Is the assignment type a Purchase?

[Mike Ault]

FHA said it had to be done as a purchase believe it or not. I wrote a small novel as to why I thought that was wrong.

Then the owner needs to fix the title so you can represent the transaction that way in your appraisal.

 

[sputnam]

FHA said it had to be done as a purchase believe it or not. I wrote a small novel as to why I thought that was wrong.

From an appraiser point of view... FHA is wrong. However, if the borrower is seeking an FHA loan, FHA makes the rules. Instead of a novel, just check the purchase box and then explain when you analyze the purchase contract.

 

[Larry Phillips]

Good morning, I advocate for first deciding the overall goal of the assignment , then how to best accomplish that goal within USPAP constraints. You have the option of using comments to expand upon any facet of the appraisal report. In this instance, it is possible to check the "Purchase" box, then explain in comments the situation in sufficient detail to allow the reader to understand what is happening. Appraisal fees do not typically include "combat pay", so work toward the common goal. The typical objective is to provide a credible opinion of value, which the client can use in a lending decision.

 

[Mark K]

I know I'm a bit late to the party here but I find myself in the unenviable position of appraising a single-wide MH on 1/2 acre of low-lying (almost swamp land) on well and septic with no municipal utilities nearby. The owner is renting it to a tenant for $800/month so I came to this part of the forum to look around.

IMO, it (the OP's scenario) is little more than a matter of semantics. If the client wants to call it a 'purchase', call it a purchase. This is not a hill worth fighting over, much less dying on. I suspect that it won't have any effect on the final appraised value so appraise it as asked. I know the banks I work(ed) for would call it a construction loan but if they wanted to call it a purchase, so be it.

 

[Anna Richardson]

This is a construction permanent (refinance). You will appraise the land with a new manufactured home on a permanent foundation. There will be a final inspection required at the time the manufactured home is situated permanently on the site. He owns the land so the purchase will be for the manufactured home only and they should be giving you the plans for that improvement. A cost approach will be completed showing the land value and the improvement value. The value rendered will be for both. You will state on the front of URAR that the borrower is the owner of the land and the purchase is only for the improvements. The value you render is for both.

 

[Anna Richardson]

If the old manufactured home is located on the land at the time the field work is completed it will be the land value minus the cost to remove the old manufactured home. No old houses on this one. By the way AppraiserUSA, I am not a freshman on this website as I joined in 2017 five year ago. LOL

 

[alebrewer]

Refinance. We appraise the land... and whatever happens to be (or was or will be) attached to it. It's the same as if a property owner contracted with a builder to site-build a dwelling on the property. The difference is that the dwelling is mostly built when it arrives at the site.

Normally I treat those as construction loans under 'other'. So long as one explains what is happening, though, I think it's just semantics.

 

[CGinMN]

It’s refi or other-construction loan. It’s not a purchase is the borrower already owns the land. It's time to escalate within the AMC and get someone who knows what they’re talking about involved.

 

[Mark K]

Normally I treat those as construction loans under 'other'. So long as one explains what is happening, though, I think it's just semantics.

Exactly. I realize that the loan terms can be less favorable for refi and/or const loans, hence the lender wanting to call it a purchase. However, unless it has an effect on appraised value, I'd do as asked by the lender in this gray area.

 

[Mike Ault]

Exactly. I realize that the loan terms can be less favorable for refi and/or const loans, hence the lender wanting to call it a purchase. However, unless it has an effect on appraised value, I'd do as asked by the lender in this gray area.

Given that the loan terms are less favorable for refi and/or construction loans, wouldn't the ultimate investor in the loan being supported by an appraisal under this scenario be unhappy if the loan was misrepresented as a "purchase"? Unless "the client" is holding the paper on those loans, their desires don't matter. Checkboxes on the appraisal form have a long shelf life...