Sales Comparison Grid & Cost to Cure

[DWiley]

Also never had a lender refuse to allow an extraordinary assumption. Maybe just a bad lender - noted for future dealings.

For GSE work, adding an EA via commentary would render the appraisal report non-compliant with GSE guidelines. For GSE work an EA or HC can only be added via the checkboxes at the bottom of page 2.

 

[Zoe]

Yeah, I would not do EA because you knew at time of inspection it was not done. Easiest way is subject to. Go back for final inspection.

 

[Zoe]

You could do a condition adjustment and base it on cost to cure but your flirting with disaster when that house is exposed to the weather with no roof on it. If was a liquidation or REO assignment it would be different because it usually has to be "as is".

 

[Surf Cat]

You could do a condition adjustment and base it on cost to cure but your flirting with disaster when that house is exposed to the weather with no roof on it. If was a liquidation or REO assignment it would be different because it usually has to be "as is".

Zoe, the OP's client wants the report as is or the AMC would have to pay another appraiser to do so. Which would ultimately mean the OP wouldn't be receiving anymore work.

 

[Charles West]

If the client wants as is then give it to them. Deduct the rough cost of a tile roof and be done with it. It makes everything look weird to do it that way in the sales approach but so be it.

 

[J Grant]

Good Afternoon -

I am working on a revision for a lender who will not accept a subject-to appraisal report (assignment condition). The subject's roof is in the middle of being replaced (tiles are stacked ready to be installed). I based the value opinion on the extraordinary assumption that the roof replacement was completed in a timely and professional manner in accordance with local customs and regulations. The lender asked me to revise the report because they won't accept an extraordinary assumption - it bases value on a future condition so they won't allow it.

They are insisting I put a cost to cure adjustment in the sales grid - which seems highly irregular. Adjustments in the sales comparison approach are supposed to be based on measurable / quantifiable differences in attributes. Adding cost items to the sales grid seems inappropriate.

Has anyone come across this issue? Is it acceptable practice to use cost derived adjustments in the sales comparison grid?

Thanks in advance for your help -

Normally an adjustment is a market reaction but if ii is a minor amount, approximately less than 5k k I am comfortable making the cost to cure as an adjustment because an informed buyer would realize the apes low cost to finish the work.

AS is , cost to cure for a minor amount-

if large enough to materially affect value then I want to use market reaction AND find similar comps needing an equivalent kind of repair -needing no adjustment

 

[Zoe]

Normally an adjustment is a market reaction but if ii is a minor amount, approximately less than 5k k I am comfortable making the cost to cure as an adjustment because an informed buyer would realize the apes low cost to finish the work.

AS is , cost to cure for a minor amount-

if large enough to materially affect value then I want to use market reaction AND find similar comps needing an equivalent kind of repair -needing no adjustment

You saw what Dwiley posted. The easiest way is do subject to and go back for final inspection. Keep it clean as possible. With VA or FHA it is not even a question really. It is subject to unless it is REO or liquidation.

 

[Surf Cat]

If the client wants as is then give it to them. Deduct the rough cost of a tile roof and be done with it. It makes everything look weird to do it that way in the sales approach but so be it.

Which reminds me of another thing....OP, just like in my post number 9 where I suggest doing cya commentary for C2C.... you also have to make a comment about your "across the board" adjustments that are going to be in the sales comparison grid.

Why you ask even though this is what they're requesting you to do? Because it's a frigging AMC... the report will get conditioned again if you don't do it.

Across the board adjustments in the sales comparison analysis were made for the unfinished Roofing and were deem necessary due to the lack of more recent, similar and relevant sales within the subject's market area and surrounding competitive neighborhoods.

 

[Zoe]

An earlier poster said if they told them they had half a roof, he or she would request them put him or her off until the roof was completed. Good answer.

 

[Terrel L. Shields]

I've used cost to cure in the cost approach

Then how did you deal with it in the SA? or the Income Approach?