Property being sold "AS IS" condition

[jmedina]

Helly fellow appraisers:

I am appraising a property in Fontana, Ca. This is an REO and is being sold "AS IS" condition. Property appears to be in overall good condition based on appraisal walk thru. Only 2 deficiencies were noted which include 2 bedrooms with no flooring (no carpet) and a cracked window. How should I address this since both parties agreed on sold "AS IS" condition. should I "subject to" or give cost to cure??? Please advise. thx

 

[RSW]

I would provide a cost to cure and adjust for it in the sales comparison analysis if the scope of work is for an AS IS appraisal.

 

[Webbed Feet]

Helly fellow appraisers:

I am appraising a property in Fontana, Ca. This is an REO and is being sold "AS IS" condition. Property appears to be in overall good condition based on appraisal walk thru. Only 2 deficiencies were noted which include 2 bedrooms with no flooring (no carpet) and a cracked window. How should I address this since both parties agreed on sold "AS IS" condition. should I "subject to" or give cost to cure??? Please advise. thx

Helly back at you,

These are not either structural, or involving anything that may be hidden. Very straight forward. I would provide an addendum explaining how I took the lack of carpet and broken window into consideration in the condition adjustments. A separate line item adjustment would be fine too.

However, the above said..... what the SELLER is doing, or not doing (as-is) doesn't mean a flying rip to me if my CLIENT has engaged me for a buyer loan with GSE requirements that do NOT allow broken windows! That can fall under safety. At some point appraisers really need to stop appraising the sales contracts and advertising of a seller, even if the seller is a fricking bank! ... What is the SOW and does that SOW carry with it GSE requirements? For example, this could be a REO sale with a buyer obtaining a FHA loan. Are WE going to ignore ten layers of roofing because it is "as-is" between the seller and buyer in the contract in that case?.... Come on! ... Lenders, nor appraisers, have to play ball on such nonsense if the seller wants the buyer to obtain a loan or not.

Webbed.

 

[Fred]

How should I address this since both parties agreed on sold "AS IS" condition. should I "subject to" or give cost to cure??? Please advise. thx

If they ask for as-is value, how can anything else be a credible appraisal?

 

[TJSum]

I agree with Webbed. Even if the client wants an "as is" report, sometimes it is our job to educate them on what they need instead of what they want. We have to keep in mind the requirements of the end user of the report, whether it be FHA, Fannie/Freddie, etc. If the end user has requirements that the subject does not meet, their guidelines over rule what the clients wishes are. This should all be agreed upon in the SOW when accepting the assignment, so that is is "credible" to all parties involved.

Back in the day, REO purchases rarely went FHA because of the repair problem entanglements, but with FHA being the soup of the day and the large amount of REO's out there, way too many are trying to pound that round peg into a square hole. Regarding the OP, it sounds like this is a Conventional deal, so the question is do the problems exceed Fannie guidelines?

 

[Fred]

I agree with Webbed. Even if the client wants an "as is" report, sometimes it is our job to educate them on what they need instead of what they want.

If two parties want to trade a property at market value, you know, what it is actually worth - isn't that a "need" for market value as is, not a "want?"

 

[PropertyEconomics]

Appraisers should only TELL value ... leave the rest to the experts on the other side of the deal.

 

[Mr Rex]

Yep PE, its screaming 203k or similar, and the current MB doesn't have that in their goody bag. Dropping that hint to the MB, borrower, or seller isn't covered with vaseline in a FAQ. Just covered in Vaseline.

 

[PropertyEconomics]

Yep PE, its screaming 203k or similar, and the current MB doesn't have that in their goody bag. Dropping that hint to the MB, borrower, or seller isn't covered with vaseline in a FAQ. Just covered in Vaseline.

Good to see you Mr Rex. Been wondering where youve been ... and apparently 203K programs are not offered by many lenders, atleast that has been my experience. Now if they had another program they could put them into, unfortunately none exist.
And most lenders wont cooperate with another and be happy they got their client a good deal and a referral fee. Nahhhh ... thats like losing the whole fee.

 

[Hamlet]

Surly you guys aren’t suggesting that these people aren’t interested in helping borrowers; I thought that is what comp checks were all about.