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VA Condo Appraisal & Budget

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Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
I often see comments on the forum from many appraisers who state that they do not review a condo budget. I believe it is an appraisers responsibility to do so. It does not take a genius to do a review and spot problems. I just reviewed a Condo budget on a VA sale. The HOA Fee is higher than other similar condo's in the immediate area. The budget contains very questionable expenses. For example, an expense for landscaping. there is no landscaping. Fees for a master insurance policy and a flood insurance policy that is very high with no indication if it cover individual units, And, the asphalt common area is in a very deteriorated state and needs to be replaced. There are no reserves for anything except replacing siding, which does not appear to need to be replaced. I took photos of all this and included with the appraisal. In my opinion, and appraiser who does not review and comment on a condo budget is negligent in the appraisal of a condominium. I know many will disagree and that is just fine. But it is one of the things an appraiser is expected to do.
 

gregb

Elite Member
Joined
Sep 3, 2011
Professional Status
Certified General Appraiser
State
California
I often see comments on the forum from many appraisers who state that they do not review a condo budget. I believe it is an appraisers responsibility to do so. It does not take a genius to do a review and spot problems. I just reviewed a Condo budget on a VA sale. The HOA Fee is higher than other similar condo's in the immediate area. The budget contains very questionable expenses. For example, an expense for landscaping. there is no landscaping. Fees for a master insurance policy and a flood insurance policy that is very high with no indication if it cover individual units, And, the asphalt common area is in a very deteriorated state and needs to be replaced. There are no reserves for anything except replacing siding, which does not appear to need to be replaced. I took photos of all this and included with the appraisal. In my opinion, and appraiser who does not review and comment on a condo budget is negligent in the appraisal of a condominium. I know many will disagree and that is just fine. But it is one of the things an appraiser is expected to do.

Don, please cite a reference to VA documentation that the condo budget review is required to be completed by the appraiser.

Appraising since 1989, every condo assignment I ask client for budget to analyze, zero budgets provided to me. I agree it would be ideal to review the budget especially to see the reserves, however, no client to date has ever provided said budget.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Peer practice...vast majority of appraisers do not review condo budgets, (for numerous reasons including difficulty in obtaining them ) and yet appraisers come to credible assignment results for condos without doing so.

It is admirable you reviewed the budget, but imo doing so is inviting liability ( and I seldom reference liability) . An appraiser can offer an opinion about adequate reserves, for example, and turns out building needs a big repair and reserves are not adequate after all. Lender or borrower will claim they relied on appraiser's representation about reserves. Thanks but no thanks

The lenders and the buyers have to take responsibility for the properties they buy or loan on, and THEY should do their due diligence and review a condo budget. It is not necessary for appraisers to do that to achieve credible assignment result s A poorly run condo building should have a market reaction in low prices or poor marketability.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Don, please cite a reference to VA documentation that the condo budget review is required to be completed by the appraiser.

Appraising since 1989, every condo assignment I ask client for budget to analyze, zero budgets provided to me. I agree it would be ideal to review the budget especially to see the reserves, however, no client to date has ever provided said budget.
It is not the clients responsibility. It is your responsibility. You need to inquire as to the managment agent that manages the condo and ask them for a copy of the budget and any other information needed such as number of units, phases, rented vs owner occupied, parking for subjectan d guest. All of this is necessary for the condo form.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
I realize not every VA RLC is the same. Here is what the Roanoke RLC advises(See attached).
 

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  • VACondo.pdf
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gregb

Elite Member
Joined
Sep 3, 2011
Professional Status
Certified General Appraiser
State
California
Thank you Don. Condo budget is never provided with the appraisal request and it is not made available in the normal course of business. I do get info from the HOA management company regarding dues, number of units, amenities, number rented, etc. The HOA management company will not provide the budget.

upload_2017-5-26_11-52-47.png
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
It's amazing what they teach you in the Navy ** :) LOL
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Thank you Don. Condo budget is never provided with the appraisal request and it is not made available in the normal course of business. I do get info from the HOA management company regarding dues, number of units, amenities, number rented, etc. The HOA management company will not provide the budget.

View attachment 32198

I agree that it is difficult to get a copy of the budget from the HOA. But, if it is a sale for VA the lender gets a resale package and the budget is in that. But, more and more HIOA's are being difficult to work with and often will not assist at all. I have turned in a condo appraisal with all condo information blank as regards units, etc.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
It's amazing what they teach you in the Navy ** :) LOL

Want to know how that works? Read the book by a Retired Admiral Seal...."How to make a bed". That will tell you all you know about Navy training.
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
I just completed a condo appraisal for VA and attempted to get a copy of the budget report. I could not get it from the Lender, the seller, or the HOA. It is kind of difficult to review it when you can't get it.
 
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