Stand-Alone 216?

[realbiz]

I agree with most posters above on how to address this assignment. Having previous experiences like this before, I would like to add one addtional comment. In most of my cases the original appraiser did not get paid for their previous work, therefore they would not do additional work. I would request payment up front, and charge accordingly. I know business is slow for most appraisers, but be careful of what you wish for. Why didn't they order the original appraisal from you?

 

[PropertyEconomics]

Siggy ... based upon your second post my guess is there is no operating history on this property. That being the case, you will most probably have to estimate market rent, you will have to measure the improvements, you will have to verify their condition and you will have to do the research regarding expenses.
Like the others, I think you can do this assignment, but I also believe you are completing an appraisal with respect to the market rent. I would proceed very cautiously and make sure your file is documented very well as to where you obtained every part of the information you use within the operating income statement.
I wish you well with this assignment.

 

[Mike Kennedy]

Is it a Legal Use of the Site? Walk-thru or walk away.

 

[PropertyEconomics]

Is it a Legal Use of the Site? Walk-thru or walk away.

Are there places you cant rent your home?

 

[Abzntminded]

An OIS is not an appraisal and does not fall under USPAP. In other words, there are no standards to adhere to beyond a reasonable assessment, and no value is given. As far as the survey, it is only used to determine market rent. If an OIS is developed using only the property's current rent there may not be any need to know market rent and no reason to do the survey.

 

[TJSum]

An OIS is not an appraisal and does not fall under USPAP. In other words, there are no standards to adhere to beyond a reasonable assessment, and no value is given. As far as the survey, it is only used to determine market rent. If an OIS is developed using only the property's current rent there may not be any need to know market rent and no reason to do the survey.

Walk softly grasshopper. Why do you think they are asking an appraiser to complete the form instead of some other flunky.

Also note, per the OP's info, there is no current market rent for the subject or historical market rent.

Lastly, so as long as the subject owner can supply a monthly rental figure, you would just use that, irregardless of the market rents for the area? Usually owners rental info is as reliable as their estimate of value for the property.

 

[Mike Kennedy]

Are there places you cant rent your home?

......yes.

 

[Abzntminded]

Walk softly grasshopper. Why do you think they are asking an appraiser to complete the form instead of some other flunky.

Also note, per the OP's info, there is no current market rent for the subject or historical market rent.

Lastly, so as long as the subject owner can supply a monthly rental figure, you would just use that, irregardless of the market rents for the area? Usually owners rental info is as reliable as their estimate of value for the property.

Where did the OP say there is no current rent? The OP referred to a "216 on a rental property". You certainly can do a 216 using current rent instead of market rent. This just means the lender wants to know what kind of relief the rental income can provide after expenses, based on what the rent actually is, not what it would be if it were managed to the level of market rent. A percentage of the 216 result is used, and the UW is free to slash and burn it as they wish.

It's the lender's job to be the rent police, not the appraiser. We don't have to verify whether we've been told the truth as far as the rent is concerned. Lenders can use the landlord's tax returns and bank deposits as verification.

It makes sense to have the appraiser do the 216. We're supposed to be the flunkies with no dog in the hunt.

 

[George Hatch]

An OIS is not an appraisal and does not fall under USPAP. In other words, there are no standards to adhere to beyond a reasonable assessment, and no value is given. As far as the survey, it is only used to determine market rent. If an OIS is developed using only the property's current rent there may not be any need to know market rent and no reason to do the survey.

The above statement is partially incorrect. It's true that there are no performance standards (Standards Rules) applicable to a stand-alone income and expense analysis, but it is an activity that falls under the definition of "Appraisal Practice" as defined in USPAP. As such, the front half of USPAP applies, including the requirements of the Preamble, Definitions section, Ethics Rule, Competency Rule, etc..

When engaged in appraisal practice an individual who is acting as an appraiser has obligations to perform ethically and competently.

As to the acceptability of using market rent vs. contract rent or to what extent the contract rent should be verified I would think that question would be best answered within the context of "meaningful". The Preamble in USPAP includes an overarching requirement when it states that:

It is essential that appraisers develop and communicate their analyses, opinions and conclusions to intended users of their services in a manner that is meaningful and not misleading.

 

[TJSum]

Where did the OP say there is no current rent? The OP referred to a "216 on a rental property". You certainly can do a 216 using current rent instead of market rent. This just means the lender wants to know what kind of relief the rental income can provide after expenses, based on what the rent actually is, not what it would be if it were managed to the level of market rent. A percentage of the 216 result is used, and the UW is free to slash and burn it as they wish.

It's the lender's job to be the rent police, not the appraiser. We don't have to verify whether we've been told the truth as far as the rent is concerned. Lenders can use the landlord's tax returns and bank deposits as verification.

It makes sense to have the appraiser do the 216. We're supposed to be the flunkies with no dog in the hunt.

See Post #6 from the original poster, they are buying a new home and turning the current residence into a rental property. The lender will be using tha appraiser's OIS to determine whether they can carry both mortgages or not. So yes, there is liability involved with this assignment...