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What is this ?

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Charles Decker

Thread Starter
Sophomore Member
Joined
Nov 16, 2006
Professional Status
Certified Residential Appraiser
State
Arizona
:shrug:

I did a condo appraisal about two weeks ago and it was a condo conversion from 2003 but the property was originally built in 1965. The client just called me and tells me the the UW wants to know if the property is "non-warrantable". Never heard of this one.
Got any ideas ?
 

Ultraviolet

Senior Member
Joined
Dec 31, 2002
Professional Status
Retired Appraiser
State
Arizona
Tell the client that the UW should read your report and compare the results with the lender's (or Fannie's) guidelines to determine if the condo is warrantable or not! That's the UW's job - not yours.

Different lenders (or funding sources) have different guidelines but typically, a high concentration of investors, pending litigation, unfinished common facilities, etc. can make the project unwarrantable.

It's like everything else - where is the loan going and what are the intended user's guidelines for warrantable condos? That's a lending problem - not an appraisal problem.

Of course, I may be wrong because I'm an appraiser, not a LO or UW ... :icon_mrgreen:
 
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Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
Charles,

I agree with Ultra that this is an underwriting issue, not an appraisal issue.

While I have not heard that exact term, "non-warrantable", I assume it means whether or not the condo project is, or can be, approved by that lender or that lender's secondary markets.

Lenders have their own resources for making that determination. This UW or client is simply confused as to where they have directed the question.

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Other guesses might be that they are talking about insurrance issues or title issues.

Still not an appraisal issue.
 
Last edited:
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
They want to know how many units are owner occupied and how many are tenant occupied and how many are vacant. Can't remember what the percentage of owner occupied is necessary to make the condo project 'warrantable'. The sales / developer personnel know and will provide those figures to you that will show the project is 'warrantable', even though it very well might not be. Do your own research to find out. Aren't the figures for this on the condo forms already? What did you fill in those blanks with and where did you get the data to fill them in???
 

Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
Pam,

I agree that the appraiser is responsible for providing the information he agreed to when accepting his assignment to conform to certain guidelines including due diligence in collecting data and properly filling out the agreed to forms.

If Charles has been defficient in doing so, he needs to correct his report.

But he is not responsible for making the "non-warrantable" determination. The UW does that. That decision is based on much more data than what is in the appraisal report.
 

Charles Decker

Thread Starter
Sophomore Member
Joined
Nov 16, 2006
Professional Status
Certified Residential Appraiser
State
Arizona
Thanks everyone for your responses so far. On all condo reports when I fill in the number of rentals/OO I put a +/- next to the number and make a statement in the addendum. The following is the statement I have in the report in question:
According to the MLS, there have been no rentals in the subject development since 01/01/2006. It is possible that any rental agreements are between private parties and/or property management companys and that information is not readily available. Because of this it is unknown the current number of properties in the subject development that are currently rented.

A little info regarding the development. It is a 16 unit complex ( four 4-plexes) and to be honest I don't know what the HOA fees are going toward because the complex is not very well maintained (and was noted in the report). According to county records, 12 of the units are owned by different individuals and 4 are owned by one individual.

Ultraviolet, If you are in Phx, the subject is located around 42nd street and about 500 yards north of the 202 and might qualify for the "Appraising in a dangerous neighborhood" thread LOL. While I was inspecting the property there were two ICE agents walking down the street.

I typically call HOA's to get the information regarding the number of rentals but for some reason I did not on this one. When discussing the rental information I include the name of the person I spoke with and include the phone number in the report.
Sounds like I need to make a call to get this information.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Charles,

You mean you do not get a copy of the budget and review it?

That analysis of the budget is on page 2 of the 1073. I have never had a Condo Management Company turn me down when I have requested a copy of the budget. It is part of an appraisers due dilligence, IMNSHO.

Did you ask the managment company if there were any rentals? Most such Condo Management Company's have that information available. Maybe it's different in Arizona, or, maybe it is not available due to the small size of the project?
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
:rof: Don, down here in Florida (mortgage fraud capital of the nation), the condo assns have hand outs for appraisers that include:

* totally made up HUD-1s showing new sales at high prices and no concessions.
* totally made up owner occupied / tenant occupied statistics.

and anything else that will help keep unwary appraisers using totally false data so the cash back deals will close and the lenders can pawn off these mortgages on Wall St.
 

TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
I think the rental cutoff is 50%, and it is amazing how many management companies have told me their rental ratio is 49%...

I would never rely on MLS rental info to count the number of rental units, at least in this part of the country, most rentals are handled privately. If the management company does not cooperate with the info, and/or as a good second source, pull up the tax records for all 16 units and see how many have different mailing addresses, etc.
 
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