Purchasing An Investment Condo, But Asked To Appraise A Unit In The Same Condo?

[timd354]

Thanks for the info guys. You guys are pretty much confirming what I thought all along. Just wonder this is even legal to appraise in a complex you are purchasing a unit, or is it just a morality unbiased thing I'm dealing with?

You have 2 issues involved here that possibly conflict with cert #17 (see below) the FNMA condo appraisal form (Form 1073). First, it sounds like you have have a a personal interest or bias with respect to participants in the transaction (the property seller/developer in this case). Secondly, when you purchase a condominium unit, part of what you are purchasing is an interest in the project's common areas....thus, an argument can be made that when you appraise another unit in a complex in which you own (or have a contract to purchase) a unit that you have a present or prospective interest in the property that you are appraising.

I think that your best move is to stay away from appraising any units in this complex.

 

[glenn walker]

Save your friendship because once you come in low on a few the whole project loses value and your friendship is gone-poof-- just say no and move on .

 

[Terrel L. Shields]

"Investment Condo"

Kind of an oxymoron, right?

 

[TRESinc]

"Investment Condo"

Kind of an oxymoron, right?

much like cars you make your money when you buy, not sell. rental condos have been very good for me, and mine are all 1 bedroom units. bought 5 of them after the crash, all are at least twice now what i paid back then and they are all are paid off. sticking to 1br units prohibits me from renting to anyone with kids over the age of 2 in the city mine are located, so no worries about them destroying the units i also don't have to worry about someone cutting the grass, removing the snow, keeping up on the landscaping, any exterior repairs and repairs outside the interior paint (apartment-styled units) such as clogged common drain lines.

 

[Mark K]

Does that go for appraising improvements in the subdivision where they live, as well?

I think it could... but not to the extent as buying a rental property where part of your investment strategy is based on the value appreciation of the other units.

It wouldn't take a big leap for an outsider to think that an appraiser would have a conflict of interest in appraising in his own subdivision. After all, if the neighborhood home prices increase, so does the appraiser's. It wouldn't stop me from appraising in my own neighborhood but I'm not blind to the possibility that someone would see a potential conflict.

 

[J Grant]

Since most appraisers are not planning on immediately selling their own residence, it would be quite a stretch to allude to a conflict of interest in their own subdivision. Also, most assignments to appraise in an established subdivision would be random and sporadic. I get assignments to appraise in my own subdivision once or twice a year...as if that would affect value among the scores of transactions there in a year ?

In the case of the OP, it is a new condo being built and sold which will mean hundreds of appraisal assignments within a relatively short period of time ( he said he is on the panel of 4 lenders approved for the condo)./ So an individual appraiser doing numerous assignments in new construction, if they have an agenda to do so, can impact the value trend in that community. They may not have an agenda, but easily be perceived to with combination of buying for investment and friends with builder's son. Kudos to the OP for making a wise decision.

 

[BRCJR]

Since most appraisers are not planning on immediately selling their own residence, it would be quite a stretch to allude to a conflict of interest in their own subdivision. Also, most assignments to appraise in an established subdivision would be random and sporadic. I get assignments to appraise in my own subdivision once or twice a year...as if that would affect value among the scores of transactions there in a year ?

In the case of the OP, it is a new condo being built and sold which will mean hundreds of appraisal assignments within a relatively short period of time ( he said he is on the panel of 4 lenders approved for the condo)./ So an individual appraiser doing numerous assignments in new construction, if they have an agenda to do so, can impact the value trend in that community. They may not have an agenda, but easily be perceived to with combination of buying for investment and friends with builder's son. Kudos to the OP for making a wise decision.

Who said the subdivision was established?

 

[J Grant]

Jeez nobody said it ! I said most subdivisions that appraisers live in are established (not brand new under construction)

 

[BRCJR]

Jeez nobody said it ! I said most subdivisions that appraisers live in are established (not brand new under construction)

Jeez I just thought your illustration was not apples to apples.

 

[Tim The Enchanter]

Cancel that purchase and do those appraisals!