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Mixed-use For FHA

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Bill S

Junior Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Illinois
A lender has asked me to perform an appraisal on a mixed-use building (retail/apt). After accepting the assignment I was told it was for an FHA loan. I'm approved with FHA but haven't completed a report for them since my residential days prior to 2006. My question is can this be done in a narrative format and are there special requirements I should be aware of? I'll be going through the handbook but wondered if anyone would care to chime in.

Thanks
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Make sure you are going through the current handbook; it changed a few years ago.

Call your local HOC and ask them about the reporting format; then, inform your client how you will report it to make sure they are fine with it.
(obviously, any narrative report can be reported on a form, but the reporting process can be cumbersome. I review for a client who asks that small apartments be reported on the 71b; the appraisers comply, but the form becomes more or less a cover-sheet for the narrative; in other words, everything in the narrative is reproduced on the form. I spend more time ensuring that the information is consistent between the form and the narrative than I do reviewing the analysis. When there are mistakes, it is due to simple typos).

Good luck!
 

Bill S

Junior Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Illinois
Make sure you are going through the current handbook; it changed a few years ago.

Call your local HOC and ask them about the reporting format; then, inform your client how you will report it to make sure they are fine with it.
(obviously, any narrative report can be reported on a form, but the reporting process can be cumbersome. I review for a client who asks that small apartments be reported on the 71b; the appraisers comply, but the form becomes more or less a cover-sheet for the narrative; in other words, everything in the narrative is reproduced on the form. I spend more time ensuring that the information is consistent between the form and the narrative than I do reviewing the analysis. When there are mistakes, it is due to simple typos).

Good luck!

Thanks Dennis. I provide 71B's for a couple of clients and you are right. By the time you add everything to make them USPAP compliant you have added a significant number of pages.
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
Contact your HOC it's very possible the lender did not know this was a used mixed property when they took the loan application and I was under the belief FHA quit doing mixed use ?
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
To the OP:

Is the subject property part commercial and part residential? The FHA will not accept it if the commercial is more than 25%. Check the 4000.1 handbook.
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
...and I do not think FHA accepts narrative reports...to the dismay of the CG appraisal purists/Gods that think narratives are the only way to provide an opinion of value without sacrificing their soul to the form demons...
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Don't know which gods you may be referring to, but from quickly looking over the 4000.1 handbook, I'd say you are right: A mixed-use property (1-4 unit residential) would need to be reported on the associated residential form, with the mixed-use portion analyzed as part of that form-report.

(The excerpt below does not say that; but reading the handbook regarding appraisal report submission, that is the conclusion I draw)

Below is the mixed-use threshold: At least 51% of the building area must be residential-use.

upload_2018-2-23_14-31-49.png
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
It appears FHA will accept a narrative report, but not for the mixed-use property-type.

upload_2018-2-23_14-35-25.png
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Alien or other life-form structures presumably require a form.

upload_2018-2-23_14-43-49.png
 

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Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
I just find it amusing how the CGs seem to think forms are some "form" of soul stealing threat to their autonomy. While I have limited access to them on a regular basis, the ones I have seen are a whole lot of bloviated "by the pound" justification for their own self importance. While taking my CG classes a major national bank reviewer was in my class as he had moved from a non reciprocal state and had to re-take his classes etc to get a NC license etc. He said he typically threw away 3/4 of the fluff and concentrated on the Std 2 requirements. I learned more about USPAP from him in a few meetings than I had in totality prior. I asked him what narrative software he preferred and he scoffed and said type it on a IBM selectric, just follow the 12 required basic requirements, in order if you want brownie points.(I have not counted recently but it used to be 12)

Not to dismiss narrative reports or to say that forms are the end all solution as obviously they are not. But to constantly propose that a complex residential property can not be properly analyzed and reported on a form is myopic and to a degree self serving (more power to you). As always its a SOW and intended use/user issue. Are forms USPAP compliant? Not on their own in most cases. So does that differ substantially from a narrative report that only is USPAP compliant if the appraiser does their due diligence and makes it so?
 
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