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How do you deal with as-repaired rehab projects when the final result is different than what you pictured?

S is for spittman

Senior Member
Joined
Oct 24, 2005
Professional Status
Certified Residential Appraiser
State
Texas
Have not had it happen yet, but what if the quality of a remodel is inferior (or superior on the other hand) to what you imagined it would be upon final inspection? Do you tell the client you made a mistake and then revise your appraisal? The reason I am asking is because some of the proposals I am seeing are sometimes generic in their descriptions and it can be very difficult to gauge the quality of craftsmanship of some of the contractors if you have never seen their work before. I have an assignment right now. Doesn't look like a full rehab. No mention of any repairs to the roof, flooring, or kitchen.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
When make it "subject to" , state that assumes the work will be of a workmanlike quality per current codes and standards, or similar verbiage. If it turns out superior, fine, comment the quality is very good above average or the like. If it is inferior to the extent that it would affect value, at that point would contact client because might need a new appraisal, or a re do of the work to bring it to acceptable standard.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
The hypothetical in the "subject to completion" is that the work will be completed as per the terms of the proposal. Use of the hypothetical condition in an appraisal *requires* the appraiser to disclose its use and comment that their use might have affected the assignment results.

xiii.JPG

If the terms of the HC aren't met in full it could affect your results. Meaning, the value that goes with the "what is" might be different than value that goes with your original "what if".

"That's not what I appraised"
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
That is why the appraisal is made "subject to" - the loan does not close/fund until the work is done ( and inspected as adequate by appraiser 1004 d completed) -- because if the work is not completed as planned or done in a sub par way, it would be do not pass go- appraiser could call for the work to be re done , - let client know - in case a new appraisal needs be done to reflect impact on value of what was done differently than anticipated.
 

S is for spittman

Senior Member
Joined
Oct 24, 2005
Professional Status
Certified Residential Appraiser
State
Texas
So I'm thinking if I tell the lender the quality and condition are not what I expected and I need to redo the appraisal, then everyone involved will not be happy. And if the contractor has done the work and the loan goes into limbo then who is left holding the bag on that deal? I always make sure to display my extraordinary assumptions prominently throughout the report, but nothing to stop them from suing me if the loan does not get funded. Probably a good idea if I ask for more details than what they sent me. I mean I know it's a small house but descriptions such as "bathroom - tub/toilet/sink/cabinets - $2600" and "kitchen - appliances - $2700" are really vague to me. I'm use to seeing multiple pages of upgrades itemized room by room and telling me the specific material being used (ex. stone countertops vs laminate), but for this assignment all I got was half of 1 page. Really? Kind of hope they don't accept my fee quote now, but if they don't give me the details I want then I'm probably going to end up using comps with the minimal amount of upgrades. If the quality turns out to be better then I won't have to worry about anything.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
You can always make further inquiries. Your info doesn't have to be limited to the list already provided.
 

jay trotta

Elite Member
Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
So I'm thinking if I tell the lender the quality and condition are not what I expected and I need to redo the appraisal, then everyone involved will not be happy. And if the contractor has done the work and the loan goes into limbo then who is left holding the bag on that deal? I always make sure to display my extraordinary assumptions prominently throughout the report, but nothing to stop them from suing me if the loan does not get funded. Probably a good idea if I ask for more details than what they sent me. I mean I know it's a small house but descriptions such as "bathroom - tub/toilet/sink/cabinets - $2600" and "kitchen - appliances - $2700" are really vague to me. I'm use to seeing multiple pages of upgrades itemized room by room and telling me the specific material being used (ex. stone countertops vs laminate), but for this assignment all I got was half of 1 page. Really? Kind of hope they don't accept my fee quote now, but if they don't give me the details I want then I'm probably going to end up using comps with the minimal amount of upgrades. If the quality turns out to be better then I won't have to worry about anything.
Those are probably an allowance, seen that go to the other side of the moon to often; base it on what you have, put the one page in the report and at final, note the differences.
Good Luck
 
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