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Is It Soup Yet?

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Blue1

Elite Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
California
I keep getting these........Proposed construction.....Do the appraisal 'subject to' get called out a few weeks later to to a 'final' inspection. Invariably, the thing is not finished. Just had one........Was supposed to be finished BEFORE I went out (3 weeks ago).....You guessed it.....No cabinets, no flooring, no fixtures, on and on and on......Contractor told the client that it was finished. Made the appraisal 'subject to."

Well.........NOW 3 weeks later, I get a Certificate of Occupancy FAXED to me (I called for it in the appraisal)....I got out there and...WHATDYAKNOW? 5 guys working on the baseboards, touch up painting, front door weather stripping, etc.

I say....It's still not soup yet.......What say you all?
 

Tom Barclay

Senior Member
Joined
Apr 7, 2002
Professional Status
Retired Appraiser
State
Oregon
I bill 'em every time I go out. It's $100, and I don't really care if it's done. It's not my house, not my loan. I have written instructions to inspect. If it takes them three times to get it right, so be it.
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
I tend not to worry about the builders punch list items. These are generally small and in the big scheme of things relatively minor. The C of O is the biggie for me. Without it, the value of the property is greatly reduced.

So if they are still priming and painting or finishing construction of some sort, it's not finished in my book. But if they are touching up and taking care of the punch list, I say it is done enough for me.
 

Steve Wyrick

Member
Joined
Aug 15, 2003
Professional Status
Certified General Appraiser
State
California
I charged for the appraisal made it subject to completion of plans and specs with final permit and occupancy certification. If the builder calls, we talk about what is left to do, if there is something like final paint, concrete drive work or landscaping to be done I tell them get it done and call me. I charge $75 for 442 and if I have to go out twice, well that is $150 and it is easy work.

Love 442 proposed construction.
 

xm39hnu

Senior Member
Joined
Jul 10, 2003
Professional Status
General Public
State
Florida
Would someone mind sending me a copy of that 442 form? I've looked all over the web for it, and I can't find one.

I've had three out of town lenders on new construction request it, and we couldn't provide the form, just the information. Didn't seem to cause much of a problem, but I don't like to disturb bureaucrats.
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
What software do you use? Your software might have it listed as the Satisfactory Completion Certificate or other similar name. The number 442 is in very tiny print at the bottom, left hand side. If they have a choice of the bottom of the page being blank--choose that! The 442 was developed in 1989 prior to the adoption of USPAP and recertification of values have not existed for Fannie Mae since 1990. So if the bottom of the form has the recertification of value statements-DO NOT USE that section of the form--or choose one that is blank on the bottom.
 

Ghost Rider

Senior Member
Joined
Apr 27, 2003
Professional Status
Banking/Mortgage Industry
State
Connecticut
The Certificate of Occupancy is worthless as far as I'm concerned when it comes to "completed" construction. The building inspectors will look for things to be build as per local building codes, and make sure there are no health and safety risks. I've seen homes without finished flooring that have a C.O.....Does that make the home complete?? Nope......I'll look past the little things, like little pieces of trim;/moulding that have not been installed, or little touch up paint and minor punch list items, but I won't sign off on a house being complete just because they got a C.O.
 

xm39hnu

Senior Member
Joined
Jul 10, 2003
Professional Status
General Public
State
Florida
Originally posted by Jo Ann Meyer Stratton@Aug 28 2003, 08:18 AM
What software do you use? Your software might have it listed as the Satisfactory Completion Certificate or other similar name. The number 442 is in very tiny print at the bottom, left hand side. If they have a choice of the bottom of the page being blank--choose that! The 442 was developed in 1989 prior to the adoption of USPAP and recertification of values have not existed for Fannie Mae since 1990. So if the bottom of the form has the recertification of value statements-DO NOT USE that section of the form--or choose one that is blank on the bottom.
Thanks for the info, JoAnn. If that's the case, then please disregard the request. I won't use an outdated form, especially one which has the potential to be in conflict with USPAP. (1004 is bad enough.) I'll simply tell any who request it that the form is no longer available, and ask what specific information they require. Any client dumb enough to insist on an outdated form is not one that I'm interested in retaining on my client list.
 

Steve Forstner

Junior Member
Joined
Aug 18, 2003
Professional Status
Certified Residential Appraiser
State
Michigan
It isn't uncommon to have to make more than one trip on a new construction. It depends on how the lender sets up the loan and how much capital and credit the builder has behind him. Sometimes the loans are set up with multiple draws for the builder. 20 to 30% up front, with another payment when a certain stage has been reached, etc. If there is more than one draw of funds by the builder, the lender may want someone to look at the property each time and determine how much work has been done. Definitely bill them each time you have to go out.

I've got one client that did it that way for years. Then they started using a service to do the in between inspections and just have me in for the final.

Steve
 
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Montana
Be aware of the 2% rule that went into effect in June Last Year

From the selling guide:

For new or proposed construction, an appraisal may be based on either plans and specifications or an existing model home, if the lender obtains a certification of completion before it delivers the mortgage to us. This certification should be completed by the appraiser, state that the improvements were completed in accordance with the requirements and conditions in the original appraisal report, and be accompanied by photographs of the completed improvements.

When the completion of certain items that are included as part of the sales contract-such as landscaping, a driveway, or a sidewalk-or other minor items that do not affect the ability to obtain an occupancy permit has to be postponed for some reason, the lender may deliver the mortgage before these postponed items are completed if it represents and warrants that the postponed improvements will be completed within 180 days after the date of the mortgage note. The appraisal report must show both the cost of completing the postponed items and the "as completed" value of the property after completion of the postponed improvements, although no dollar-for-dollar adjustments should be made. The cost of completing any minor improvements must not represent more that 2 % of the "as completed" appraised value of the property.

- The lender must establish a "completion escrow" for the postponed improvements, by withholding from the purchase proceeds funds equal to 120% of the estimated cost for completing the improvements. However, if the contractor or builder offers a guaranteed "fixed price" contract for completion of the improvements, the funds in the "completion escrow" only need to equal the full amount of the contract price.

- The lender and the borrower must enter into an escrow agreement that determines how the lender will manage and disburse funds from the escrow account. Once a certificate of completion is obtained, the lender must release the final draw from the escrow account (which should include any funds in excess of the amount needed to pay for completion of the postponed items). The final title report must not show any outstanding mechanic's liens or take any exceptions to the postponed improvements or the escrow agreement. If the final title report is issued before the completion of the improvements, the lender must obtain an endorsement to the title policy that ensures the priority of our lien.
 
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