Sales Comparison Grid & Cost to Cure

[TekJ42]

Thanks everybody for responding to my post!

 

[Surf Cat]

Actually, I changed the subject's condition rating and modified the condition adjustment for all comparables with some very specific language in the addendum. As of the effective date the subject had no roof covering - so we adjusted the condition as though the subject's roof was severely damaged. Feels more correct than a cost derived adjustment jammed into a line item in the sales grid. They seem to have bought it for now... tomorrow is another day though.

Really? Well, that's one way to go about it. What condition rating did you choose? Did any of your comparables have "severely damaged" roofs with the same condition rating? If not, then all of your comps s*ck for the same reason.

Lastly, how did you derive your measurable and quantifiable adjustment for said severely damaged roof?

This would be very interesting if this goes through and the client does not contact you back.

 

[Terrel L. Shields]

every AMC I have dealt with specifically prohibits direct communication with the client.

The client should inform you of what kind of loan it is. If they want you to do FNMA they need to say so - use their form. But for a bank, non-conforming, again that bank falls under the UCC or FDIC and adheres to the Interagency guidelines. They require an "AS IS" value always. If they need a "subject to" or " plans and specs" then they ask for that in addition to the "as is" value. FNMA, FHA, etc do not require an "as is" value.

If the AMC send it out as FNMA and it isn't - then the AMC is at fault.

 

[Zoe]

The client should inform you of what kind of loan it is. If they want you to do FNMA they need to say so - use their form. But for a bank, non-conforming, again that bank falls under the UCC or FDIC and adheres to the Interagency guidelines. They require an "AS IS" value always. If they need a "subject to" or " plans and specs" then they ask for that in addition to the "as is" value. FNMA, FHA, etc do not require an "as is" value.

If the AMC send it out as FNMA and it isn't - then the AMC is at fault.

Yeah. I still would not do EA. But yes I agree with this.

Many times an "as is" and "subject to" values are needed in same assignment. EA not required and rarely needed.

 

[J Grant]

Actually, I changed the subject's condition rating and modified the condition adjustment for all comparables with some very specific language in the addendum. As of the effective date the subject had no roof covering - so we adjusted the condition as though the subject's roof was severely damaged. Feels more correct than a cost derived adjustment jammed into a line item in the sales grid. They seem to have bought it for now... tomorrow is another day though.

But the subject roof is not severely damaged. It is misleading to present it as such. ( AS IF)- you made a HC without declaring it a HC.

The subject roof is covered with tar paper over wood ( or whatever is there ) and ready for tiles to be installed.

If the cost to install the tiles was a substantial enough amount to impact value you could have told the client you intend to put a market-derived adjustment instead of straight cost and they would have said ye ( because they can not instruct you how to write your appraisal )

AS IS means AS IS !! Why is that difficult...It does not mean AS IF it had ( severe roof damage or X other )

 

[sputnam]

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 -

So.. this Lender never makes loans on proposed dwellings?

As for your question, I would just make condition adjustments and explain what they for and how they were derived. If the Lender is insisting on a completely separate adjustment for the roof, then use one of the extra lines at the bottom of the grid.

BTW, imo the correct approach would not be a prospective valuation based on an extraordinary assumption. It would be current value based on a the hypothetical condition that the roof was complete on the effective date of the appraisal.

 

[J Grant]

So.. this Lender never makes loans on proposed dwellings?

As for your question, I would just make condition adjustments and explain what they for and how they were derived. If the Lender is insisting on a completely separate adjustment for the roof, then use one of the extra lines at the bottom of the grid.

BTW, imo the correct approach would not be a prospective valuation based on an extraordinary assumption. It would be current value based on a the hypothetical condition that the roof was complete on the effective date of the appraisal.

WRONG!!
based on a HC that roof was completed on eff date IS NOT the lender engagement assignment!! ! The OP already did it that way and it was rejected by the client ! The dlient wants it AS IS.


I have done appraisals AS IS a number of times for partly completed repairs or finish. There is nothing "incorrect" about it. Of course, from the appraiser's point of view, it is optimal and easier to make it subject to a HC as complete, however that is not the assignment.

The lender can not insist on a completely separate adjustment for the roof since we can not let the lender dictate ( instruct ) us how to do the appraisal. They can suggest it. We might or might not make a separate line adjustment for the roof.

 

[sputnam]

WRONG!!
based on a HC that roof was completed on eff date IS NOT the lender engagement assignment!! ! The OP already did it that way and it was rejected by the client ! The dlient wants it AS IS.


I have done appraisals AS IS a number of times for partly completed repairs or finish. There is nothing "incorrect" about it. Of course, from the appraiser's point of view, it is optimal and easier to make it subject to a HC as complete, however that is not the assignment.

The lender can not insist on a completely separate adjustment for the roof since we can not let the lender dictate ( instruct ) us how to do the appraisal. They can suggest it. We might or might not make a separate line adjustment for the roof.

Please read more carefully. I did not advise the OP to do it using an HC.. nor did I say that the appraisal could not be done as is. I said that an EA involving a prospective value was not the correct approach. Obviously, the Client decides whether which approach is acceptable to them. The Lender absolutely CAN insist that the adjustment for the roof, if any, be separated from the adjustment, if any, for general condition of the imrprovements. They can't tell the appraiser that an adjustment is warranted or how much that adjustment can be. The Client is allowed to have input on reporting issues. Not on development issues.

 

[J Grant]

Please read more carefully. I did not advise the OP to do it using an HC.. nor did I say that the appraisal could not be done as is. I said that an EA involving a prospective value was not the correct approach. Obviously, the Client decides whether which approach is acceptable to them. The Lender absolutely CAN insist that the adjustment for the roof, if any, be separated from the adjustment, if any, for general condition of the imrprovements. They can't tell the appraiser that an adjustment is warranted or how much that adjustment can be. The Client is allowed to have input on reporting issues. Not on development issues.

I disagree, the client can not instruct the appraiser to make separate line adjustments and it is not just a reporting issue !! It is an appraisal issue, they are telling the appraiser to appraise it this way , (with a separate roof adjustment ) ( and the appraiser says yes )

If the appraiser decides independently that making a separate roof adjustment is the credible approach, that is different than the client instructing them to do it that way.

BTW, imo the correct approach would not be a prospective valuation (I was addressing this , which you did advise) -

 

[J Grant]

Actually, I changed the subject's condition rating and modified the condition adjustment for all comparables with some very specific language in the addendum. As of the effective date the subject had no roof covering - so we adjusted the condition as though the subject's roof was severely damaged. Feels more correct than a cost derived adjustment jammed into a line item in the sales grid. They seem to have bought it for now... tomorrow is another day though.

25. Any intentional or negligent misrepresentation(s) contained in this appraisal report may result in civil liability and/orcriminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United StatesCode, Section 1001, et seq., or similar state laws.

They seem to have bought it for now ?? Seriously??? You sound like a nice guy, but your view point is a bit off -

As if the roof was severely damaged is misleading because it is not the case and you adjusted based on it, ( that I swh I pasted cert 25). It is good for any of us to slow down and read the certs and limiting conditions - a house with severe roof damage is usually compromised in other ways , water intrusion or mold, and the roof needs repair and replacement - this is a roof ready to be tiled. Normally roofing companies would put a tarp on overnight to protect against weather -