Log Cabin Appraisal And FHA Lending Issues

[db09jku]

First of all, I don't really do residential appraisal, I am commercial. Also, this is my mothers house that we are selling.

The house is a SFR Log Cabin, built in the early 90's. All the bells and whistles, hard surface countertops, stainless applinaces, HVAC, gas fire place, wood floors, exposed beam ceilings. It has a full rear back screened in porch, metal roof, car port and detached 2 car garage. All utilities, including cable, alarm. The structure is in good shape, with a few issues that we are fixing in regards to maintenance. It has a metal roof. It is located on a lake in northwest Tennessee. As far as amenities and upgrades, this house is in the top 5 houses in the county that it is located in.

We are having a problem with getting it appraised. We have a contract on it, and the buyer is going through FHA at the bank. They have put the appraisal up for bid, but the rotation they are using has not resulted in any appraiser taking the job. There is not a lot of log cabins that have sold, if any, in the immediate area.

I know an appraiser that will do it, but she has not come up on the FHA rotation I guess.

My question I guess, what is going on with log cabins, appraisers and FHA. Is the FHA appraisal of a log cabin scaring away the appraisers? Would a conventional loan cause the same problem with no appraiser wanting to touch it? Any other advise or experience would be appreciated.

Thanks,
DB

 

[Meandering]

it's more an issue with lenders don't want to lend on them.

I don't know why, but if I had to venture a guess,

Logs need more maintenance, which isn't cheap, and FHA is low income buyers, who may not afford all that extra maintenance a vinyl sided ranch does not have.

 

[CANative]

There isn't a rotation. It's lender select. And appraisers don't like doing log houses for the very reason you stated (no comps). It's a PIA and involves double the amount of time an a conventional house. Plus FHA has implemented a new handbook (4000.1) and FHA appraisers (many of them) are frightened of it.

They shouldn't be and especially so with FHA because there is a lot of juice in it regarding housing conformity and other issues involved in appraising a log house.

The problem you describe is complicated by the fact that the three primary comps (1, 2 and 3) must have sold less than 12 months prior to the effective date and in searching for log houses an appraiser might have to go back several years to find sales of similar.

Typical fees in my area (that has a lot of rural woodlands where log houses are not as uncommon as other areas) would be $500. I would charge upwards of $1,000 for a log house FHA assignment. Maybe more.

 

[RSW]

I am in East TN and have appraised many log homes. There are the log homes in the tourist area: Gatlinburg, Pigeon Forge, and Townsend. There are the log homes in Knox county and surrounding counties. Then, there are the log homes in the very rural counties. All three have their own market. The hardest to appraise are the ones in the rural counties due to a lack of sales. I have discussed this with several appraisers in the area and we all agree it is necessary to go into several counties in order to locate log home sales. They tend to be competitive since a potential buyer from out of State may consider those counties if the log home has some acreage. Research time and travel time have to be factored into the appraisal fee alongcwith the updated 4000.1 requirements. Most AMCs or lenders will not want to pay the fee necessary to do an adequate job.

 

[Mr Rex]

There are many factors that play into log home appraisals. If its on a lake or acreage in the woods where it seems to fit versus sitting on a typical residential lot makes a heck of a difference, especially if its as you say in the top 5 houses in the county. If not appropriately sited, the bells and whistles and the extra cost of a log home may not be returned in the market to the typical buyer. So likely the appraisers contacted have done some research and found little to no supporting sales to do the appraisal and declined.

 

[Tru Red]

I agree with CANative. Typically no comps and I live in the mountains near Yosemite. The underwriter seems to always want at least one log cabin sold comparable and since log cabins are not nearly as common as other stick built homes sometimes there are none available unless you go back several years or more. Not worth the time and effort, especially with an FHA or USDA request. If I were to do it, I'd be at a $1,000 or more as well.

 

[Elliott]

Its probably more an issue that you've chosen a lender who chose an AMC that is mildly or significantly incompetent. They are probably broadcasting orders at $250 for a log home and tell you they "can't get an appraiser to do it." I've done log homes, kit and custom, and there is nothing about an FHA request that is so different, but they do require a thorough review of the market.

 

[Terrel L. Shields]

My question I guess, what is going on with log cabins, appraisers and FHA. Is the FHA appraisal of a log cabin scaring away the appraisers?

At $350 no. At $500 no. At $1,000 maybe...if I can find at least two log home comps similar.

You will be stipped to death by the lender. Expect to invest 8 or more hours (at your inconvenience since they expect instant results) extra explaining to morons what a log home is...or isn't.

 

[Meandering]

Logs are just a specialty product.

We have lots of true logs, and custom log builders, and log wood lots to provide the logs, and mills for stripping bark, and then we have log sided homes, which are not reliant on logs for the structural support, and chinking becomes less of an issue, but still affects the R value for insulating the home.

AMCs and Lenders generally can't wrap their head around the quality issues with logs, and the Cost Approach, which may or may not line up with other types of stick built homes, and causes issues when the comps are not also log homes.

The ongoing maintenance of log homes is much higher than other styles. This will additionally limit the pool of potential buyers, and may not be reasonable for buyers who have to qualify their mortgage at the highest LTV just to own, as it won't leave them sufficient funds for maintenance.

I've always tried to get information from the residents concerning the last treatments for
Wood boring insects
exterior sealing of the logs
Chinking - type of chinking used.

Here is a website with a maintenance check list for log homes.
http://www.logcabinrestorationservi...0/Log-Home-Maintenance-Why-is-it-so-IMPORTANT

appraisers would do well to keep a copy in their clip board so they can ask questions during the inspection.

.

 

[JTip]

Find a cash or conventional buyer.

FHA is intended for people to buy 'normal' homes and, with the help of taxpayers, can help buyers afford to buy a home with the nominal 3.5% down payment. It was never intended for luxury, "top 5 in the county" homes with "all the bells and whistles".

A textbook square peg in a round hole situation. Keep on marketing and find a buyer with some money in the bank and a good job.