Renovation

[Beechnut]

I have been assigned to complete an appraisal (conventional loan) for a property that includes a dwelling that was damaged by fire and no longer habitable. The loan is for the renovation of the dwelling. Two questions: (1) shouldn't the bank provide all of the plans/specs and cost for the renovation? (2) Where can I find guidelines for the report? I only see Homestyle Renovation in Fannie Mae Selling Guide

 

[Terrel L. Shields]

(1) shouldn't the bank provide all of the plans/specs and cost for the renovation?

Ask them for it. Or, perhaps the borrower can provide it. Don't try to wing it. Get clear plans and specs.

(2) Where can I find guidelines for the report?

Ask the lender what kind of a report it is. FNMA? FHA? In house construction loan? Go from there. The Selling Guide applies if Fannie/Freddy.

 

[Mike Ault]

Lots and lots of code issues with those, so if you are in an incorporated area make sure that the remediation plans and specs provided will be sufficient to qualify for a certificate of occupancy upon completion.

 

[Surf Cat]

Another vote here for the get the plans and specs "along with" the cost breakdown...how are you going to complete the cost approach or know the quality of construction without the cost breakdown? Also, make sure that plans are approved with the stamp from the planning department....

I honestly don't see how a lender could approve a loan without both of these items.

Find out if the lender wants an as is value of the subject in its current condition. You need to charge for this assignment appropriately.

The great thing about "subject to" plans and specs assignments is that if the Builder, or borrower don't follow the plans and specs and get the certificate of occupancy, all bets are off.

One last thing. In the Improvement section of the report, make it known what you're doing.

Based on full inspection, the subject is of average condition and in need of repairs. However, at the request of the client, the appraisal indicates "good condition" as the appraisal has been made subject to repairs, plans, and specifications of all construction and refurbishing being completed with permits and a C of O in a professional manner.

Remember, charge appropriately. Have fun! These are great assignments!

 

[Tom4value]

I have been assigned to complete an appraisal (conventional loan) for a property that includes a dwelling that was damaged by fire and no longer habitable. The loan is for the renovation of the dwelling. Two questions: (1) shouldn't the bank provide all of the plans/specs and cost for the renovation? (2) Where can I find guidelines for the report? I only see Homestyle Renovation in Fannie Mae Selling Guide

Home style is the only loan I know of that is not kept in-house. To do it, they have a contractor give a detailed estimate. They get it before they order the appraisal so they have to give to you. You must include the estimate in the report.

There is nothing fancy about the appraisal or report. You state what is there now, what work is to be done and note that the value is subject to completion.

 

[andrew81]

FNMA selling guide says:

The lender must maintain a copy of all of the documentation that supports the renovation work, including plans and specifications, “as completed” appraisal, renovation contract, renovation loan agreement, certificate of completion, title insurance endorsements or updates, and any other related documentation in the loan file.

 

[Surf Cat]

FNMA selling guide says:

The lender must maintain a copy of all of the documentation that supports the renovation work, including plans and specifications, “as completed” appraisal, renovation contract, renovation loan agreement, certificate of completion, title insurance endorsements or updates, and any other related documentation in the loan file.

Okay...... if they haven't provided you with the plans and specs with a materials list and costs...call the client and get them. You can't move forward without having any of this.

Be firm, but polite. Don't get stuck on all the rules....

 

[andrew81]

Okay...... if they haven't provided you with the plans and specs with a materials list and costs...call the client and get them. You can't move forward without having any of this.

Be firm, but polite. Don't get stuck on all the rules....

ok?

 

[Surf Cat]

ok?

Do you have everything that Fannie May requires and that everyone here has been telling you to get in your possession?

 

[sputnam]

A conventional appraisal.... therefore, you will appraise it subject to completion of the repairs and renovations and based on the hypothetical condition that the renovations are complete as of the effective date of the appraisal (there is a check box near the bottom of the 1004). You can appraise it without having plans, specs, budget, etc. however, that would require reliance on one or more extraordinary assumptions. Definitely try to get the information but, don't get hung up on it being given to you in a formal manner. You can take notes while on the phone with the builder or owner. Just make sure that the appraisal report states the source of the information you use. If you can't get anything, you will have to decide for yourself whether to complete or withdraw from the assignment.