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Verbage

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joeduncan

Sophomore Member
Joined
May 7, 2003
Professional Status
Licensed Appraiser
State
California
Does anyone know any good verbage for the 1025 form on page 3 at the very bottom where it says "Comments on the rent schedule, actual rents, estimated rents (especially regarding differences between actual and estimated rents), utilities, etc..)??? What to write??
 

jeff samolinski

Senior Member
Joined
Apr 18, 2003
I do not know of any good canned comments if that's what your looking for. Don't think canned comments are normally appropriate since you are supposed to anlyze your rental comps and reconcile differences with the actual rents for the subject.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Quite often someone will rent a property on a long term lease or have a tenant who pays below market rent. If you are doing an income and expense analysis you should comment on what is "market rent" and if it is substantally more than the current rent do the analysis as a "pro-forma". Indicate what you did and why you did it. Henry Harrison has a good guide to the small income form that has a lot of typical comments for the report.
 

Jim Bartley

Senior Member
Joined
Jan 20, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
A lender called me yesterday to see if I would do a 2055 drive by on two income properties, one duplex and one triplex. They just had them appraised but were not comfortable with report. I explained that that form wasn't apropiate. Hung up, she calls back and says, yea, you're right. It seems they have some questions about the comps the guy used. We talk some more and I say, "why don';t you fax reports over and I'll take a look". The comps were OK, but where you comment on rents, this guy wrote "NONE". Unprofessional to say the least. The whole report looked like an exercise in "the less said the better". I alway use this section to explain why I'm using actual/market rents. It's really not that complicated. What you write here will carry over to your GRM analysis so just watch for consistency. Here's some verbiage I recently used on a duplex, maybe it will give you some ideas.....




"Due to the unique design/layout of the subject, there were few recent sales of similar homes. I have selected 2 very similar Capes with upstairs apartments, neither of which is currently rented, and a true duplex with similar income. The actual gross rent for the subject is $475 down and $375 up, for a total income of $850 per month. I have researched current rents of comparable apartments in the area and believe the subject's actual rents are a little on the low side. Specifically, I located 3 two bedroom units that rent for $475, $475 and $500 and 3 one bedroom units with rents of $450, $450 and $475. Based on this data, I have estimated the subject's market rent to be $500 down and $450 up for a total market rent of $950. I also researched past sales of dulpexes with similar income features. These had gross rent multipliers (GRM) of 71 to 86 with most around the higher limit. For the income approach I used comparable #3 GRM of 88 and the estimated market rent of $950 for a figure of $83,600 (88x950=83600). This figure closely supports the figure derived via the sales comparison approach."
 
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