Michigan CG
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There is your answer.
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I need a fast, non-confusing answer :-)
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There is your answer.
Mr Rex
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Thats what I thought too Tim. If George's assertion is true, then Residential Appraisers need not apply for alot of FRT work, its beyond their level of licensure. I'm sure Mr H will be back and clear things up.
Blue1
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Do you have a copy of the tentative map? Will this be 4 separate parcels?
Seems to me if you have the plans/specs and tentative parcel map you should be able to do 'subject to' appraisals and base the lot value subsequent to the proposed split.
Why would you develop an 'as is' value for proposed construction? I must be missing something.
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Mztk1
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AO-17 says:
A current value opinion assignment does not require an appraiser to provide a prospective value opinion. However, so as to not be misleading the appraisal report should clearly indicate the fact that the value of the property that actually exists as of the date of the report would be different from the value concluded for the property with the proposed improvements completed as described in the hypothetical condition(s) used in the appraisal.
I didn't see anything that said you have to state what that "as is" value is exactly, only that it is different.
A current value opinion assignment does not require an appraiser to provide a prospective value opinion. However, so as to not be misleading the appraisal report should clearly indicate the fact that the value of the property that actually exists as of the date of the report would be different from the value concluded for the property with the proposed improvements completed as described in the hypothetical condition(s) used in the appraisal.
I didn't see anything that said you have to state what that "as is" value is exactly, only that it is different.
Farm Gal
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I may be wrong but I ditto Jim... and good catch on the quote...Fannie doesn't NOT want us to do proposed construction... so they are having the cake and swallowing it whole too with regard to the 'no hypothetical's ...
Sorry about the double neg... it has a different connotation than "They DO want us to do proposed/hypotheticals...."
George Hatch
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My comment wasn't meant to be read that the subdivision needed to be appraised - that entire subdivision was never the subject of this assignment. The 4 units presumably only represent a portion of the project as a whole and don't exist as stand alone parcels or pads at this point. Greg didn't say so, but this appraisal assignment is obviously not for a construction loan but for permanent financing.
If your property consisted a subdivided lot or a condo pad and you were appraising it subject to completion of improvements per plans and specs that would be an assignment that needed an "as is". If your subject is part of a subdivision or condo map that hasn't been recorded then that property interest doesn't exist as yet and there's nothing to appraise.
A borrower can't close on and a lender can't put a loan on a property interest that doesn't yet exist. Lenders don't do construction loans on individual units in a subdivision being built by a single developer and they don't put out money on properties that their borrowers don't already own. They either put out a construction loan on the entire project or they will do permanent financing on the finished units subject to the completion of those units. These are two very different types of assignments.
With the case of the individual condo unit in an unfinished building, even if a lender could do a "construction loan" on such a unit, what would be the collateral? Can a lender either encumber or foreclose on a property interest that doesn't exist yet? Of course not.
Meaningful to the intended users. That's what we're shooting for. Trying to do a hypothetical of another hypothetical is way too far removed from "as is" to be meaningful to anyone.
I've done a number of appraisals for FRTs over the years where I made the comment that I was unable to develop an "as is" value for the subject property interest being appraised because it hadn't yet been created. I've never heard a squeek from any of them and I don't anticipate I ever will.
If your property consisted a subdivided lot or a condo pad and you were appraising it subject to completion of improvements per plans and specs that would be an assignment that needed an "as is". If your subject is part of a subdivision or condo map that hasn't been recorded then that property interest doesn't exist as yet and there's nothing to appraise.
A borrower can't close on and a lender can't put a loan on a property interest that doesn't yet exist. Lenders don't do construction loans on individual units in a subdivision being built by a single developer and they don't put out money on properties that their borrowers don't already own. They either put out a construction loan on the entire project or they will do permanent financing on the finished units subject to the completion of those units. These are two very different types of assignments.
With the case of the individual condo unit in an unfinished building, even if a lender could do a "construction loan" on such a unit, what would be the collateral? Can a lender either encumber or foreclose on a property interest that doesn't exist yet? Of course not.
Meaningful to the intended users. That's what we're shooting for. Trying to do a hypothetical of another hypothetical is way too far removed from "as is" to be meaningful to anyone.
I've done a number of appraisals for FRTs over the years where I made the comment that I was unable to develop an "as is" value for the subject property interest being appraised because it hadn't yet been created. I've never heard a squeek from any of them and I don't anticipate I ever will.
George Hatch
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By the way, if my assumptions above were wrong and Greg actually is appraising the entire project then that's a really different assignment; at least as far as an FRT is concerned. Then he would be doing an "as is" of the parent lot, a "subject to" of the subdivision portion and each of the individual pads; and a "subject to" for the finished units.
Incidentally, the value of the project as a whole would probably not be the aggregate of the finished units; there would probably be some discounting involved for the multiple units, absorbtion time, costs of sale, etc. That sort of assignment is definitely outside the scope of practice for a residential appraiser.
Incidentally, the value of the project as a whole would probably not be the aggregate of the finished units; there would probably be some discounting involved for the multiple units, absorbtion time, costs of sale, etc. That sort of assignment is definitely outside the scope of practice for a residential appraiser.
I think I agree with George....but it is too late in day for me to be concise.
It seems to me that if there will be 4 separate properties, you need 4 separate appraisals, done each SUBJECT TO completion per plans and specs and recordation of the subdivision map.
You might be over-thinking this. Talk to your client and see if that is not want they want. The loans will probably be construction-take out loans with the loans sold to Fannie or Freddie when they are completed AS they are completed. So, it does not have to be "as is" until you do the 1004D, or 442.
It seems to me that if there will be 4 separate properties, you need 4 separate appraisals, done each SUBJECT TO completion per plans and specs and recordation of the subdivision map.
You might be over-thinking this. Talk to your client and see if that is not want they want. The loans will probably be construction-take out loans with the loans sold to Fannie or Freddie when they are completed AS they are completed. So, it does not have to be "as is" until you do the 1004D, or 442.
CANative
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Thanks George. Dad too.
Yes. 4 separate loans to 4 separate (supposedly) borrowers/buyers. I got stuck because I have that narrative appraisal of the similar project and it has all 4 values in it. But I see the difference now.
My only real comps for this are those units on Versailles Street in Santa Rosa (65 miles south and 1 County over from the subject).
Yes. 4 separate loans to 4 separate (supposedly) borrowers/buyers. I got stuck because I have that narrative appraisal of the similar project and it has all 4 values in it. But I see the difference now.
My only real comps for this are those units on Versailles Street in Santa Rosa (65 miles south and 1 County over from the subject).
jay trotta
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GB
The developers (which are also the borrowers ... and two of which are being held out as buyers) have tentative map approval and there are utility trunks in place
can U esplain - "tenative map approval" or do U mean a "preliminary site plan-approval" ??
and if it has any approval OR are there "Conditions by the Town" ??
GH, would have to agree with most comments; here we can do 4 lots in a subdivision, beyond that it goes to a commercial guy
The developers (which are also the borrowers ... and two of which are being held out as buyers) have tentative map approval and there are utility trunks in place
can U esplain - "tenative map approval" or do U mean a "preliminary site plan-approval" ??
and if it has any approval OR are there "Conditions by the Town" ??
GH, would have to agree with most comments; here we can do 4 lots in a subdivision, beyond that it goes to a commercial guy
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