 

[Amy Perkins]

Land minus demolition costs...Site preparation

 

[timd354]

It is also improper for a hard money loan assignment as well. Why? The GSE appraisal forms are used to report appraisals for loans that are purchased/funded/guaranteed by all kinds of different entities, including hard money lenders, the FHA, VA, portfolio lenders, etc. There is no reason that an appraisal of a 1 unit residential property for a mortgage transaction cannot be reported on the URAR whether or not the loan is ultimately going to Fannie or Freddie.


Try reading Fannie Mae appraisal guidelines - Fannie Mae will only purchase or securitize a mortgage that represents the highest and best use of the site as improved. So what? Whether or not Fannie or Freddie will purcahse or securitize a mortgage is not a dispositive indicator of which appraisal form is appropriate. F&F won't purchase or securitize mortgages that are secured by properties in UAD C6 condition either, but this does not mean that the URAR cannot be used for appraisals of those properties. Sometimes a lender needs an appraisal just to cover the bases when denying a loan or sometimes the lender is going to portfolio a loan and not sell it to the GSE's.

For improvements to represent the highest and best use of a site, they must be legally permitted, financially feasible, and physically possible, and must provide more profit than any other use of the site would generate. All of those criteria must be met if the improvements are to be considered as the highest and best use of a site.

... the present improvements contribute to the value of the subject property so that its value is greater than the estimated vacant site value,

Regarding the original question, yes it sounds like the HBU for the subject property may well be to tear down the existing home and build a substantially larger homes, but so what? There is no reason that such an appraisal cannot be reported on the URAR in a non-misleading manner if the appraiser does an adequate job communicating the results of the appraisal, including the results of the HBU analysis. Remember, forms are not USPAP complant or non-USPAP complant, appraisal reports are and one certainly could communicate the results of an appraisal of the proeprty described by the OP in manner that is credible not misleading to the intended user on the URAR, and that is really the basis of what is required by Standard 2 of USPAP.

 

[Howard Klahr]

There is no reason that such an appraisal cannot be reported on the URAR in a non-misleading manner if the appraiser does an adequate job communicating the results of the appraisal,

So I could also report a multi unit property on a 1004 form with enough narrative in a non-misleading manner or a manufactured home. Heck I could even report a commercial property. However, the use of the proper form for the proper assignment type and the proper property type is a necessary reporting requirement

 

[Mr Rex]

Apples and oranges. The assignment is to value an improved residential property. So 1004 is appropriate. The land form could also be used but there is nothing wrong with using the 1004 form to value a single family residence even if the H&BU is to raze and rebuild.

 

[J Grant]

So I could also report a multi unit property on a 1004 form with enough narrative in a non-misleading manner or a manufactured home. Heck I could even report a commercial property. However, the use of the proper form for the proper assignment type and the proper property type is a necessary reporting requirement

Your example about forms and properties above with a multi family is a bit off. The subject, as exists IS a single family house (even if needing significant repairs) Therefore , it is not misleading to report it on a 1004 form.

Your example of a multi family reported on a 1004 form, the multi family is not a 1004 . While appraiser may conclude the HBU is to tear it down for site as vacant,, the subject on effective date is NOT vacant land. (it could be reported on vacant land form , but client does not want that done, and there is nothing misleading about reporting what exists on an effective date ( a single family house ) on a single family form ( 1004 URAR)

If Fannie Mae rejects the property for collateral, so be it. The client is aware of it the possibility of rejection if appraiser tells client hey it's a C6 HBU looks to be not as improved do you want ot proceed? Client says yes..perhaps because borrower insists on applying for a single family home loan. . Maybe this borrower needs to see financing as a SFR is not possible on this piece of property in this condition.

 

[CANative]

This is wrong as well. If the form doesn't matter if not a GSE transaction then why would it be improper to use the for for an estate assignment, divorce assignment or tax appeal assignment. It is also improper for a hard money loan assignment as well. To do otherwise would be misleading and imply conformance with GSE guidelines/requirements especially since the inedible portions of the form specifically state that they are not to be edited or altered.

The use of the proper form for the proper purpose and the proper property type is a necessary reporting requirement.


Try reading Fannie Mae appraisal guidelines - Fannie Mae will only purchase or securitize a mortgage that represents the highest and best use of the site as improved. For improvements to represent the highest and best use of a site, they must be legally permitted, financially feasible, and physically possible, and must provide more profit than any other use of the site would generate. All of those criteria must be met if the improvements are to be considered as the highest and best use of a site.

... the present improvements contribute to the value of the subject property so that its value is greater than the estimated vacant site value,

Fannie Mae doesn't own the forms and is not the only entity that use these forms.

And don't tell me to "try reading Fannie Mae appraisal guidelines" Howard as I read them almost every day. The forms have a yes or no box for the HBU opinion.

 

[CANative]

Anyone ordering this, a land appraisal, on a 1004 is an IDIOT.

It's a real estate appraisal before it's a "land appraisal." You're not thinking about the appraisal problem in the correct terms.