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Purchase Contract For Model Home

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Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
OK,

Heres my dilema.

Under sr1-2e(ii,ii,iii) I have indentified the physical and legal of the charecteristics of the subject.

1. Condo
2. residential
3. Leasehold

Condo is the model in developement. Buyers are the two on-site R.E.'s agents. Devloper is leasing back, one year with several 6 month renewals. They did not give me a copy of lease, but did tell me one existed.

Bank sent order saying owner occupied purchase money. They did not mention 2nd buyer.

If I understand AO-23 , it seems that if the intended use, purpose is for a SFR, owner occupied, that means I should appraise it as Fee simple? I then only have to disclose the leasehold.

Heres my question THis is not a typical residential lease. This is a business lease. Does this have ny bearing on the scope of work and property rights appraised ?
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Yes.

I would not do this without disclosing exactly what you know in full.

In fact, I think I would turn this one down. Seems everyone involved would want you to lie.
 

Patrick Egger

Sophomore Member
Joined
May 29, 2003
Professional Status
Certified General Appraiser
State
Nevada
it appears that the buyer's are trying to get an "owner occuppied" loan ... and you have knowledge that is it is a non-owner occuppied and also that a lease is involved ...

failure to disclose this is a violation of USPAP for one ... more importantly, it may also come under the Bank Fraud Act ....

clearly this is an investment ... and your responsibility it to the client

I'd think twice ...
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
I would not accept the assignment under those conditions! We see that alot out here with builders. They build the models and then sell them to a holding company who leases back to the builder. Don't know how they handle the appraisals.

Another problem you will run into is that the models are usually super adequate. I have appraised a number of them when the investor (usually handled by the builder) sells off the models. The last two I did were nearly $20,000 more than the exact same plan that was not a model. Hard to justify things like a $6,000 kitchen counter upgrade or $10,000 in landscaping.

You might talk to a few of your local builders and see if they sell of the models and lease back to find out how they handle the appraisals. I wish you well!
 
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