No Carpet

[Flygirl 152]

Hello,

This is actually one of my first postings here, and your feedback would very much be appreciated.

Did an appraisal on a house that was in overall average+ condition. The house is on a slab and in the living room there was no carpet or flooring, just concrete. The upstairs bathroom had been completely redone, so I asked the owner who is a sheriff if he was in the process of installing new carpet. He said yes that he was, because they found some water damage due to the upstairs bathroom. He said they had done everything through their insurance and that the drywall had been replaced and any mold was taken care of by qualified individuals. The next step was to have new carpet put in.

How would you handle this situation?

Thanks

 

[lmichels]

Hopefully you can find comps with similar minor repair issues. It's very common in our area to see on listings and sales "seller to credit $XXXX at closing for new carpet", or towards siding replacement, etc. A lot of owners are being forced to sell to get out from under mortgages and don't have any money to spare to fix up minor problems in their houses.

My understanding of Fannie Mae guidelines is that missing carpet is not a structural problem, but a cosmetic one. As soon as you find comps with minor issues, you can determine how much the market discounts houses like that.

Alternatively, you can call up the client and let them know that the appraisal might come it higher if the owner installed carpet, and ask them if they want to pay you extra to go back out and re-inspect when the carpet is in.

Take interior photos to cover yourself!

 

[Mike Boyd]

I hope you took photos showing the lack of floor covering. You have two choices: 1. appraise it as is with a cost to cure equal to.......maybe higher, the estimated cost to replace the carpet. Maybe use a figure of $25-30 per yard (square footage divided by 9)
2. Appraise it subject to completion of the floor covering.

You might want to speak with your client, first.

 

[Michigan CG]

Figure out the cost to cure...$2/sf or $18/yd is reasonable if I remember correctly. Minor cost BUT make sure the water problem is really fixed, if they can't afford carpet, did they REALLY fix the water problem?

 

[Oregon Doug]

Sounds like an appraisal for a "refi" of some sort (not a sale). Ask your client what they want. The solution is usually fairly simple, they either an "as is" or an "as repaired" value.

Typically, most market re-sales are of completed homes, so I'm assuming that to be the case here. That means that extracting the subject's market value is pretty straight forward - based on the extraordinary assumption that the subject is completed to typical market norms (carpet & pad installed), which, you know to not be the case.

Although cost & value do not necessarily equate $ for $, you can make some pretty good assumptions that provide an "approximation" of the contributory value of (new) carpet & pad to develop as "as is" value.

You probibly didn't actually measure how much carpet is needed, but the "typical" slab-on-grade, three bedroom, two bath house has about 30% of its GLA as vinyl/tile/... flooring, or about 70% carpet. In this case, it may just be the living room that needs carpet - lets say it is. You know from your measurements (exterior) that the living room is about 16' x 20' (or whatever it is). Thats 320 sq ft or 11.85 sq yards (say 12). The cost of carpet & pad is about $20/sq yard installed (you need to check this in your market) for average plus quality carpet - so 12 yards x $20 = $240.00. If they need more carpet....

So, you can appraise the home with the extordinary assumption that the carpet will be installed (and let the lender figure it out, maybe do a "holdback") or you can do an "as is" appraisal. Ask the client.

In any case, the lender may request a completion inspection from you when the owner says that the job is done.

Oregon Doug

 

[Mike Kennedy]

........carpeting on bare concrete which had water damage due to a "bathroom" leak.............needs more than simply laying a pad and some carpeting......... beware!!!!!