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Hypothetical Cond/Extra. Assump/Neither?

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Matt McCormick

Thread Starter
Freshman Member
Joined
Nov 9, 2004
Professional Status
Certified Residential Appraiser
State
Oklahoma
I posted a few weeks ago about a property that I am appraising that is on 19.75 acres with the subject property. It is unclear whether the manufactured home is on the 19.75 acres or the adjacent 20 acres (not appraised). and the borrower does not have a survey to indicate one way or the other (manufactured home appears to be permanantly affixed, but not confirmed as it was not inspected).

Here is what the client offered:

"I have spoken with my supervisor about this report. She advised to have you send in the report without valuing the manufactured home. Please add a comment in the addendum that there is a manufactured home near the home however it is not valued in the report because without a survey, you are unable to determine if the manufactured home is on the parcel with the main dwelling. Also state, for this reason, you did not inspect the manufactured home and can not comment on its condition or provide an estimated value."

To which I said:

"Just to make sure that we are on the same page....you want me to value the home + the 19.75 acres and do not value the manufactured home, correct? In order to do this, I have to make it subject to the hypothetical condtion that the manufactured home does not exist OR subject to the extraordinary assumption that the manufactured home does not lie within the 19.75 acres....as well as state that I did not inspect the manufactured home and cannot comment on condition or estimate of value....either way, it is going to have to be "subject to" and want to make sure that you are good with that. Clear as mud? Please advise."

She said that her client does not accept "subject to" appraisals and I told her I would see if there was any way that it could be done "as-is"

Any thoughts on if it can be done "as-is" given the information?
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
Mr. McCormick,

You need to restate if the SOW is asking for 03/2005 Fannie forms or not. This makes a difference due to the prohibition of modifying the SOW preprinted on the those forms.

Please state what this client's reporting parameters are in regards to reporting format.

Webbed.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
You say you don't know which lot it's on so an HC is probably not the way to go. If it's that close of a call, just make the extraordinary assumption that it's not on the appraised lot and complete the report with the "as is" box checked. State that your opinions about value and marketability are subject to change if the EA is proven false. Let the UW figure out how to proceed.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Webby... Not all property is a perfect fit for Fannie Forms. Sometimes we just have to punt.
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
You say you don't know which lot it's on so an HC is probably not the way to go. If it's that close of a call, just make the extraordinary assumption that it's not on the appraised lot and complete the report with the "as is" box checked. State that your opinions about value and marketability are subject to change if the EA is proven false. Let the UW figure out how to proceed.

Mr. Boyd,

I do not know your stand on the 03/2005 forms issues, but I say he cannot do that on a 03/2005 form without using CB4 to do so. My expectation is his client is demanding the use of 03/2005 forms. In that case I would be forced to promptly notifiy them they are requesting a modification of the preprinted SOW and that is prohibited. This is not a USPAP trumps Fannie issue. Fannie wants EA's of that type proven or disproven.

Webbed.
 
Last edited:

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Isnt this a cb 4 under the extraordinary condition that survey inspection would show the manufactured housing improvements not lying within the property boundaries? Wouldnt doing so make the report acceptable to Fannie?
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
P.S.

By the way, with the circumstance being that it is completely unknown if the manufactured home is on the 19.75 acres with the primary house or not, this is NOT a situation where a HC can be used. To use a HC the truth must be known.

The appraiser does not know the truth here. Either the appraiser must find out the truth, or use a EA as long as such EA is allowed per USPAP and SOW. If the client is causing a Catch-22 where this is not possible, then it is game over. The assignment cannot be completed under the demanded SOW. A change in the SOW allowing the use of generic forms might solve it. But not if the client refuses that.

Webbed.
 
Last edited:

DWiley

Elite Member
Joined
Apr 4, 2007
Professional Status
Certified Residential Appraiser
State
Tennessee
Take a look at FAQ 113 in the 2008 USPAP Document.

Appraising only the underlying land does not require use of a hypothetical condition - at least according to the ASB. You simply need to identify your subject property as the site.


Also look a t SR 1-2(e). The subject may be fractional interest, a physical segment, etc.

I would disclose that there may be a manufactured home on the site, but it was not included because the subject of the appraisal is only the site.
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Danny,......I believe the original posting refers to a (one) "home" or "main dwelling" as being on the 19.75 acres. The actual sticking-point to Matt's situation is whether, or not, the known unit of "manufactured housing" that is securely fixed and attached to the earth.....is within the defined and physical boundaries of these SAME 19.75 acres, i.e. there are actually 2 residential structures in seemingly close proximity to each other and the client is asking that the report(er) do the "best as can be done" to negate any impact, whatsoever, that this manufactured home exists there.

P.S. - - Do any of the supporting photographs in the report show the presence of a mfd. home nearby ? The next likely request just might be.....to please remove those photos too.
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
Take a look at FAQ 113 in the 2008 USPAP Document.

Appraising only the underlying land does not require use of a hypothetical condition - at least according to the ASB. You simply need to identify your subject property as the site.


Also look a t SR 1-2(e). The subject may be fractional interest, a physical segment, etc.

I would disclose that there may be a manufactured home on the site, but it was not included because the subject of the appraisal is only the site.

Oh Lordy! Not this one again! ..... I quake in fear that one day a thread will be started discussing Effective Age (EA) and Extraordinary Assumptions (EA) all in the same thread. Then, with all of us using just abbreviations, nobody will understand what anyone is saying. Versus only a few that don't follow what anyone is discussing.

Webbed.
 
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