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Unacceptable Assignment Condition

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Doug Wegener

Senior Member
Joined
Apr 14, 2005
Professional Status
Certified Residential Appraiser
State
Oregon
Very large lender but I won't mention the name. Letter of engagement comes across with this in it:

If the subject dwelling has an unpermitted addition or conversion, provide commentary regarding this fact in report. DO NOT INCLUDED THE ADDITION OR ROOMS/ROOM IN THE SALES COMPARISON GRID. NO VALUE SHOULD BE ASSIGNED TO THIS AREA .(my caps)

******************'
Seems to me , no can do. If the market assigns value, how can I not give it value?

How are you dealing with this?





?
 

YFA72

Freshman Member
Joined
Jul 4, 2010
Professional Status
Certified Residential Appraiser
State
Florida
Very large lender but I won't mention the name. Letter of engagement comes across with this in it:

If the subject dwelling has an unpermitted addition or conversion, provide commentary regarding this fact in report. DO NOT INCLUDED THE ADDITION OR ROOMS/ROOM IN THE SALES COMPARISON GRID. NO VALUE SHOULD BE ASSIGNED TO THIS AREA .(my caps)

******************'
Seems to me , no can do. If the market assigns value, how can I not give it value?

How are you dealing with this?





?
Same way you can appraise a house which is NOT there (Proposed Construction). or proposed demolition or any other existing or anticipated condition. As long as you and the client agree on the SOW and you are competent, you can include &/or exclude any part of the site or any feature or improvement. Of course you would report that there are unpermitted improvements just as you would with any other assignment.
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
It could be done with a hypothetical condition but I don't think this type of lender is wanting that.

You could include both values; with and without addition that has no permit. That way the lender knows what the market accepts and how much value is gained or lost by including or excluding it. The lender can decide how much to loan on.
 

S is for spittman

Senior Member
Joined
Oct 24, 2005
Professional Status
Certified Residential Appraiser
State
Texas
I think you should clarify their use of the word "unpermitted". May not have the same meaning as in the legal sense. I know FHA has specific rules on including additions and accessory units in the gross living area and some lenders use blanket guidelines to FHA standards.
 
D

Deleted member 134708

Guest
I'd Accept it and deliver a hypothetical value as long as engagement makes no mention you cannot deliver a hypothetical.

I'd read engagement 3 times. Then deliver what engaged to do. They would reject it but that's their problem. Maybe a regulator would say you failed to deliver what they wanted, but I'd take that chance.

This day and age, not much you can't get in trouble for. Doing either way will have same flaws and can be argued you didn't deliver what they wanted of HC Or what USPAP wanted if as-is.
 

gregb

Elite Member
Joined
Sep 3, 2011
Professional Status
Certified General Appraiser
State
California
Details:
Pre-2005 Fannie Form
Lender assignment condition: No permit, no value
Unpermitted patio room, no value in report

OREA: Bad boy, should have turned down the assignment. (I had co-signed report of my brother, a trainee at the time and OREA saw the report as part of is license upgrade to certified and the OREA comment was directed toward him)
 
D

Deleted member 134708

Guest
@gregb

Can see that all day long.

@OP if needed the $ to put food on the table I'd take it and take my chances out of necessity. If didn't need the $. Decline.

Cause hypothetical will give you a blacklist, and as-is no value as a condition give you USPAP no no.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
I'd vote 'unacceptable.' I once did a house and the lender said, 'we need a BP for the addition.' I called the city and they say, 'well, they got a permit, but the builder never called for a rough stage inspection, so we'll have to have the finished work removed to look at the rough construction stage.' The deal feel through, and HUD, who just happened to 'own' the property, took a $75,000 bath on the value of the property because it had to be disclosed going forward. So its not a good idea to 'ignore' anything about a property, IMO.
 
D

Deleted member 134708

Guest
Call OREA [sic] on Monday. Talk to an investigator. The 2 times I talked to and bounced ideas off of was surprisingly reasonable and did not represent a Gov. employee.

Ask them if they are interested in pursuing this bank for forcing appraisers to violate appraisers regs. No clue if they can do anything, but I'd give it a 5 min phone call to find out.

Do banks have to follow appraisers reg? No clue, but I know how to find out with 1 phone call.

Worst case OREA has no power, best case OREA calls up all these banks appraisals with this condition, issues violations against 10,000 appraisers, fills OREA's coffers and gets a large fine levied against the banks and or agents of the bank.
 
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