• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Lender is asking to change report type to "as is"

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Certified Residential Appraiser
State
California
Fannie/Freddie/FHA will not allow a C2C to serve as a replacement for an issue that may adversely affect the livability, soundness or structural integrity. It sez so right on the forms.

If the say "It's not going to Fannie or Freddie" then tell them they don't need the Fannie Form and you can write it on some other form, state "As Is" and disclose the EA.

I doubt if they will like that option. Do you like this client?
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
The scope of work can change
Only the appraiser can change it, rather agree to change it
They could be in violation of asking you to provide something that might not be credible or undue influence.
How so? Every bank is REQUIRED by the IAG to provide an AS IS value in addition to any hypothetical value, subject to value, etc. Secondary market is another animal entirely.
no such comps exist
They exist somewhere, maybe not the subdivision. But you can find something somewhere if you spend enough energy to find it, extract it, etc. That's one way to quantify the defect. The other is the C2C estimate, which you are probably not equipped to do, but your third option is to withdraw from the assignment.

My bank clients make it explicit. They want an as is value always. The issue of as proposed or subject to is not 'as is'
1576734674214.png
 
Last edited:

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
So the conundrum is they want an AS-IS, even though you have what seems to be a serious structural deficiency. If you'r able to arrive at an as-is without aide of another professional, then first you must arrive at an AS-Repaired, in spite of they don't want it. You can have that inside your work file. The As-Repaired should be relatively easy. The AS-IS no doubt is going to be difficult to quantify.

For me the reason I think its important to develop the AS-Repaired first(for your work file) is because its the reference point to go downward for the AS-IS. Cost of the Repair from your description will be very high because it includes the cost of demolition, permitting, licensed contractor(s) etc Search for REO sale data and that particular REO's as-repaired comparable. It does not matter if the REO/REPAIRED matched pair are similar to your subject Economically. Maybe you can bracket your subject with multiple matched pairs. All that quantifiable amount can be changed to a percentage adjustment,
.
Since the AS-IS will have inherent error because they don't want a professional estimate to cure.then I would error/lean on the AS-IS to the lower side of the MV range in your final reconciliation.

Something to seriously consider and include in your report is Strong Undeniable Notification of the Defect you observed. Some things you would have to say i.e The absence of any Local required permits for this addition. This would not just address the overall addition Construction permits, but also the absence of Electrical Permits and maybe even Plumbing permits. Another comment may possibly be a DIY addition. That's a huge Red Flag. The absence of any record of Controlling municipal code Inspections. You know they have to have a record at the controlling municipality, even if its just for Tax assessment purposes.

You might want to seriously consider asking for a Fee Increase. This assignment had unknowns that if you had been aware of would have resulted in a higher Fee Quote at the on-set.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
.The subject value can be AS IS, the appraiser wants to make it subject to inspection as a possible safety issue, which is a different reason than the valuation aspect. I have done REO appraisals where the lender did not want to make repairs, however there was always an as is and an as repaired value and because it was an REO in house use on a vacant property..

this is an equity loan where HO is living in the house or might rent it or sell it and someone else move in...kids living there? Visiting? ceiling falls on their head? Who are they going to blame...good old appraiser ...if appraiser truly believes this is a safety issue they do not need to back down, they might lose a client but some clients are worth losing. If they think it is a surface crack and just CYA with an inspection that is not reason to make subject to...
 

alebrewer

Member
Gold Supporting Member
Joined
Mar 11, 2008
Professional Status
Certified Residential Appraiser
State
Texas
Of course the appraisal can be done 'as is' with recommendation of inspection for any areas that 'might' present a structural concern. The only potential issue, at least as regards USPAP, is that, if you choose to invoke an EA, you must have reasonable basis for the extraordinary assumption (check out FAQ's 232-243). IF, in your opinion, there is reasonable basis to make an EA that the damage is cosmetic, and not structural, you can invoke the EA. If that is not your opinion, I'd probably recuse myself. An earlier poster was correct in that you cannot unsee what you've seen. Making an EA about structural soundness on a property where you've not done a personal inspection is a bit different than invoking one where you have done the inspection... at least that's my take on the issue.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
I recall another story about the perils of the unknown or hidden defects. Years ago I did a pending sale and it had a new basement floor and nice new plywood wall in the basement, along with a shinny new sump pump. It also had a funny little 'bump' in the hallway. So I call the realtor and she says, "They had a leak from a spring, but its not a problem anymore." Fast forward two years and I'm being dragged into an arbitration hearing. I bring my report and there are 30 people in a conference room, 20 lawyers and secretaries and 10 plaintiffs and witnesses. I was also tasked to look at the subject in its "current condition." When I arrive it is a scene from Apocalypse Now, 20 worklights under the house, 15 screw jacks lifting the house 4 feet, 12 footing boxes filled with fresh concrete and a sea of mud under the house. I was asked a few questions and dismissed. The realtor's insurance fund paid 6-figures for it all . It was a good lesson to ask questions and report. Had I not mentioned the bump in the hallway and asked the realtor for an explanation, I probably would have been sued too. There is no advantage to an appraiser in not reporting all that is wrong or unusual about a property.
 

Bill75

Thread Starter
Junior Member
Supporting Member
Joined
Dec 18, 2015
Professional Status
Certified Residential Appraiser
State
Texas
Fannie/Freddie/FHA will not allow a C2C to serve as a replacement for an issue that may adversely affect the livability, soundness or structural integrity. It sez so right on the forms.

If the say "It's not going to Fannie or Freddie" then tell them they don't need the Fannie Form and you can write it on some other form, state "As Is" and disclose the EA.

I doubt if they will like that option. Do you like this client?
It's an AMC, and the lender is my personal bank for both my business and personal accounts. I like the lender, not so much the AMC.
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
"AS IS " and Recommend Lender Obtain a Inspection but not make it Subject To the inspections. You have no liability as you disclosed it and also advised the lender of the condition.
 

Bill75

Thread Starter
Junior Member
Supporting Member
Joined
Dec 18, 2015
Professional Status
Certified Residential Appraiser
State
Texas
.The subject value can be AS IS, the appraiser wants to make it subject to inspection as a possible safety issue, which is a different reason than the valuation aspect. I have done REO appraisals where the lender did not want to make repairs, however there was always an as is and an as repaired value and because it was an REO in house use on a vacant property..

this is an equity loan where HO is living in the house or might rent it or sell it and someone else move in...kids living there? Visiting? ceiling falls on their head? Who are they going to blame...good old appraiser ...if appraiser truly believes this is a safety issue they do not need to back down, they might lose a client but some clients are worth losing. If they think it is a surface crack and just CYA with an inspection that is not reason to make subject to...
It's more of the valuation aspect, I believe that a prospective buyer will see this and offer less based on what they see.
 

Bill75

Thread Starter
Junior Member
Supporting Member
Joined
Dec 18, 2015
Professional Status
Certified Residential Appraiser
State
Texas
"AS IS " and Recommend Lender Obtain a Inspection but not make it Subject To the inspections. You have no liability as you disclosed it and also advised the lender of the condition.
What if they never get an inspection and the owners try an sell in a year and can't get what they are asking...
 
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks