Two Values Including Prospective Opinion

[Zoe]

How freaking narrow minded are you? Conventional doesn't always mean Fannie which should be obvious to someone whose clients are direct lenders. Like you, right? Credit unions and community banks are usually federally regulated. FRT/RRT requirements apply. Prolly half of every "prospective" I ever performed or reviewed involved SFR properties.

One report can contain multiple valuation scenarios so that's not the issue. (i.e., insurable value, liquidation value, etc)

The OP laid out a scenario. And they clarified what their question was. Engagement requires "as is" and "prospective". And they added a clarification at the end:


Besides that, you SHOULD open your mind to the possibility that such assignments may become more common in the future. "Prospective" wasn't a thing during the last RE downturn. It came on during the boom when prices were increasing.

But George, VA or FHA or Bank don't mind how many acres you want to put with the house as long as commercial is not involved. When it becomes a farm and @Terrel L. Shields can tell you.

 

[Zoe]

From a borrower perspective? I don't how this land is laid out. But I would not want all that acreage on my house loan depending...............

 

[Zoe]

Look at it this way. Owner just got survey on 1 acre for kin. Whether it is financially feasible for them to carve out another acre or whatever on their own residence? I would if it is H&B use.

Then bank or FHA or VA would be fine. Bank, FHA or VA would be fine with 1,000 acres as long as H&B use is not commercial.

GSE would be fine.

 

[J Grant]

How freaking narrow minded are you? Conventional doesn't always mean Fannie which should be obvious to someone whose clients are direct lenders. Like you, right? Credit unions and community banks are usually federally regulated. FRT/RRT requirements apply. Prolly half of every "prospective" I ever performed or reviewed involved SFR properties.

One report can contain multiple valuation scenarios so that's not the issue. (i.e., insurable value, liquidation value, etc)

The OP laid out a scenario. And they clarified what their question was. Engagement requires "as is" and "prospective". And they added a clarification at the end:


Besides that, you SHOULD open your mind to the possibility that such assignments may become more common in the future. I don't know if they will or won't and I'm not making any predictions. But there is a possibility. "Prospective" wasn't a thing with the feds during the last RE downturn. It came on during the boom when prices were increasing.

Heck, Fannie/Freddie might like to know but they may have problems asking for it due to how many appraisers already don't meet all of their other minimums. As a reviewer I have had to enforce this element of their engagement with a number of appraisers, every one of which initially resisted complying with it until I explained it to them. A couple of them refused outright (inadequate fee for the extra work) and the lender ended up cutting them off the approval panel. Good appraisers with lots of experience, but ultimately uncooperative with a couple of the explicit terms of their engagements. Another one they didn't want to do was actually develop their land value opinions instead of backing into them off the SC for the subject. Engagement letter said to do it but they wouldn't, even after I showed them there were land sales in the area that they could use.

You never know. If you actually are working for credit unions and community banks it's just a matter of time before their banking regulators catch up with them. You may be seeing this again. You might even have to figure out how to do it. Or not.

Direct lender simply means the lender client does not use an AMC for its appraisal management, and the lender orders appraisals directly from its own lender-approved panel. My lender clients use the UARAR form, which means Fannie and Freddie.

I highly doubt such assignments will become common in the future for res lender ordersbut if they do, so be it.

 

[Zoe]

I get real specific sometimes on H&B use analysis. Like H&B use is for single family residential property. That is big in this case.

All but one acre may be in flood zone for all I know.

 

[George Hatch]

Direct lender simply means the lender client does not use an AMC for its appraisal management, and the lender orders appraisals directly from its own lender-approved panel. My lender clients use the UARAR form, which means Fannie and Freddie.

I highly doubt such assignments will become common in the future for res lender ordersbut if they do, so be it.

Portfolio deals which are held in house or which are sold to other investors don't go the GSEs.

Perhaps you missed it when I said that probably half the assignments involving "prospective value" which I have personally performed or which I reviewed have involved SFR properties. Reported on the 1004 form.

If you haven't yet been exposed to that niche in the market then that might be an opportunity for you to explore. I already provided you with the writeup for doing one, if you're interested. If you have any other questions about it I'll be happy to help you.

 

[J Grant]

Portfolio deals which are held in house or which are sold to other investors don't go the GSEs.

When lenders use a URAR form the loan can be sold to Fannie or freddie at a future time even if at present it stays in-house.

 

[George Hatch]

Maybe so, but none of the lenders I have done those for are selling to the GSEs. Nor are these particular loans often written at the same rate/term.

Bear in mind that the OPs example is apparently a construction loan with proceeds being used to build an ADU. The borrower may be an investor, not an end-user of the property.

 

[J Grant]

Perhaps that is true. Am waiting for the OP to ask his client and confirm-

 

[Terrel L. Shields]

they do not require it,

Most do require the "as is" value. But true enough, there is a choice between prospective (EA) and the "as if today" (HC) and I've done prospective about 3 times in 30 years.