Subect "to" because bath is in progress on remolding?

[Lobo Fan]

Subject to or is-is is a judgement call. FOr example if the bathroom is unusable and it is the only one then that is a definite subjet to situation. If there is another bathroom then you could go as as is with a cost to cure. Frankly, I look at whether or not I want to go back on a 442. Sometimes these are pretty rural, and doing a 442 for $100 is a losing proposition.

 

[CANative]

What if it was like this...

 

[Christine Marie]

you're very fast today, can barely get my post in ahead of you... there is some ambiguity to his post, which makes it more difficult to correctly answer....

 

[Christine Marie]

yup, if that's the only bathroom, you'd better pray for rain.. and would also deserve a "subject to"

 

[Fred]

Greg,

If the client gives you the "this isn't going to Fannie Mae" routine

That is messed up. Have you ever heard the expression that if your only tool is a hammer, then every problem must be a nail?

the appraisal needs to be made "subject to repairs."

How is it none of the clients know what they need? If the client is a federally insured lender, an appraiser is supposed to know that as-is value is required without being told.- Right from good-old USPAP, “The agencies guidelines require an appraisal to include the current market value of the property in its actual physical condition and subject to the zoning in effect as of the date of the appraisal (a current date of value).”

Even factoring in that Fannie doesn’t want to buy mortgages collateralized by fixer uppers, I don’t see where the Fannie excerpt removes the primary lender's need for as-is value or the appraiser’s requirement to provide it. Even Fannie wants as-is value.
1. The Fannie excerpt says if needed repairs are immaterial, call it as-is value. That’s standard everywhere.
2. The excerpt says if material repairs are needed, they will accept what was done as a hypothetical value, because the lender must have the “material conditions repaired before it delivers the mortgage loan to Fannie Mae.” After the repairs are made, what was a hypothetical value is now an as-is value.

While the repairs remove the hypothetical condition by the time the loan is delivered to Fannie, the originating lender has a problem because the overstated (hypothetical) value could cause them to lend more than the LTV limit, maybe even more than the property is worth.

If I were the lender and this were my own money, in addition to giving you the “it’s-not-for-Fannie-routine, I would be asking the same question this lender is asking – in effect – what is the property really worth without the hypothetical conditions? :icon_smile:

 

[Matt Anzaldo]

Pictures of the "subject to" appraisal in California.

This is Matt, the original poster on the message.

To give you some more info. The property was a SFR 3 brd/2bath, two car garage etc...

I posted pictures of the 2nd bath. The floor is missing. The shower is non-functional. The sink is installed with working water and toilet.

The first bath is functional and in working condition, if that helps.

Let me know what you think? Would you make the appraisal "subject to"?

How would you appraise this property.


Picture of 2nd bath without flooring. Toilet and sink working.
http://img.photobucket.com/albums/v292/jennifer_anzaldo/bath.jpg

Picture of shower not working, just a wood frame.
http://img.photobucket.com/albums/v292/jennifer_anzaldo/shower.jpg

 

[Christine Marie]

This is Matt, the original poster on the message.

To give you some more info. The property was a SFR 3 brd/2bath, two car garage etc...

I posted pictures of the 2nd bath. The floor is missing. The shower is non-functional. The sink is installed with working water and toilet.

The first bath is functional and in working condition, if that helps.

Let me know what you think? Would you make the appraisal "subject to"?

How would you appraise this property. am assuming, i am still in this...,, in your scenario, Matt, i probably would have utilized a cost to cure, and compared it to at least ONE one and one-half bath, to illustrate market participants reaction to a full versus a half, AND hopefully that amount would have been greater than my diminished cost to cure market value...... that said, i will be the sponge and just absorb.... hopefully...

 

[CANative]

That is messed up.

I had to read the post originator name twice to make sure it wasn't my grandson.:icon_smile:

If the client is a federally insured lender, an appraiser is supposed to know that as-is value is required without being told.

If the appraiser states that the appraisal is for mortgage underwriting to fannie mae guidelines, Statement 10 becomes moot. The appraiser has stated that by using the form and pre-printed certifications.

Even Fannie wants as-is value.
1. The Fannie excerpt says if needed repairs are immaterial,

The condition of the property does not appear to be immaterial.. as described in the FAQ.

Even Fannie wants as-is value.

Only if the condition does not rise to the level of a condition requiring immediate repair. A non-functioning bathroom is not maintenance that has been deferred.

If I were the lender and this were my own money, in addition to giving you the “it’s-not-for-Fannie-routine, I would be asking the same question this lender is asking – in effect – what is the property really worth without the hypothetical conditions?

If you were lending your own money, you wouldn't need an appraisal reported on a Fannie Mae form. I would fee free to give you an as-is value. The trouble with these situations is that it is MB's who are not loaning their own money using lenders who only loan their own money for a few months before sending off a huge batch of mortgages to the secondary market.

 

[Otis Key]

Greg - I just finished one like your picture, except that bath was in a detached garage/shop and of minimal concern. I photographed it and mentioned the lack of completion and gave it NO consideration. Of course, in that market it would have been a minimal (if any) contributory amount if completed with gold plated fixtures.

 

[Fred]

Matt

The floor is missing. The shower is non-functional. The sink is installed with working water and toilet. The first bath is functional and in working condition, if that helps. Let me know what you think? Would you make the appraisal "subject to"?

I voted as-is, because hypothetical is wrong for intended use and wrong on standards. I'll add this. Using the hypothetical doesn’t make sense. If 1.5 +/- out of 2 bathrooms are working, the deficiency doesn’t seem “material.” How big a line adjustment for condition is that? 5% net adjustment? 10%?