Permitted and non permitted additions.

[peteles]

27 years and I'm being once again I find myself frustrated with this industry. Fraud is rampant again.. The same idiots running the asylum 10 years ago are back running new companies.. Here is my specific complaint and question:

A certain lender has stated that I can give value to a non-permitted addition provided it is completed in a workmanlike manner.. this also applies to FHA. I am not a contractor. In addition, many times an insurance company will not cover losses on non permitted additions (especially baths) Many times they do not conform (raised foundations to crawl space) and in every instance, the subject cannot be rebuilt as it stands without permits if it destroyed. I hope I'm not being a hardarse, but in these instances, even though FHA allows these, I am not giving them value.
Same lender uses above example as a comparable ... MLS shows the comp as 3BR/2BA. Public record shows 2BR/1BA. It sold for "X" dollars with the same lender allowing the addition (by another appraiser they found, knowing there are no permits for the BR/BA.) The same lender is tellling me that because there are no permits, it should be valued as a 2BR/1BA even though they clearly funded the property as a 3BR/2BA. I decline the assignment. They find another reviewer (in house) who funds the loan.

Not only is this frustrating, but it is occurring every day and no one is monitoring these lenders AGAIN. So CAL ethics I guess.. A certain lender here in town who runs their own AMC dropped me from a steady amount of biz because of this situation on an FHA assignment. This after being championed for finding out a budgetary issue on another assignment which saved the lender thousands..

Let me know what the populace thinks..

 

[J Grant]

See relevant discussion in Urgent Help Needed section, titled, "can an appraisal be revised after it is submitted?"...there have been numerous recent threads on permits as well.

 

[CANative]

Gaaa... !!

Appraisers don't "give value." The market decides on the price paid for real property. It's our job to develop market value indications and then report our opinions and conclusions. Everything else is a side show.

 

[Scott R Marshall]

Have to agree with Can. Appraisers do not give or not give value. What does the market do? That is what you are hired to do, comment on the market. If the market says there is contributory value, then who are you to say there is not. And if the market is scared to death of buying such properties, then who are you to say it is marketable in its "as is" condition.

Put addendums within the report explaining your findings. Some lenders have unacceptable assignment conditions, asking you to ignore how the market reacts. In such cases, it is impossible then for the appraiser to opine on market value.

Too many appraisers interject their own opinions and/or biases into what they have been hired to do. Doesn't matter what you think. Whether you think the market is right or wrong, you comment on the markets reaction to any feature, amenity, etc. Anything else is to place yourself on a pedestal and become a malevolent appraisal god, telling others what you think they should or should not be doing.

 

[Restrain]

Per Fannie Mae, et al. Summarizing: Just because there's no permit does not mean there's no value. The value is based on the market. The appraiser must demonstrate the value by the use of similar properties with non-permitted additions/enclosures.

That being said, you should discuss the probable actions of the permitting authority (tear it down, require an inspection, etc), how long ago the addition/enclosure was done, can you examine the permits in the "normal course of business" recognizing that if you call the building inspector and say 'does XXXX Smith Street have a permit for that addition' you may be disclosing confidential information and be liable for damages, etc.

Yes, it's a can of worms, but you cannot simply say, no permit-no value.

Good luck.

 

[Meandering]

Workmanlike manner is a legal term with a legal definition:

Workmanlike manner is defined as “the quality of work that would be done by a worker of average skill and intelligence.” Aquila, LLC v. City of Bangor, 640 F. Supp. 2d 92 (D. Me. 2009)

Tell them you did not interview the workers so you don't know their skill level or intelligence level and to ASK THE RIGHT F ING QUESTION.

Can a intelligence challenged individual nail 2 boards at a right angle? Maybe, can or did they do it 100% of the time it was needed? Maybe. Did you check and measure every joint, angle board in the structure?

Be careful of what is "accepted" against what liabilities you may be taking on just to "go with the flow".

http://definitions.uslegal.com/w/workmanlike-manner/


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[Mike Kennedy]

"Per Fannie Mae, et al. Summarizing: Just because there's no permit does not mean there's no value. The value is based on the market. The appraiser must demonstrate the value by the use of similar properties with non-permitted additions/enclosures."

Illegal "additions/enclosures" not located in an/as part of an Accessory Dwelling Unit are not on Fannie's "special" illegal use approved list.

FHA 4150.2
1. Matters of a Legal Nature
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.

Zoning Compliance
• Determine whether the current use is in compliance with the zoning ordinances. Mark whether it is Legal, Legal Non-Conforming (Grandfathered Use), No Zoning, or Illegal Use.
• If the existing property does not comply with all of the current zoning regulations (use, lot size, improvement size, off street parking, etc.) but is accepted by the local zoning authority, enter “Legal Non-Conforming” and provide a brief explanation.
• If the use is not legal, the property is not eligible for FHA mortgage insurance

Highest and Best Use (* i.e. legally permitted/permissible as of an Effective Date of Appraisal)
• Mark the appropriate box. This entry questions the categorization as the highest and best use of the site as improved or, as proposed and completed, in relation to the neighborhood and current market conditions.
• If current use represents the highest and best use, mark "yes".
• If it does not, mark "no" and provide an explanation.