REO company requesting a 1004 to be used on a 4-plex

[jimk1709]

The 4-plex is in very bad condition with kitchen appliances in only one of the units. The rest of the units pretty much gutted. I have Comps in similar condition. Can the subject be appraised without regard to income potential using a 1004?

 

[PropertyEconomics]

Dont see how you could do it and not be misleading. It belongs on a multi family form, if the highest and best use is for renovation into a four plex.

 

[Dirty Harry]

It belongs on a multi family form, if the highest and best use is for renovation into a four plex.

Am I missing something? I thought the subject already was a 4-plex, just a really trashed one.

 

[Dirty Harry]

The 4-plex is in very bad condition with kitchen appliances in only one of the units. The rest of the units pretty much gutted. I have Comps in similar condition. Can the subject be appraised without regard to income potential using a 1004?

An REO company I work with has the same requirements using the 1004 form and no income approach for units. Thankfully they have not sent an order for units yet. I'm not sure how I will handle that when it comes. I guess I'll cross that bridge when I come to it. Let us know how you finally decide how to handle it.

 

[jimk1709]

REO company does not want a Operating Income Statement. However I believe your statment of highest and best use of renovation into a four plex is accurate and I will insist on using a 1025. Thank you

 

[Carnivore]

Considering the appraisal software most of us have there is no good reason to do this assignment on a 1004.

Is this the impression you want to leave people with once your report hits the streets?

 

[Lobo Fan]

I don't understand the thinking behind this. Why would they want a fourplex appraised as a single family?

 

[CANative]

I have Comps in similar condition.

Dont see how you could do it and not be misleading. It belongs on a multi family form,

What does the form have to do with anything? And why is an income approach NECESSARY when other methods will work and may even be superior?

If all they want to know is how much can they sell it for then sales of other screwed up 4 plexes would be pretty credible. Maybe they want to save time and money on the appraisal fee and don't need an income approach on a property that won't be getting any income until it's not theirs anymore.

 

[Mr Rex]

The first few lines of page 4 of the 1004 make this a no go. Think of it this way, a company you do not know asks you to participate in a 4 way orgy but all the paperwork will reflect you as monogamous. Explain this to your significant other later.

 

[Dirty Harry]

What does the form have to do with anything? And why is an income approach NECESSARY when other methods will work and may even be superior?

If all they want to know is how much can they sell it for then sales of other screwed up 4 plexes would be pretty credible.

That does make sense. Generally, these appraisals are not needed for lending purposes, they are for asset valuation purpose.