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Slab Issues

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joeduncan

Sophomore Member
Joined
May 7, 2003
Professional Status
Licensed Appraiser
State
California
Here is the situation... this was a purchase for about $285k.. i pulled some comps and i found several that were coming in at $400k... so i asked the mortgage broker who gave me the order if something was up with this and he told me that the buyer and seller are good friends... so i say ok fair enough.. so i inspect the house and there is an obvious slant in the kitchen area, so i figure there is a slab problem... now the question is since this doesn't seem to be an arms length transaction, (it was never listed and mortgage broker said they were friends) do i need to note that there is a slope or slab problem? and if i note in the appraisal that it was not an arms length transaction does this cover me for not mentioning the slab problem? or should i just mention it? what to do??????
 

jeff samolinski

Senior Member
Joined
Apr 18, 2003
Report what is there unless you want to pay for correcting the slab later out of your pocket or your insurer's pocket. You must not mislead the user of your appraisal.
 

joeduncan

Sophomore Member
Joined
May 7, 2003
Professional Status
Licensed Appraiser
State
California
FOLLOW UP QUESTION.............. when i do report this i believe it goes in the condition of improvements section? what exactly needs to be written?
 

jeff samolinski

Senior Member
Joined
Apr 18, 2003
Ah Ha here's where it gets tough. Yeah I would be it in the repairs section but the cost to cure if it can be cured is the difficult part as well as what the effect is on the marketability of the subject. To cover yourself I would call for an inspection by qualified structural engineer that includes options and cost to correct with language in appraisal giving you the right to change value based upon inspection. Would be nice to have the engineer's report before completing appraisal though. If you decide to proceed before the inspection is done just be sure to state what you observe as the potential problem, that you are not an expert in determining the cost to cure and that the present condition may affect the marketabilty of the subject ie.. cya--cya---cya. Good luck and hopefully someone else will come up with other ideas. I doubt that any lender will finance without an inspection to determine the exact nature of the problem. might want to advise your client of the problem before you proceed any further.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
What Jeff said.

And, make your appraisal based on the Extraordinary Assumption that the slab is average condition and does not need any repairs.
 

Walter Kirk

Senior Member
Joined
Jun 24, 2003
Professional Status
Licensed Appraiser
State
New Jersey
I would make my value conditional upon an engineers approval of the foundation.
 

Patrick Egger

Sophomore Member
Joined
May 29, 2003
Professional Status
Certified General Appraiser
State
Nevada
Would this be an extra-ordinary assumption ( assumed as a fact and if found to be false would alter the opinion) since the slab appears to have a problem or is it a hypothedical condition ( contrary to what exists but is supposed for the purpose of the analysis) ...

Perhaps a little of both, depending on how you approach the assignment. At the very least ... spell it out in no uncertain terms .... making sure you have advised your client of the potential problem and have clearly advised them that the report is based upon the EO/HC or both.

USPAP requires the "clear disclosure" ... and the problems I've seen appraisers get themselves into can be related directly back to failure on the appraiser's part to meet the "clear disclosure" part ... effectively, appraisers place the comments in areas that appraisers read and not in areas the client is suppose to .... put it in bold in the transmittal ... and also in bold in the body of the report ... and link that statement to your call for a professional building inspection or engineer's report, etc.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Real-life example. I inspected a home and noticed that there appeared to be some settlement/shifting on the back side of the home. I mentioned the fact and recommended an inspection by a foundation engineer. I further noted in the Conditions of the Report that should any engineering inspections, etc that were recommended in the report find that there was a problem with the foundation, it could affect the estimate of value. That put the borrower and lender on notice and covered me. Later, there was a he said/she said between the inspector and the realtor (always get the inspectors report in WRITING if you're the realtor). The Inspector said that he said there was a problem, realtor said that he said there wasn't. Buyer sued the realtor and inspector, inspector got out, realtor had to pay. I was not included in the suit since I had put the notice and disclaimer in the report.

So, ALWAYS disclose and comment. Make a condition on other inspections if you need to - don't say the home HAS settlement -APPEARS to POSSIBLY have some foundation problems/shifting, etc. You can be sued if you AFFIRM that there is settlement, so always uses "Appears", etc. (Engineers have sued appraisers over this).

Roger
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Thanks, Roger. The wording can be so very important!!!

(and the newbies that think they know it all after their first year.....! :angry: )
 

Steve Gish

Sophomore Member
Joined
Apr 28, 2003
Originally posted by RStrahan@Jul 3 2003, 03:10 PM
So, ALWAYS disclose and comment. Make a condition on other inspections if you need to - don't say the home HAS settlement -APPEARS to POSSIBLY have some foundation problems/shifting, etc. You can be sued if you AFFIRM that there is settlement, so always uses "Appears", etc. (Engineers have sued appraisers over this).

Roger
Can you be sued/would it be appropriate to state something like:

Conditions of Appraisal: "Settlement has occured and has been corrected by the owner with the installation of 15 steel piers. Appraiser recommends having a qualified structural engineer inspect the foundation. A hypothetical assumption is being made that the structural engineering inspection approves of foundation repairs."

Then check the "subject to" block in the final reconciliation.

I guess my question is would this cover you in court.
 
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