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sallyapp

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Reply with quote  #1 
I am appraising a home for which the borrower has applied for FHA 203K financing. The lender requires an “”as is” appraisal and a separate “as completed” appraisal. They also require a copy of the contractor’s bid in the “as completed” appraisal. I have a copy of the HUD consultant’s report and a copy of the contractor’s bid. The contractor left out an important item which is replacing all windows and exterior doors as specified by the HUD consultant. The homeowner can’t seem to get the contractor to do anything quickly as far as changing the bid and this situation has dragged on for 6 weeks. I don’t think I can make an extraordinary assumption that the contractor will replace all doors and windows and have a call into FHA. Who knows when someone will call me back. Any advice is appreciated.
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Meatloaf

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Reply with quote  #2 
If the consultant said that new windows and doors were to be installed, just do it subject to what the consultant said.  If you have a consultant invoived, I wouldn't worry too much about the bid except to just attach it to the report but do your report subject to the work write up done by the consultant.  They will want you to attach 2-3 more bids before its all done with... None of which will be relevant to your appraisal but they just want you to attach them to the report.  Don't know why but just attach it and MAKE SURE THAT YOUR REPORT REFERENCES THE CONSULTANT WRITE UP.  You can also identify anything that hasn't been written up by the consultant that doesn't meet HUD guidelines.

Is this for a purchase or a refi?  On a purchase, they will generally use the contract price as the 'as-is' value.  If its a refi... remember that the as-is value isn't simply the as-repaired value less the cost to repair.  The as-is value can be a very complex assignment that they usually expect for free or cheap.



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sallyapp

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Reply with quote  #3 
This is a re-fi. Thanks for all the great insight and advice!
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RubberStamp

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Reply with quote  #4 

I'm not sure I agree with Meatloaf here.  Never assume work will get done...  I have been left out to dry although with my behind was covered.  Often they won't even finish the work they outline or they change plans.  This also puts you in a really tough position. 

The dilemma is that you are valuing the property and every change matters.  How can you be accurate without the final work estimate to be completed?  Yes, it is really tough to put a "market derived" value on new windows and doors.  However, it is also way incorrect to think that this has no impact on value. 

Now if you are saying the HUD consultant's list is comprehensive and you can use it in place of the contract that is fine.  Then you can just point out the flaw and make sure they see that they are currently not getting the necessary windows and doors.  If it looks like an error, you need to point it out.  Trust me it is WAY harder to do that after everyone thinks its done and you are there for the final.  God, and for such big ticket items.

These 203k's are terribly managed.  Just blank checks being written..   Unfortunately you are supposed to be the policeman.  So forget the AMC turn time table you need more info IMHO.  


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We argue this: Meanwhile the agent's assistant just did 5 unofficial appraisal inspections they paired with a Zestimate and granted 90% LTV - all guaranteed no buy back.
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BillDing

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As-is is just that...as-is with no work done.  As completed is whatever your report says is to be completed.  If they don't do the work, then that is THEIR problem, not yours...because the final will show that the work is not completed.  I don't see a problem.  Your report is accurate to your stated hypothetical scenario.  If the lender requires the full bid, then you contact the lender and tell them that they aren't providing the bid. Let them tell you how to proceed. They may can it, but that doesn't relieve them from paying.

 

Now to OP...that's 2 appraisals.  I hope you're charging for two.

 

 


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sallyapp

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Reply with quote  #6 
Most definitely charging for two!
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MEP

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Reply with quote  #7 
I used to do these every week but my lender went to a different AMC...anyway, 

1. Don't trust anyone, verify everything
2. Call the contractor and the Consultant...then compare their comments. FYI, the consultant makes a lot of money on these deals...3 or 4 times what the appraiser gets
3. Ask the contractor to update his quote per consultant's report
4. The owner will do things that are not in the contract and will omit other things. Make sure that you detail All comments.
5. Take extra photos...extra photos saved my butt a few years ago, otherwise, it would have been "he said, she said"
6. Watch out for contractors that are 'fly by' night operators...some will say this is beyond your scope of work but it will save you time in the end.

NOTE: I just finished up a 203k loan that was began in 2015...the owner's added an upper story and wanted me to sign off on the final...I explained to him that the extra stuff was on him...took a few trips to make my point and gas money [smile]




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RubberStamp

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Reply with quote  #8 
Quote:
Originally Posted by MEP
I used to do these every week but my lender went to a different AMC...anyway, 

1. Don't trust anyone, verify everything
2. Call the contractor and the Consultant...then compare their comments. FYI, the consultant makes a lot of money on these deals...3 or 4 times what the appraiser gets
3. Ask the contractor to update his quote per consultant's report
4. The owner will do things that are not in the contract and will omit other things. Make sure that you detail All comments.
5. Take extra photos...extra photos saved my butt a few years ago, otherwise, it would have been "he said, she said"
6. Watch out for contractors that are 'fly by' night operators...some will say this is beyond your scope of work but it will save you time in the end.

NOTE: I just finished up a 203k loan that was began in 2015...the owner's added an upper story and wanted me to sign off on the final...I explained to him that the extra stuff was on him...took a few trips to make my point and gas money [smile]



This is what I'm talking about.  These programs are all over the place with little oversight.  In fact, you may be the only oversight and you are the only one with your license on the line guaranteeing everything.

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We argue this: Meanwhile the agent's assistant just did 5 unofficial appraisal inspections they paired with a Zestimate and granted 90% LTV - all guaranteed no buy back.
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