Occupancy

[Couch Potato]

Don't mislead.

Lets say the owner occupies it 4 months of the year, a number of different rents occupies it a total of 4 months a year and it sits vacant 4 months of the year. How would you mark the report?

I would mark it based on the occupancy at the time of inspection just like every other property. What else could an honest appraiser do? If I was aware of the typical 4 month rotation, I would describe it in the report too.

I just don't see it as a complicated concept. Either someone is living in the property at the time of inspection or they are not. A person living there is either the owner or they are not. All other information, such as seasonal occupancy by the owner, would be in comments. Give the client an accurate and complete description of what you know as an appraiser. We are not the occupancy police, but we are obligated to convey what we observe in a way that is not misleading.

 

[Carnivore]

Why fret over or make a big deal about something you have no control over?

Because of the Intended Use. If this was for Estate Planning I would say nothing about occupancy. Since its about mortgage lending then Occupancy is important because of the Intended use: To assist the Lender/client in making a decision for a mortgage finance transaction.(something like that).

The appraiser should know something about his clients business and purpose for the assignment. How else would you know what to report to the client.

For example, an FHA Loan usually requires more to be said in the appraisal report then a conventional loan appraisal report.

I rest my case.

 

[Richard Carlsen]

Since its about mortgage lending then Occupancy is important because of the Intended use: To assist the Lender/client in making a decision for a mortgage finance transaction.(something like that).

I agree that the Intended Use must be considered in doing an appraisal. However, we are not required to do more than the client mandated reporting form requires (i.e. Supplemental Standards). If the Limiting Conditions say we will not be responsible for things of a legal nature, why get involved in attempting to make legal determinations. i.e. residency? If the form says that the effective date of the report is the date of the inspection, why concern yourself with what goes on 5 months before or after? If the reporting form requires us to report who we think is the occupant as of the day that we were there and the borrower is there at the time of inspection, why worry about if they are telling the truth or not. It is not part of the assignment. I know there are those who will say that we need to help protect the client. and I agree but if there is nothing obvious or suspicious seen or heard during the inspection, then what reason is there for going beyond what the client mandated (and written) report requires.

My position with this has been very clear from the beginning when I started receiving orders from H&R Block to make statements in the report that supported the borrowers contention that the property was owner-occupied. I am not qualified by license or training to make such a determination. I told them that I could not make such statements and if they insisted on something, then I would condition the report on a sworn statement from the HO that they were in fact living in the property on the effective date of the report. They did not press the issue.

There is only so much we can do to protect our clients. Other than state what we see, hear, smell, taste or feel when we are at the property, there is not a whole lot that we have authorization or power to do.

 

[Ariba]

The reporting form does not ask use to state the "residency". It asks us to state what we considered to the "occupancy" status at the time of inspection. That is all you have to do. You have no authority or responsibility as I said, to vois dire the occupant, look at mail, check voter registration lists, talk to the neighbors or anything else.

Just check the correct boxes that is all appraisers are responsible for! The appraiser apparently has no obligation to expend or disclose anything else concerning occupancy or residency in the addendum. The box covered it all.

Therefore, based on Limiting Condition 1, "The appraiser will not be responsible for matters of a legal nature that affect either the property being appraised or the title to it, except for information that he or she became aware of during the research involved in performing this appraisal.

Does that include, zoning, leasehold/fee simple, etc.

This means that you only have to put into the report that which you have viewed and believe is true based on your understanding at the time of the inspection.

Wouldn’t you think that part of being diligent in the inspecting and completing an appraisal report is to talk to the homeowner? Do any of you engage in small talk with the property owner? Like asking the property owner how do you like the neighborhood? How long have you lived here? Made any recent improvements to the property? You do not have to be a rocket scientist in the appraisal business to figure out the occupancy situation with a couple of questions.

Why fret over or make a big deal about something you have no control over?

ETHICS RULE: An appraiser must not communicate assignment results in a misleading or fraudulent manner. By not asking the right questions could that produce a misleading appraisal report? Just asking. [/QUOTE]

 

[Mike Boyd]

In some areas avoiding the role of Occupancy Police is easier than in others. I would think it negligent to not make inquiries when the person providing you access describes themselves as the property manager.

That is a different situation. In that case, I would mark it tenant occupied.

 

[Mike Boyd]

Voter registration is a one of the test the IRS uses to qualify a property as a primary residence. Here in MA we have a statewide voters registration system. A new registration in another community or a new address does change your primary residency in the eyes of the IRS.

Providing service to a reverse mortgage request, I strongly suggest you confirm the occupancy/occupant. This is one of the first requirements to qualify.

That would be the LENDER's or CLIENT's responsibility.....not the appraiser's.
Some of you might want to look into becoming a private detective. We don't get paid enough nor are we trained for confrontational situations. If whoever lets me in says he is the owner/occupant, we should not have to aks them to prove it.

 

[Couch Potato]

That is a different situation. In that case, I would mark it tenant occupied.

Mike, in Florida it is not an uncommon occurrence for a property only occupied by it's owner on a seasonal basis to hire someone to "manage" the place during the summer months. It may or may not involve renting to tenants. The owner may or may not be currently occupying the property. Occupancy can be a very fluid situation in a resort area, and Florida in general. The mountains of North Carolina have some similar issues.

Often, just checking a box doesn't cut it. Not that one needs to hire a private detective to sort things out, but a few lines of comments can paint a much clearer picture of what the appraiser knows or doesn't know.

 

[Richard Carlsen]

Voter registration is a one of the test the IRS uses to qualify a property as a primary residence.

Voter registration proves residency. It does not prove occupancy.

Big difference.

 

[Kevin A. Spellman]

I see the term I used in my post “primary residence”.

A reasonable lender today does want to know if the subject is a primary residence or a second home. There is a new Mortgage Cancellation Tax Relief Act just signed by President Bush. Prior to this new law the lender/investor had the opportunity to issue a 1099 for mortgage debt/deficit the lender has forgiven. This new law a primary residence cannot receive a 1099. A second home or investment property does permit the lender/investor to issue a 1099 in a foreclosure procedure if a deficit occurs.

If your service area does not have second homes it is an easy box to click and you do not have to think, but not in my area.

My service area has several second and possibly third homes The 9,000+ homes in my service area about 5,400 or more are second homes.

I do not just let an “x” in a box answer the question. I always state in my reports if the subject is a second or a primary residence. I also describe the neighborhood occupancy in my reports about the high ratio between primary and second homes. My area has weekly rentals and the owner/applicant on several occasions ask me to inspect on Saturday between 12:00 pm and 2:00 pm during the turn over time. During this two-hour period the property is once again owner occupied during the summer months. I click the owner’s box, but with a comment about seasonal weekly rentals that are quite common on this island.

The service I provide is for my knowledge and is not just an “X” in a box. The form we use is for ease of the reader. I do not see the form we use to limit our knowledge.

I believe I have stated "test" by the IRS not for the occupancy.