Good, Average, Fair, Poor

[Pamela Crowley (Florida)]

If it's "As-Is" and has a list of repairs with a cost to cure, I would expect to see a condition adjustment in the grid. Otherwise, it should be 'Subject to". The cost to cure has to be considered somewhere in that value.

 

[Frederick R. Ruffell]

Pamela,
I hope you would expect adjustments only to those comparables that would warrant it, i.e. if a difference in condition does in fact exist, and/or where the market recognizes and pays for (+/-) said difference in condition.

 

[Lee Steidel]

Essentially I subtract from the condition of the subject the amount estimated to return it to "average" condition. I grid the cost-to-cure estimate as a separate line item adjustment by using paired sales analysis of a comp with a similar cost to cure and provide a full explanation in the addendum. I also reference an attached separate Photo Addendum labeled "Cost to Cure Photo Addendum" so nothing can be misconstrued and then make the appraisal "as is".

If, for example, there is a health and safety issue like lack of heat, I cover the "subject to" issue by stating that the lender may wish to ascertain whether the property can be sold without heat . However, in most cases I am able to find a fixer/beater that sold without heat to use as a comp for support and adjustment purposes in such an instance.

 

[Pamela Crowley (Florida)]

Pamela,
I hope you would expect adjustments only to those comparables that would warrant it, i.e. if a difference in condition does in fact exist, and/or where the market recognizes and pays for (+/-) said difference in condition.

Of course!

 

[Richard Carlsen]

You have me a little more confused than I normally am afer being up since 5:30am.

Are you giving a value of the property, as it was when you viewed it and including needed cost to make any repairs without considering the added value of the repairs? If so, you are doing an "as is".

If you are considering what repairs need to be made and the added value of those repairs being done, then you have to do it "subject to" since they were not done at the time of inspection but will occur at a later date and add value at that time.

Departure taken in a 2055 with no cost approach in the form has its limitations.

Which is it?

 

[Frederick R. Ruffell]

Richard,
all I am saying is that an appraisal can be done as is and include a cost to cure for those items that need to be cured, if any.

 

[Richard Carlsen]

Got it.

And that is a good service to your client, even if they don't ask for it.

The only drawback I can see is that there may be a tendency of the client to say, "What is the value if the repairs are done?" Then you have another appraisal.

I have this very thing happen once in a while with a lender that insists that any necessary repairs along with a "cost to cure" be included in the report. It is a natural progression for them to then ask on the phone what the value would be if all of the repairs were done. I have to tell them that I don't know, as I did not appraise it that way. What they really would like is two values in one report: "as is" and "subject to". Sometimes, it is a small amount or no change at all but I have seen orders like this where they wanted both that have required a whole new set of comps and a lot of work. My position is that if you want me to do the work, you have to pay me to do the work.

 

[Craig Sewell]

I see my original question has generated substantial discussion, which is always good. Allow me, however, to rephrase my question. Assuming the condition of the house is explained and substantiated with photos and reasonable adjustments, and the value equals or exceeds the sale price, will Fannie Mae make a loan on a property with a fair rating? Yes/no?

 

[Frederick R. Ruffell]

Craig, I do not know

 

[jt]

It Depends! it could be yes or it could be no.