What Format For "as Is" & "as Improved"

[Charlotte Dixon]

I have a client who wants a conventional appraisal with an "As Is" value and an "As Improved". I have the plans and specs for the renovation of this property, which is pretty much now a dump.

What format do you use? Two grids? Narrative? Other?

I can't remember ever doing one of these, other than the V.A. repos with that one page listing repairs, "as is" and "as improved" but this is not a V.A. assignment.

 

[Tina]

I've done these types of reports before and basically did them as two seperate reports; as the comps should be different. I would probably use a 1004 form.

I would disclaim the "as proposed" is subject to completion per plans and specs; a hypothetical condition. Further I would also disclose what the "proposed" renovations would include.

I would probably do the "as is" report first as that's what you've seen. Then I would conjure up my imagination and visualize what the proposed renovations would be and then go and search for comps based on that.

This should give the client an idea of market reaction -vs- cost to renovated so they can make an imformed decision from there.

FWIW

 

[Nathan Markley]

Charlotte,
Unless they specified what they want, they are leaving it up to you to determine the reporting format. Tina's suggestion is a good one. Each report should contain comparable sales data in support of the value estimates for as is and per plans and specs. Two reports would provide a cleaner process where no one could be accused of misleading anyone. The scope of work would be slightly different for the two assignements and should be addressed in the purpose of the appraisal.
Good luck!
Nathan

 

[Larry Lyke]

Charlotte --

The way I've done it and do it is:

1) Make the job(s) 2 complete reports.

2) Do the "as is" on the 1004.

3) Clone the above report and start the "as improved: Saves about 30% of the work of the new report. And the essential stuff is the same. Write over the change stuff.

BE CAREFUL. In cloning, the most common mistake I see is in not proofing the cloned report, because the appraiser see blanks filled in and doesn't realize it's the stuff left over from the cloned report instead of the new stuff.

Best o'luck.

L- in MN

 

[Mister Ed]

I have also included a disclaimer for the "as improved" value that it is based on current market conditions which are subject to change during the course of the repair process. I have not personally appraised any such properties, but my boss appraised two that dropped from the initial "as improved" value because the market made a negative shift.

 

[Larry Lyke]

Ed --

The forewarning(s) is unnecessary. Appraisals are a snapshop in time.

Disclaim this and disclose that...

Seems OK, until you realize with all the disclosures and disclaimers -- especially tailor-made ones overlaying the pre-printed attachments and certifications -- it adds confusion instead of clarification.

IMHO.

L- in MN

 

[Steve Wyrick]

Larry L. has it right, 2 reports clone the first one. Two different sets of comps. Two reports two fees, jackpot. :dance:

 

[Pamela Crowley (Florida)]

I have a different take on this and ready for the reasons 'why not'.

URAR completed with either the "As Is" or the "Subject to Completion of renovations per plans & specs provided". That would depend on who it's for and why they want it, so discuss that with them. Think I would prefer the 'As Is' on the URAR.

Then add an additional comps page to do the other grid, title that page for whichever value you are using it for. Not sure of the other software programs, but Alamode provides a lot of space for writing up an explanation of those comps. Your other value would be put on that page.

Now, what is 'wrong' with doing it like this? Of course the fee would be higher, but I don't know why one would have to do 2 separate reports.

 

[Nathan Markley]

Pam,
We have used the format you mention together with a list of repairs when completing REO assignements. However, when the client provides you with a set of plans and specs and requests two values, one before rehab and one after rehab, that's two different assignments, hence two reports. One is hypothetical, one is not. Why? The appraiser must not confuse the information with known facts. Two reports are cleaner, less confusing and will prevent call backs a month later when they close on that rush appraisal they needed two days from the date of the request.
Nathan

 

[Otis Key]

Charlotte - Larry pointed to the fastest, easiest and most widely used method. Alamode will easily let you clone, but like Larry said, be careful of data, statements and adjustments from the old report remaining in the new one.

Pamela - Like Nathan said - REO & foreclosures - yes. Plans & Specs rehab of a home for a client that might want to make a loan - NO. From the limited remarks in the question it appears that they want the "as is" to maybe provide interim or a small bridge loan to start the rehab. Putting both values on the same form & report will more than likely confuse the investor on down the line. Also, if the "as is" report was used for an interim financing situation and that loan is later paid off from the "subject to" completion and loan, then the first report is going to create far too many problems from a UW point.



Makes sense to ME :rainfro: :rainfro: :rainfro: