Owner Occupied?

[Patti(CO)]

Hey gang,

Been awhile since I have posted. Sorry Wayne but really don't like the new format. I like simple. This Forum is way to busy with too many topics. Just my opinion. I do understand why you changed however.

Anyway...I have a request for an exterior drive-by. The property has a 1,000sf cottage in the rear whereby the owner of the property lives. He is currently renting the main house. He recently refinanced and I am doing an investor 2055. As for right now the order is on hold. The investor has sent me..I did not request..the latest appraisal. It was completed on a 1004 form with no mention that the owner does not live in the main house. The cottage was called a Mother-in-Law cottage. There is no rent survey and there is no mention of the main house being rented.

So is the property owner-occupied or should this be completed on a duplex form. Or should a 1004 be completed with a rent survey. No one I have chatted with can make that decision but all are confused now based on the original appraisal. Based on highest and best use...the property should be a single family with a rental cottage...but this situation does not fall into that catagory since owner rents the bulk of the property.

Any ideas?

Thanks Patti

 

[Leon Stewart]

It has always been my practice that if there are two separate units (attached or detached), with the same parcel number, where one unit is rented, it should be prepared on the 2-4 family residential income form 1025.

I have never allowed the lender, borrower or an investor to supply me with a prior appraisal report prepared by another appraiser. It's always obvious that the intent is to influence my Report.

If the Prior Report was so good, why didn't they either use it, or have it recertified or updated by the prior appraiser? Or they could just have the prior Appraiser do a new appraisal and use his old appraisal as a guide. If he/she is not on the approved list of the current lender, have the current lender approve him/her. Keeping the situation confined to one appraiser would not allow one problem to be transferred to two or three other appraisers.

Don't allow yourself to be influenced by some dumb stuff that someone else did. If it's rental property, it has to be treated as rental property. Otherwise you are misrepresenting the property you are appraising. If push comes to shove, pass on it.

When these other people pass copies of these Appraisal Reports to various people, they are showing a lack of respect for the professionalism of the new appraiser and others in the process. They are assuming that everybody is a bunch of crooks who will put anything on a form.

leon

 

[Blue1]

You didn't mention where you got the information that the owner was living in the cottage. I presume you actually talked to the owner. This brings up a question I have often had......When inspecting a home, how do you know that the owner actually is living there unless you ask for identification? Without I.D., anyone could represent themselves as the owner..........Just a thought......In your case, let's presume that the person you talked to was actually the owner of the property. There's no law that I know of that dictates which house he/she can live in. Living in either house constitutes owner/occupancy in my opinion.

If there are un-related parties living in the larger home it may be a zoning code violation. You should check into this because it would preclude you from considering the property as a duplex.

 

[Patti(CO)]

Thanks for the input.

I'm smart enough not to be influenced by the original appraisal. I like my license too much for this to happen. I came home and found it on my fax machine. I thought is was a review request, until I saw the address. I told the investor that they should maybe consider a review. This property I know can't be completed on a 2055 form. It should be on a 1025 form...That would take care of the owner-occupied issue. It is up to them as to how to proceed.

I found out the owner does not live in the main house because his address reflects a "1/2" ie...123 1/2 Road. That is not typical except when there is a rental unit. Zoning is legal. I also chatted with the owner to verify the situation. It is not typical for the owner to live in the "rental cottage". Very confusing. I think they are trying not to go the review route since it could blow the entire loan apart based on the original appraisal. As for my end of it.. They need to order a 1025 or a review.

 

[Blue1]

Patti,

I agree, if it's a legal use then a multi-family is indicated. As for which unit the owner lives in.....I'd still say it doesn't matter.

 

[Blue1]

Patti,

I agree, if it's a legal use then a multi-family is indicated. As for which unit the owner lives in.....I'd still say it doesn't matter.

 

[Shea Koch]

1025 and Operating Income Statement

I have now read in several posts that many appraisers DO NOT include the operating income statement unless it is requested, and if so, they'll charge an extra fee.

What is the common consensus on these posts? Thanks

 

[Otis Key]

Talk about diggin up an old thread (4 years). The forms have changed and what was then, doesn't apply now.

 

[robert higgins]

if its legel 2 family zoned, the H&B use is a 2 family, 2-4 family 1025 all the way, anything else would be misleading.

 

[Terrel L. Shields]

have now read in several posts that many appraisers DO NOT include the operating income statement unless it is requested, and if so, they'll charge an extra fee.

unless the client needs a OIS on the property I do not include it. Further, the new 1004 allows valuing a single unit with an additional "mother in law". Whether rented or not doesn't matter. Are the rents even market rents? The 1025 is not necessary and the 1004 with accessory unit is not misleading. But on the issue of the owner living in the accessory unit, the question I have is why? Probably because they are single? A few decades ago I lived in a large house with a couple of my oily buddies - we were working on a series of oil wells near Carlsbad, NM. The landlady moved to their rent house next door because she was elderly and her husband had died. The place was too big for her to take care of. So when her rental went vacant she moved into it and we rented the house. It gave her some extra income and made her situation better. She even left us her old player piano and large house plant. While those houses were probably on seperate lots, the situation is similar. I would just say the main unit is occupied by whomever (renter or family) and the accessory is occupied by the owner.