Remaining economic life for a condo unit?

[Don Fiore]

I just received an underwriter's stip that I revise my report by including a "remaining economic life" estimate for a condo unit I appraised.

I have never, ever been asked to do this for a condo unit before and am not sure that it's even possible under a typical 1073 scope of work, since a condo unit is an integral part of a much larger physical structure, and it's remaining economic life would certainly be determined to no small degree by the physical condition of the entire structure, no?

I tried to explain this to the client (as yet to no avail), pointing out that estimating remaining economic life relates specifically to the cost approach, and that approach is rarely applicable to condominium units.

Any comments?

 

[timd354]

I just received an underwriter's stip that I revise my report by including a "remaining economic life" estimate for a condo unit I appraised.

I have never, ever been asked to do this for a condo unit before and am not sure that it's even possible under a typical 1073 scope of work, since a condo unit is an integral part of a much larger physical structure, and it's remaining economic life would certainly be determined to no small degree by the physical condition of the entire structure, no?

I tried to explain this to the client (as yet to no avail), pointing out that estimating remaining economic life relates specifically to the cost approach, and that approach is rarely applicable to condominium units.

Any comments?

Yes, it is a ridiculous request....is this for a FHA appraisal by any chance. as FHA has required an estimate of the REL on all proeprties, including condos for as lonmg as I can remember.

 

[Jerry Bone Jr]

Not ridiculous. REL is more about Highest & Best Use. They are asking how long the condo will contribute to value. If you answer is 30 years or more they will be happy.

 

[PropertyEconomics]

Not ridiculous. REL is more about Highest & Best Use. They are asking how long the condo will contribute to value. If you answer is 30 years or more they will be happy.

Good luck showing that ... with sufficient market evidence to support your conclusions.

 

[glenn walker]

making a big deal out of nothing, I have owned some pretty bad properties in my life and even the ones that were 80 years old would stand another 30 to 50 years unless of course an earthquake or flood came. I have never seen a condo that didn't have at least a 40 to 80 year life, FHA has always required that the life of the property be at least as long or longer than the term of the loan, thats also true of Fannie and freddie, so make it 40 years and move on.

 

[PropertyEconomics]

making a big deal out of nothing, I have owned some pretty bad properties in my life and even the ones that were 80 years old would stand another 30 to 50 years unless of course an earthquake or flood came. I have never seen a condo that didn't have at least a 40 to 80 year life, FHA has always required that the life of the property be at least as long or longer than the term of the loan, thats also true of Fannie and freddie, so make it 40 years and move on.

Funny .. no one even asked how old the subject property was and are offering 30 and 40 years as answers. God I love this profession.

 

[Old Man]

Funny .. no one even asked how old the subject property was and are offering 30 and 40 years as answers. God I love this profession.

There are many appraisers that prefer short cuts over due diligence, especially when they don't know something or don't want to do it.

 

[jay trotta]

we have many a structure that exceed "300 years" of life in my area - will they see another 30-40 years ??

Does, how Old the subject is matter ????


Cheers


PS: it ain't just a JOB, it's a freekin adventure

 

[Dennis J. Black ASA IFAS]

Remaining Economic Life and Remaining Physical Life are not the same thing.

One is a function of the market, the other is a function of the elements.

 

[Don Fiore]

All HUD references to REL that I've ever seen are in relation to "the building". I have never read anything anywhere in the handbook that states or even suggests that an REL or TEL estimate is required for a condominium unit. Since these estimates have a direct and necessary function in the develoment of a cost approach and HUD does explicitly state that this approach is not applicable to condominium units, I've never included them in FHA condo appraisals and nothing has ever come back from an underwriter before as a result of the exclusion until now.

Can anyone here cite chapter and verse regarding a HUD requirement that REL estimate be provided for a condominium unit?