So Who Is Repsonsible To Verify Permits?

[SmilingDog]

In the course of the many reviews I do, I'm finding that a great majority of appraisers simply do not go to the city to check on permits and zoning. For example:

*** appraiser states that there are additions (done in workmanlike manner) and that per owner was done with permits. Blah blah blah...

But the appraiser never goes to verify permits (which may or may not exist). Today such an assignment came my way, tax records show GLA as 1500 sq ft. Appraiser measured 4400 sq ft!!!! Appraiser states additions were done with permits and that it is "not the appraiser's responsibility to verify existance of permits, since the assumption is made that the work was done with permits per owner".

These kinds of statements bother me. Are appraisers just getting lazy, or stupid? I was taught that I'm the one responsible to verify permits and anything else which will affect the valuation I'm stating in the appraisal report.

In the case above... Turns out that the subject property has permits, but that almost 400 sq ft was done as a workshop not living area, and planning dept said that the property can be subdivided into as many as 14 PUD SFR's!!!!!!!!! How's that for highest and best use. Hmmmm, one SFR for $1 Mil. or 14 SFR's for $450k each ($6.3 Mil)..... NO BRAINER!

Keep being lazy... I'll get more work!

 

[Rudy Canoza]

As soon as the owner says that there are permits, you just know that there aren't...

I guess the short answer is that if you have a letter of engagement to provide professional appraisal services you had better provide professional appraisal services. Including a trip to the county or city building and planning department.

 

[Mike Garrett RAA]

We are not supposed to be "permit police". Repeat after me...I am an appraiser. I am not a home inspector and I am not the permit police.

Was talking to a real estate agent today who was complaining about an appraiser who took two hours to "inspect" a property. She even climbed up on the roof to check the shingles. This is way beyond the "normal course of business" for an appraiser.

Sorry, it is not my job to hunt down building permits.

 

[Roy Spidle]

Have to agree with Mike here. I don't care so much if a permit was pulled or not. I am more worried about how my market will react to that addition. Will my market view that addition as a plus or a minus. Depends....

Do I go and check to see if permits were pulled on an addition? newp....

Does that make me lazy or stupid? Depends.....I don't think it does in my market.

-me

 

[wyecoyote]

Haven't we beaten this horse to death by now? Some appraisers on this forum say we should. Some say we shouldn't. Each has to be able to defend his/her position.

 

[SmilingDog]

Originally posted by Mike Garrett@ RAA,May 31 2005, 11:46 PM
We are not supposed to be "permit police".  Repeat after me...I am an appraiser.  I am not a home inspector and I am not the permit police. 

Was talking to a real estate agent today who was complaining about an appraiser who took two hours to "inspect" a property.  She even climbed up on the roof to check the shingles.  This is way beyond the "normal course of business" for an appraiser.

Sorry, it is not my job to hunt down building permits.

Mike,

I agree that we are not "home inspectors" and should not be made to check the roof (unless for FHA purposes) or crawl under houses, etc.

However, how can you (as a "professional appraiser") give value to an addition which may not even be permitted? There's a HUGE difference in comparing a 1500 sq ft house with a 4400 sq ft house. I think it falls under due diligence to check with the city for the permits.

If the property did not have permits for those additions, than their "workmanlike manner" is a moot point. We should not be giving value to unpermitted living areas...period. IMO.

So I'm not suggesting that we become "permit police", but that we as a profession excercise due diligence in our inspection, and if that means checing with the city, than so be it.

Sorry to disagree with you Mike... and yes perhaps we've beaten this to death... does that change the way we appraise?

 

[Rudy Canoza]

I disagree about not needing permits as an appraiser. I think you need to know. Otherwise it's an assumption.

And how sure are you that it was done in a professional manner? After all, you admit that you're not a home inspector. So what else aren't you going to be as an appraiser?

/Anyway, cheap insurance to spend a half hour and 8 bucks at the assessor's office. No assumptions after that...

 

[Highlander416]

I think it is best to state that permits are assumed, per owner, or whatever. If the client wants to see the permits, then the home owner can fax them over. If he does not have the permits, then the borrower will probably pull out of the deal, and the appraisal goes no where anyway. This option seems a lot safer than the hornets nest created when you go down to the building department, find no permits exist, and the building inspector walks with you as you leave, you going back to your office, while he goes to the borrowers house to see what is going on.

Mike

 

[Rudy Canoza]

Fannie will insure unpermitted additions IF it is professionally done and IF it is typical for the neighborhood to have unpermitted additions. As will FHA. That's not the point. I feel like I'm a lazy appraiser if I say "The borrower stated that there are permits but didn't have them."

You know, that just seems unprofessional to me. And I guess that since a week doesn't go by that I don't pull permits on several properties I just don't feel like it's that big of a deal.

And I can report, with authority, the characteristics of the subject property.

 

[Benjamin Singleton]

seems like George's example pretty extreme 1,500 SF vs. 4,400 SF with a funky workshop. I would check permits under those circumstances, but shouldn't the real question be what is the market value of the structure, permitted or not?