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Non-conforming Use; Non-permitted Additions, Non-HBU . HUD Loan

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ZZGAMAZZ

Senior Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
Intended use to provide market data upon which a property owner will determine whether to market a SFR (purchased 24 months ago with FHA financing), and in doing so, critique a realtor's very recent CMA.

Underlying issues:

--parcel is "legal non-conforming" per City Planning based on CG zoning that excludes SFR improvements, although re-build rights are inherent;

--NDCDATA stats confirmed by City and County, of 1BR, 1BR, 684 sqft, relative to my inspection of 2BR/2BR, 1,100 sqft (with no additions during current ownership); consequently, a large portion of the SFR is defined as a non-permitted addition;

Questions:
--Can one assume that the appraisal report upon which HUD financing obtained by the current owner was based included a HBU analysis that would have flagged the existing improvements as non legally permissible?

--Do HUD guidelines require an appraiser to determine market response to a non-permitted addition if it appears to have been built in the proverbial "workmanlike manner"? Does it matter that a non-permitted addition is a predominant factor, in this assignment because of the impact on GLA as well as bed/bath count?

--Would peers address the potential health & safety hazards inherent in non-permitted areas and/or potential insurability issues?

--Should a critique of the realtor's CMA--an assignment condition--be included in the appraisal report?

How the heck would an appraiser trying to provide the property owner with the right answers be able to explain how those issues do not appear to have been addressed when he purchased the property 24 months ago?
 
Last edited:

jay trotta

Elite Member
Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
Intended use to provide market data upon which a property owner will determine whether to market a SFR (purchased 24 months ago with FHA financing), and in doing so, critique a realtor's very recent CMA.

Underlying issues:

--parcel is "legal non-conforming" per City Planning based on CG zoning that excludes SFR improvements, although re-build rights are inherent;

--NDCDATA stats confirmed by City and County, of 1BR, 1BR, 684 sqft, relative to my inspection of 2BR/2BR, 1,100 sqft (with no additions during current ownership); consequently, a large portion of the SFR is defined as a non-permitted addition;

Questions:
--Can one assume that the appraisal report upon which HUD financing obtained by the current owner was based included a HBU analysis that would have flagged the existing improvements as non legally permissible?

--Do HUD guidelines require an appraiser to determine market response to a non-permitted addition if it appears to have been built in the proverbial "workmanlike manner"? Does it matter that a non-permitted addition is a predominant factor, in this assignment because of the impact on GLA as well as bed/bath count?

--Would peers address the potential health & safety hazards inherent in non-permitted areas and/or potential insurability issues?

--Should a critique of the realtor's CMA--an assignment condition--be included in the appraisal report?

How the heck would an appraiser trying to provide the property owner with the right answers be able to explain how those issues do not appear to have been addressed when he purchased the property 24 months ago?

My Bold; perhaps I misunderstand, but is this a 2 family ? you do note a SFR ? IMO, would you not have to view the original appraisal ? Before getting into the balance of your question ?
 

ZZGAMAZZ

Senior Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
My Bold; perhaps I misunderstand, but is this a 2 family ? you do note a SFR ? IMO, would you not have to view the original appraisal ? Before getting into the balance of your question ?

Error of omission: The addition resulted in a SFR with 2 bedroom suites.

Comment: I'm not familiar with FHA underwriting; do review appraiser/employees work for HUD?
 

AMF13

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
--Should a critique of the realtor's CMA--an assignment condition--be included in the appraisal report?

How the heck would an appraiser trying to provide the property owner with the right answers be able to explain how those issues do not appear to have been addressed when he purchased the property 24 months ago?

1. I would not critique their work, but if it is an assignment condtion, then I guess you agreed to do that..
2. I cannot address something someone else did 2 years ago, with this scope of work, and without seeing it. To do that would require an additional stiff fee.
 

Rob Frazier

Sophomore Member
Joined
Jul 6, 2005
Professional Status
Certified General Appraiser
State
Maryland
Best advice ever when I was young and facing a really messed up property - "Follow the appraisal process step by step and you can solve any problem" So . What is the highest and best use? To determine that you may have to check with the municipality and see if they would allow present improvents to continue. If so, now look at what you have: a 2 bedroom with grandfathered zoning. Is that the highest and best use? If the present improvements need to be inspected and brought to code, what is that cost? What's the highest and best use now? If the improvements have to be removed or reduced to the original foot print, you have a 1 bedroom house with grandfathered zoning. Whats the highest and best use now? By the way, do the highest and best use as if vacant first. It is then available to compare to the alternate as improved studies.

The beauty of the appraisal process is that if you follow it one step at a time, you will be able to proceed through the analysis and reach a supportable conclusion. In your example, I suspect it will take lots of time and cost lots of money (if the owner is willing to pay) but once you are done, you will be confident in your analysis. You may lose money on this job but I don't know any really good appraisers who got really rich doing appraisals. We did become smug, self satisfied and ready to argue for our opinion against all comers. There is a lifetime of satisfaction in that.

PS do not worry about the prior FHA appraisal. it has no bearing on your assignment unless you have engaged to review it.
 
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