No sod, "As Is" or "Subject To"

[Six Flags]

Client requires estimated cost to cure.

Do you all develop your own cost to cure estimates or do you simply point out the problems and recommend inspections?

I'm having some difficutly with a client on some recent orders. They want me to estimate the cost to cure for any needed repairs. But, I'm not qualified in making estimates for home repairs. I dont want to be liable for saying it's gonna cost $10,000 to fix a home and then later find out it cost $25,000.

I do have the Marshall and Swift Home Repairs Handbook and there are ways to calculate some costs but it still requires a lot of guess work and assumptions.

In a current report I have a SF FHA reverse mortgage assignment. Tee home has two areas where siding has been torn off the home. There are cracks in the foundation. I've declared the siding as a needed repair and recommended an inspection of the foundation. Since I used comps in similar condition I've appraised AS-IS. But, the client is requiring that I change it to SUBJECT TO and provide a cost to cure estimate.

 

[PropertyEconomics]

Is grass/sod a cosmetic item?

I think its Health and Safety! :Eyecrazy:

 

[Mike Garrett RAA]

A lawn is not a requirement but it does affect the marketability of the property. I would appraise it in "as-is" condition and make an adjustment in the grid.

The HOA could and should make an issue out of the lack of a lawn. I serve on the board of my HOA and we are in the process of doing just that now that we are in the summer months. We cut the home owners some slack during the drought years but now there is no excuse for not maintaining the lawns. On my cul-de-sac there is one non-owner occupied residence and the tenant refuses to water the lawn. Says it costs too much. Guess what...it is costing the home owner (landlord) $75 a month in fines until the situation is corrected.

If I am doing an appraisal of a new built home (new construction) and the builder has not installed landscaping I typically indicate in the report an estimate of the contributory value of the landscaping. In most cases this is from $3,000 to $5,000 for sod. The lender will typically withhold that amount until the sod is put in. Quite often I am required to do a final inspection when the landscaping is completed. This can be as much as 6 months later depending on the time of year.

It's sad when owners neglect lawns as it not only affects their property but also other properties in the neighborhood. If a person doesn't want a lawn they should do zero-scape. My wife and I both have allergies and noxious weeds make the condition worse.

 

[redfish]

Scenario,

Completed new construction for purchase transaction-FHA. Contract details included the placement of sod in front and back with a irrigation system installed. As of inspection this was not done. I made "subject to" not becuase of the FHA requirments but because of the contract.

 

[Mike Garrett RAA]

Scenario,

Completed new construction for purchase transaction-FHA. Contract details included the placement of sod in front and back with a irrigation system installed. As of inspection this was not done. I made "subject to" not becuase of the FHA requirments but because of the contract.

So what happens if the sod can't be put in for several months? Do you hold up the closing?

 

[redfish]

So what happens if the sod can't be put in for several months? Do you hold up the closing?

I have no control over closing. They can close if they want without/with sod. I am not the transaction God. I determine market value and since the contract price and transaction terms included the completion of the landscaping, my market value opinion considered the completion of the home to the specifications laid out in the contract, purchase and build contract. No different than a new construction home missing the flooring in the kitchen.

 

[HF Mudd]

I'm having some difficutly with a client on some recent orders. They want me to estimate the cost to cure for any needed repairs. But, I'm not qualified in making estimates for home repairs. I dont want to be liable for saying it's gonna cost $10,000 to fix a home and then later find out it cost $25,000.

Insert a comment in the addenda stating that you are not an expert in this area and state that your estimated repair costs are subject to an estimate from a licensed contractor.

 

[DMZwerg]

It's sad when owners neglect lawns as it not only affects their property but also other properties in the neighborhood. If a person doesn't want a lawn they should do zero-scape. My wife and I both have allergies and noxious weeds make the condition worse.

I worked on an appraisal for a multi in Milwaukee where the owner wanted to "zero-scape" but the city required a certain percentage ground cover / green. He had a wonderful multi-tier deck in the rear of the property

 

[Webbed Feet]

Do you all develop your own cost to cure estimates or do you simply point out the problems and recommend inspections?

I'm having some difficutly with a client on some recent orders. They want me to estimate the cost to cure for any needed repairs. But, I'm not qualified in making estimates for home repairs. I dont want to be liable for saying it's gonna cost $10,000 to fix a home and then later find out it cost $25,000.

I do have the Marshall and Swift Home Repairs Handbook and there are ways to calculate some costs but it still requires a lot of guess work and assumptions.

In a current report I have a SF FHA reverse mortgage assignment. Tee home has two areas where siding has been torn off the home. There are cracks in the foundation. I've declared the siding as a needed repair and recommended an inspection of the foundation. Since I used comps in similar condition I've appraised AS-IS. But, the client is requiring that I change it to SUBJECT TO and provide a cost to cure estimate.

Brother Molinari,

I have so many issues in this area, and what appraisers do regarding it, that I am almost not sure where to start. We get pressured... we get more pressure, and then more pressure to do stupid .. dumb... dumb.. dumb ... things to solve the problems of other people who are asking us to do things we should not be asked to do just to solve their problems for them. That is what this comes down to. What has happened is most our trade members have self-rationalized their own acts regarding it to justifiy to themselves their need to propagate more business for themselves by caving in to requests that never should have been considered.

Of couse, the ENTIRE issue has ALWAYS been about clients that hire us that do not want to take the time, or pay for the costs, to allow appraisers to hire, or wait for them to be hired and report back, other experts that are truly qualified to answer the unanswered questions. So in reality what is happening is the client is communicating that they want the appraiser to be an expert in all things, and they intend to rely on all things they can manipulate appraisers into stating in real estate appraisal reports. Appraisers think they can respond to this conflict by inserting a disclaimer that basically says..

Yes, I see you want to rely on something I just told you not to rely on, but I agreed to state it for you anyway even knowing you intend to rely on it .... but here it is and as I am saying it is meaningless drivel crap and I 'reserve' the right to later change my meaningless drivel crap into something meaningful once a real expert gets hired... you can't sue me for knowing you intended to rely on a statement that I told you was unreliable. The fact I made the unreliable statement, 'as if it were reliable' knowing you were going to rely on it anyway, is all beside the point as this disclaimer says how unreliable my relied on statement is.

So, do I personally provide my stated unreliable "cost to cure" opinions, after I have clearly informed all the intended users how unreliable my opinions are going to be, as they all prepare rely on them anyway? Not on your life!!!! I very much appreciate your post, and your issue. It is all sumed up in one very clear question... "Cost to cure WHAT?" ... There is a gigantic gap between looking up the cost out of reference source regarding a specific KNOWN particular repair cost.. say replacing a window.. versus unknown costs when looking at foundation cracks. Even the window issue gets murky when we have an unknown reason all the window seals regarding an entire house failed, versus somebody shot the glass with a BB gun. The former demands an EA that the hidden issue that caused 100% of all the window seals to fail be addressed... and how does one "Cost to Cure" such a matter? Answer: We cannot cost to cure what we don't know. Is it "credible" to make an assumption 100% of all the windows were incorrectly installed? Is it credible to make that assumption when that same house has serious foundation cracks? Both answers could be "No."

This brings me to a summation... How did you "As-Is" your value opinion using "comps in similar condition" when there were foundation cracks that were caused by an unknown condition? Fact, you obtained no expert opinion regarding the cause of, repair of, and correction of underlying issue regarding the foundation cracks. You admit you are not qualified in that regard. Yet somehow you managed to use CB1 with an "As-Is" value opinion in the face of that? I suppose you found sales of comparable with similar appearing foundation cracks, one that cost $1,500 in repairs and another that cost $40,000 in repairs, one that did not need repair, and you accounted for all of that then, huh? OH, and AS you opined "AS IS" then NONE of those "comps" were actually repaired prior to closing? Afterall, that would be what "As-Is" would be.... right? The market value of a home without the repairs? So therefore, the "comps" MUST sell and close without the repairs in order to be "comparable." And the "repairs" need to be similar. How did you determine "similar" repairs in comps when you admit you have no idea what is needed, or not needed, regarding repair of those foundation cracks in the subject?

I happen to agree with your client.. that report should have gone out "Subject To" inspection of those foundation cracks using CB4 with an "EA" that all would be found to be well. I don't agree with your client that you, or any other appraiser, should "Cost to Cure" such an item at the same time minus the repair bids / inspections of a third party pro. My stand is there is no such thing as any "disclaimer" that is going to protect any appraiser in a court of law when providing dollar numbers on such things that they pulled out of their tail feathers and then disclaimed the dollar numbers they just stated to that client about to rely on the unreliable. All so the client's staff doesn't have to deal with it and can point at you as to why.

 

[Mike Kennedy]

that report should have gone out "Subject To" inspection of those foundation cracks using CB4 with an "EA" that all would be found to be well. I don't agree with your client that you, or any other appraiser, should "Cost to Cure" such an item at the same time minus the repair bids / inspections of a third party pro. My stand is there is no such thing as any "disclaimer" that is going to protect any appraiser in a court of law when providing dollar numbers on such things that they pulled out of their tail feathers and then disclaimed the dollar numbers they just stated to that client about to rely on the unreliable. All so the client's staff doesn't have to deal with it and can point at you as to why.

a LOUD DITTO !!