Permit Nay-sayers

[The Warrior Monk]

The acceptability of our Scope of Work lies in two things. The expectations of REGULAR users of appraisals AND what our PEERS WOULD DO IN A SIMILAR ASSIGNMENT.

Regarding Regular Users: Most regular users expect items that affect value to be addressed.

Regarding our peers: I wouldn't use that as a basis...otherwise I'd be ignoring a whole lot more than the legal use of the property.

Commercial appraisers are not my peers. What they must and should do is often much different than what a licensed or certified residential appraiser must and should do.

The main thing that separates commercial appraisers and everyone else is basically the application of income methodology. Everything else is the same. HBU and all of its elements (legal use, permitted use, etc.) apply to all classes of credentials.

 

[Joyce Potts]

Then you understand.

FWIW, I've been involved in quite a few situations lately where appraisers are missing important points like these; they "scope it away." While it may or may not be appropriate doesn't matter; appraisals for the opposing side are getting tossed. Good for my business; not so good for those scoping it away.

It's ok, because as soon as commercial AVM's begin taking away the commerical work and those hefty fees, then maybe you'll understand.

After all, don't all those residential AVM's take permits and the like into consideration of the their value ESTIMATE?

 

[The Warrior Monk]

It's ok, because as soon as commercial AVM's begin taking away the commerical work and those hefty fees, then maybe you'll understand.

Nope...In fact, AVMs haven't affected my residential work either. AVMs, BPOs, and the like are things used in the residential lending market for certain types of lenders. It is rare that they are used elsewhere.

After all, don't all those residential AVM's take permits and the like into consideration of the their value ESTIMATE?

Nope...and, in fact, it is good you brought that up.

Adding permit, title, HBU, and other information to large databases is very resource intensive. An if you adding commercial properties to the mix, you run into the situation of nonpublic information (leases don't have to be recorded, as least in my area). Think of how long it would take to set up the Z database if it took a few hours per property to put the information in the database.

From a business standpoint, wouldn't it make sense to specialize in areas where automated appraisals don't work well? After all, there is less competition in those areas, and the fees are much higher as a result.

 

[Mike Kennedy]

The acceptability of our Scope of Work lies in two things. The expectations of REGULAR users of appraisals AND what our PEERS WOULD DO IN A SIMILAR ASSIGNMENT.

IN MY MARKET, it is not common for residential appraisers to check for building permits for additions, finished basements, or remodeling. If my clients decide they want more I can do it but the fee will be more.

:icon_idea:What definitions of Market Value and Highest and Best Use do those "local" residential appraisers utilize? What Fannie/Freddie Forms do they use for mortgage lending purposes? Which version of the USPAP do they use - the one which allows an appraiser to incorrectly describe a subject property???? :new_smile-l:

http://commerce.appraisalfoundation.org/html/USPAP2008/USPAP_folder/uspap_foreword/er_conduct_.htm

http://commerce.appraisalfoundation.org/html/USPAP2008/USPAP_folder/standards/Standards_Rule_1_1.htm

e) identify the characteristics of the property that are relevant to the type and definition of value and intended use of the appraisal, (note10 ) including:

(i) its location and physical, legal, and economic attributes;

(iv) any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, or other items of a similar nature; and




XI, 404.01: Zoning (01/31/06)
The appraiser is responsible for reporting the specific zoning classification for the subject property. The appraiser must include a general statement to describe what the zoning permits—“one-family,” “two-family,” etc.—when he or she indicates a specific zoning such as R-1, R-2, etc.

The appraiser also must include a specific statement indicating whether the improvements represent a legal use; a legal, but non-conforming (grandfathered) use; or an illegal use under the zoning regulations; or whether there is no local zoning.

We generally will not purchase or securitize a mortgage on a property if the improvements do not constitute a legally permissible use of the land.


XI, 404.02: Highest and Best Use (06/30/02)
The highest and best use of a site is the reasonable and probable use that supports the highest present value on the effective date of the appraisal. For improvements to represent the highest and best use of a site,

[they must be legally permitted]

, financially feasible, and physically possible, and must provide more profit than any other use of the site would generate. All of these criteria must be met if the improvements are to be considered as the highest and best use of a site.


------
unlawful : adjective Date: 14th century 1 : not lawful : illegal

 

[Tim Hicks (Texas)]

If something is illegal use of zoning, then I can see where there are big problems that should be reported. However, additions and upgrades may or may not be a legal issue if it does not effect the legal use of the property for zoning.

Garage conversions, enclosed patios, covered patios, pools, storage buildings, etc can be permit issues or not. In rural areas, where there is no zoning or permits, then quality of workmanship is the only issue. In many cities around here, permits are new to their government and many things can be grandfathered. The tax office rarely knows one way or the other. Yet, they will tax for the improvement, legally permitted or not.

Yet, there is no appraiser on this forum that can spot every improvement made to a home and know they need to check for permits. Some items can be done so well they look original. So, how would you know to check? I have seen home owners have their original builders add on to their homes. I have seen attic bonus rooms finished after the fact. I have seen some homes taxed for unfinished attic bonus rooms that were never finished. Luckily, it is not that big an issue around here, but I defy any appraiser here to state they have never missed checking for a permit on every home they have appraised based on what they thought was original construction. It is impossible to be 100% invincible on this subject and deliver appraisals in a timely fashion. You can't know the complete history of a property every time you visit it.

 

[Mike Garrett RAA]

Mike you know the answer to your question, no need for my to answer it. I repeat...we are not permit police, we are not home home inspectors.

 

[Mike Kennedy]

but I defy any appraiser here to state they have never missed checking for a permit on every home they have appraised based on what they thought was original construction. It is impossible to be 100% invincible on this subject and deliver appraisals in a timely fashion. You can't know the complete history of a property every time you visit it.

In markets where zoning and/or building ordinances exist, due diligence IS required. In mine, they - and the supporting documentation (or lack thereof) is easily reviewed.

Yes, I perform the requisite due diligence on EVERY subject, and on comparables.

In many markets, the data is readily available, from initial BP & C. of O. through most current.

If it is, during the normal course of business, due diligence requires verification.

If it is not, detailed explanation IS required.


Current Use is either Legal, Legal Non-Conforming (Pre-existing) {still legal}, or Illegal.

Looking the other way (not you specifically nor Mike) because others in the market fail to execute due diligence in violation of the USPAP, is unacceptable.

Looking the other way when Reviewing reports which clearly indicate an appraiser abdicated his/her responsibility under the USPAP Ethics, Competency, and Scope of Work Rules....... and intentionally failing to forward the (those) reports to Regulatory Officials ......is unacceptable.

 

[CANative]

It should be "illegal" to abuse the copy and paste feature.

 

[Mike Kennedy]

It should be "illegal" to abuse the copy and paste feature.

It should be "illegal" not to read them.


[they must be legally permitted]

 

[Fnbpos]

So, you inspect the subject property to find a porch enclosed into a family room; the conversion is observed to be top quality including bringing the floor up to level with the main house; additon of an AC vent; and removal of the sliders and tracks. The market will consider this as living area. Its legal to convert porches; zoning allows it and it is a common enclosure in the subject market. During your inspection, you asked the owner if they obtained permits for this work. They do not know, it was done just prior to their ownership.

You therefore call the permit department; find out there were no permits pulled for this work. Now, the "cat is out of the bag". The city sends out inspectors and determines that despite the fact it appears to be a quality job, "we can't see behind walls" and instructs the owner to return the "family room" back to a porch, pay a fine of $5000 and additional fines of $100 per day until work is complete. (plus cost to "reconvert" - $7,000)

Question: How many days will it take before the letter from the homeowner's attorney shows up at your door ??

Is it YOUR responsibility to open this can worms ?...are you liable for damages sustained by the homeowner because of an action directly attributed to you ?...is there any violation of confidentiality between you and the homeowner ?...

Disclosure: this event did not happen to me...but I could see this or something similar happening to those on "permit patrol"