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Only heat source is wood

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Tim Schneider

Member
Joined
Feb 8, 2007
Professional Status
Certified Residential Appraiser
State
Wisconsin
I am working on a property that has a old oil furnace that per owner is inoperable and hasn't been run in 30 years. They have a wood burner in the basement that is connected to the forced air system. They burn wood as the only source of heat. Is this scenario acceptable for secondary market (fannie)? I want to have good info before I get back to the bank about the status. Thanks.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
I see no reason why it would not be acceptable if it is UL rated.
 

c w d

Senior Member
Joined
Oct 2, 2006
Professional Status
General Public
State
Florida
I am working on a property that has a old oil furnace that per owner is inoperable and hasn't been run in 30 years. They have a wood burner in the basement that is connected to the forced air system. They burn wood as the only source of heat. Is this scenario acceptable for secondary market (fannie)? I want to have good info before I get back to the bank about the status. Thanks.

What does it matter if FNMA will loan on this or not? You've been asked to appraise the property. Your client wants an appraisal of the home. You're giving it to them, good news or bad.
 

Rufus

Junior Member
Joined
Apr 3, 2008
Professional Status
Licensed Appraiser
State
Indiana
FNMA has this to say:

Section 404.01 - Conformity to Neighborhood

The improvements should generally conform to the neighborhood in
terms of age, type, design, and materials used for their construction.
If there is market resistance to a property because its improvements
are not compatible with the neighborhood or with the requirements of
the competitive market--because of adequacy of plumbing, heating,
or electrical services; design; quality; size; condition; or any other
reason directly related to market demand--the lender should
underwrite the mortgage more carefully and, if appropriate, require
more conservative mortgage terms.

Also, some lenders have their own guidelines that require a minimum of two comps with the same type of heating.
 

Otis Key

Elite Member
Joined
May 15, 2004
Professional Status
Certified Residential Appraiser
State
New Mexico
Excellent Rufus - I was going to post that but had to think for a second to see if I wanted to reply to:
What does it matter if FNMA will loan on this or not? You've been asked to appraise the property. Your client wants an appraisal of the home. You're giving it to them, good news or bad.
You utilize the Fannie form so it indicates that you know, understand and comply with Fannie guidelines ---- I'd think you would care!!!!!!!!!!!! But, then again, I don't personally know you.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
cwd... We ask questions like this because we get little client input other than report the appraisal on a Fannie Mae form. It makes a difference because we need to know how to deal with GSE issues such as finding two (or whatever) comps with similiar heat, conditioning the report on installation of a more conventional heat system, just discussing/explaining, etc., etc.

Sometimes I still have to scratch my head and think about these things. This is why I post on the forum. To find out how everyone else is doing things.
 

Mary Tiernan

Senior Member
Joined
Dec 16, 2003
Professional Status
Retired Appraiser
State
Michigan
I think the wood only source would limit marketability of the property - although there are those folks who wouldn't mind the hassle of wood, there are those who would say, naw, I am not dealing with wood.

I can tell you by the end of winter I am pretty sick of wood heat . . . and I only have a woodstove for supplemental heat but I burn it every day to lessen the cost of propane.

I wonder if your market analysis will show a difference for wood heat only versus having a back-up system. Most of the properties here still have LP or Oil back up heat, so I have not had to analyze that . . .

I have not found that a supplemental outdoor wood burner increases values. . . .
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Wisconsin

I am working on a property that has a old oil furnace that per owner is inoperable and hasn't been run in 30 years. They have a wood burner in the basement that is connected to the forced air system. They burn wood as the only source of heat. Is this scenario acceptable for secondary market (fannie)? I want to have good info before I get back to the bank about the status. Thanks.


first link didnt work. suggest verifying state,county,town,village,city building codes (they do exist).....determine if use meets code.



example: City Wisconsin Rapids, Bldg.Code, Pg 4, sec 14.09 Radiant Heating Units (attached pdf )>>

The S&B
WebSite is at http://www.commerce.state.wi.us/

Com-Safety-and-Buildings.html.


Review and cite market data to support this method of heating is common, typical, or represents F.O.I.C.

see attachment Page 4, section 14.09 radiant heating
 
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c w d

Senior Member
Joined
Oct 2, 2006
Professional Status
General Public
State
Florida
Excellent Rufus - I was going to post that but had to think for a second to see if I wanted to reply to:

You utilize the Fannie form so it indicates that you know, understand and comply with Fannie guidelines ---- I'd think you would care!!!!!!!!!!!! But, then again, I don't personally know you.


& Greg

I'm not saying that we don't need to address it appropriately. Not at all. But it sounded like Tim was concerned about how to present it to his client in a "status report" i.e. a "should I continue or cancel the assignment" status report. My point being that, aside the fact that I'm really getting tired of all the canceled assignment these days because of this or that, he should complete the assignment and present the facts in his appraisal report. After all, that is what he was hired to do.
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
....and, the issue of the home's heating system, be that primary and with any possible secondary source, could have perhaps been something that the lender/client might have asked about BEFORE engaging the appraiser.

There ought to be another sort of check-list.....the kind that has been progressively established over the years by any lender/client.....which is the significant list of interogatories that the CLIENT asks of their borrower so as to learn aspects of the property which can be adeptly introduced within the order engagement process and support the fundamental Scope of Work decisions which the appraiser will be developing. Such communication could improve turn-time, help foster the appropriate fair fee for the assignment and promote a thoroughness of reporting that can be completed withOUT there actually being post-report corrections, amendments or stips. O.k., right, it's not a perfect world.

Yes, I know, and I agree. There are far too many assignments handed out where the client knows absolutely NOTHING about the subject property.....and is too freaking lazy to learn or inquire beforehand whether THIS property has "issues".

One can be certain of one thing during this dynamic period of evolutionary change in our industry. The AVM's, CMA's and BPO's will handle the easy ones. We appraisers will be inheriting all the white elephants, problem-properties and P.o.S.'s. We deserve thorough communication with whatever orders might come across to us. Too bad most clients' staffers haven't got a clue how to process and effectively communicate an appraisal assignment !

In Tim's situation, the client could have dealt with the fireplace-only situation before ever contacting Tim......and perhaps never engaged Tim to discover something that the client was NOT going to like. I'm surprised they haven't asked Tim to indicate in his report that the oil heat system is primary and the wood source is the back-up !
 
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