Is Your Home "Unlivable" by "Their" Standards???

Simpler Times · #1 01/12/08, 10:51 AM

Some friends recently had a home appraisal done in order to get a home equity loan. This is a very large home, over 2500 square feet on a large lot in the city. Half of it was built in the early 1900s by their grandfather and it was added on to in the 1960s by their father. A huge brick fireplace was part of the 1970s addition. The friends inherited the home. It isn't the nicest of homes but it is clean and functional for the most part. There has been little done in terms of updating the appliances though. There is an old claw foot bathtub and an old steel shower stall. There is a second very small half bathroom (toilet and sink only). The kitchen has painted plywood base cabinets but no upper cabinets. The walls and floors on the newest addition are all plywood, no drywall. They have papered about half of the walls and have indoor outdoor/carpet and stick-on tile on the floors in that part. The other part of that addition has real tongue and groove paneling. There is old acoustical tile on the ceilings throughout and much of it is water stained from leaks that have long been fixed. Despite that, the tile is in place and not falling and much of it (but not all) has been painted to make it look "ok". One full wall of the "den" has unpainted plywood cabinets and there is another full wall of the same kind of cabinets in the bathroom. Excellent storage that my friends use for crafts and tools as well as for bedclothes, towels, washcloths etc! The old part has the original old plank floors and even plank walls. It is the kind of place I would love to have IF it were in the country. The outside though does look pretty rough. Part of it was painted about ten years ago but the other part hasn't been painted for years. There is no underpinning and the yard is all grown up with ivy. Interestingly, this place is on the same block with a multi-million dollar cultural center built by the city. It is the only remaining house on that city block! Anyway, the appraiser came and went in 15 minutes and in less than 24 hours had his report in to the lender. He evidently described every flaw the house had in detail and told of none of its attributes. The killing blow though was his statement that the house was "unlivable" and he couldn't appraise it as a residence! He wants to do a commercial appraisal whatever that means. The friends are upset (they paid for the appraisal through the lender) and so is the lender. The lender told the friends they are going to insist he appraise the house as he has been paid to do. Obviously though the loan is unlikely to go through because the damage has already been done in the lender's eyes. The friends are not only terribly hurt that something they live in quite easily could be perceived as "unlivable". They need the money for medical bills and other financial problems and have no other options. My question to you guys is what would you do in this situation? I've tried to advise them to just sit pat and try to work on upgrading the house as they can. Buying used cabinets for the kitchen, a modern shower stall for the bath and trying to get some used good-quality carpet to replace the indoor/outdoor carpet and the stick-on tile floor coverings would go a long way I think. The ceilings too though need something done and I don't know what to advise there. Replacing them would be very costly and I don't know what other than painting them better they could do.

seedspreader · #2 01/12/08, 11:06 AM

I suppose if you want "their" money, you need to be to "their" standards.

KCM · #3 01/12/08, 11:21 AM

Since the appraiser would like to do a "commercial appraisal",
perhaps your friends might want to investigate the potentials of such (if any).

Ninn · #4 01/12/08, 11:24 AM

I was reading through some old court papers and came across this description of my home by a caseworker. " 3 bedroom trailer with no covered porch. 1 bathroom, with washer in it. dryer in living room. no dining room. 2 adults and 2 teens-way too small. remove older daughter to foster care immediately, as she has no privacy with her room next to her brothers and less than 20 feet from her parents. supervise all activities of younger son, as is room is too close to sister. recommend forced eviction, as home is currently no suitable for habitation by more than 1 individual." Not Kidding. And we had brand new appliances, brand new hot water heater and furnace, brand new subflooring and carpets, and a brand new solid core front door. All they cared about was the square footage! I'd hate to see what a bank would say about this place, as I tend to repair rather than replace.

Liese · #5 01/12/08, 11:42 AM

For me the answer lies with your sentence "only remaining house left on the block".... if I were your friends I would have the property appraised as commercial since it sounds like it has now been enclosed by the commercial district and then sell it. The piece - not the building- probably has good value in that regard, would give them enough capital to buy a place in a residential location where their sweat equity will have some value in future years. Putting time and money into the building as you describe it seems a losing proposition monetarily. I understand they may have "feeling" for this place but obviously the area has changed and the sooner that's accepted the easier it would be for them.

texican · #6 01/12/08, 11:50 AM

Sounds as if the only value (in the appraisors eyes) for the property is commercial (minus how much it'd take to tear the house down and haul it off).

I daresay, without a lot of delayed maintenance, my place would be classified unlivable by a commercial entity. Such entities aren't interested in livability, they're interested in recouping their loans. Although I'd probably live in your friends home (have lived in ten times worst), 99.9% of the population (well, the folks that actually 'have money', and not welfare leeches) would probably not live there.

Like seedspreader said, their money, their standards.

Beeman · #7 01/12/08, 12:51 PM

If or when you sell your property if the buyer attempts to obtain a mortgage you will also find out about their standards. I've been there and done that, mine was something as simple as steps and a deck but if you go unconventional with any basic systems you could run into this.
Now if the loan was used to bring the property up to their standards i'm sure they would stand a better chance of getting it but the money would need to be used for that.

With interest rates down they might be able to find a private lender that would take the property as collateral, but they better be prepared to pay and on time or they will be moving.

alpha phi · #8 01/12/08, 01:07 PM

Sounds like the home is more "in the way of progress", than it is "unlivable".
It may be in their best interest to Sell as commercial, before the city decides
to use eminent domain; to condem, and steal the property

wendle · #9 01/12/08, 01:10 PM

The value would be much lower, but what about having it appraised for the land under the house, not including the house.
If it's a large lot, is there enough extra to be considered 2 lots? Maybe appraise what could be considered another lot?

Rowdy · #10 01/12/08, 01:11 PM

This sort of stuff is creeping into everywhere. With energy prices the way they are, I have talked to several people about the household bills. Two different people had electric bills of $500 last month, and then asked me about mine. When I told them $80, but I wish it was lower, they looked at me and asked me how I did it. When I told them that in winter I keep the temp set no higher than 68 (and usually between 62-65) when we are awake, and then between 55 to 58 when we are sleeping they both looked shocked and said "I have kids, I can't do that!" Is it a crime that your children have to wear socks in the house, or have to have an extra blanket? Neither of these people could give me an answer. They had the same reaction when I told them that in summer we keep the temp between 80-85.

farminghandyman · #11 01/12/08, 01:50 PM

my daughter and her husband bought a 1990 built house in a town in about 2000, for $220,000 in my cautiousness I said the house is only a 100,000 house in our area, they went a head and bought it, and not really pleased in much of the house, but the last few years things have really been in major development, and the town is considering rezoning the area to residential/commercial. if that goes through the house may be or the land under it may be worth over 1/2 million, currently the value as just a house it is in the $300,000 to $400,000 range. (part of that is it closeness to the business district, and less than 15 years ago the lot would not have brought $10,000.

so it being looked at on the commercial side of things may not be a bad thing in the value side of it, (not saying they want to move or see the sentimental value of the house go).

texican · #12 01/12/08, 02:28 PM

location location location....

if they're in a fashionable growing area like farminghandymans kin, it might appreciate, or already be worth a fortune...

of it could be in a rustbelt city, where property is bringing literally dimes (if lucky) on the dollar...

I'll take well watered country land, where I can have an orchard, nut trees, and a garden...

RedneckPete · #13 01/12/08, 02:31 PM

Sounds unlivable to me too.

It seems you are telling us that they have basically done no maintenance or updating to the inside or outside of the property in as long as they have lived there. I can understand they don't have the funds to update the inside of the property, but what is their excuse for letting the grounds become overgrown.

Judging by what you say, my appraisal would be this. Your friends were given a FREE house, have done nothing to maintain or update it and are now in financial trouble, despite a FREE house and likely due to a lack of drive and motivation. These were probably the same factors that caused them to let the house deteriorate during their tenure. I wouldn't lend them a cent, in fact if I were a lender I would recall any existing mortgage immediately to try and recover my investment, or at least cut my losses. Sorry, but that's my take.

Pete

TNHermit · #14 01/12/08, 02:39 PM

My guess is somebody has had here eye on the place and wants it for commercial. if they can't get a loan and decide to sell it chances are that they will get less for it since the inspector deemed i unlivable. I d say somebody was in cahoots on this deal. Wouldn't be the first time tis has happened. Especially if the inspector is connected to a real estate business.

RedTartan · #15 01/12/08, 02:40 PM

I agree with RedneckPete.

RedTartan

Beaners · #16 01/12/08, 02:42 PM

I thought that to be livable (meaning the bank could resell it if you default) you really only needed septic or sewer, running water, a bathroom, kitchen, and some way to heat the place. A C of O, basically. I checked out a place that I wanted to buy a couple weeks ago, but I couldn't get a traditional loan on it because it didn't have septic or an indoor bathroom.

I didn't think that you needed to paint the outside of a house to live in it, RedneckPete. Your mileage may vary though. I can think of plenty of people on these forums that wouldn't run out and buy new appliances for a house "just because". And while the house's exterior may be considered an eyesore, I think it would be hard to call someone "lazy and unmotivated" just because of how the house looks. It makes me glad people here don't have pictures of the exterior of my house!

Kayleigh

donsgal · #17 01/12/08, 02:55 PM

Most likely the appraiser does not have the experience to appraise a house such as the one you describe and rather than admit his ignorance he has decided to simply take the easy way out.

I would have your friends call around to find an independent licensed appraiser who is experienced with OLDER type properties (your friend might even drop the term "historical" in there to get across that this is NOT the standard tract home). They need to explain the type of house and it's unique features and ask the appraiser if he would be comfortable with that type of structure. Not all appraisers are created equal and I am certain that the person shooting for the home equity loan has the right to choose an alternative appraiser if they wish to (perhaps at their own expense, I couldn't say).

Anyway. That is what I would do. Personally, I think the house sounds positively charming and I wouldn't change a thing about it. As long as the roof does not leak and the sewer/septic system works and the water works and there are no structural defects such as mold, or damage that would make the building a hazard, there is no reason to say it is unlivable. Shoot, that high falutin' appraiser ought to come out to the Missouri Ozarks and see what some people are living in! LOL

ETA: Rather than taking out a home equity loan, your friends should consider getting a second job to pay for their medical bills and other expenses. It is never a good idea to take out a loan if they can help it. Just my 2cents.

donsgal

minnikin1 · #18 01/12/08, 05:06 PM

If the structure is sound - it sounds like your friends need to turn this guy in to the local licensing board.
I would not let him come back for the "commercial" appraisal. I would demand my money back for the incomplete job.

They might try a another bank and different appraiser, but it sounds like they should polish the place up first. Paint and mow, at a minimum.

Freeholder · #19 01/12/08, 05:20 PM

Yes, it would be a good idea to polish the place up a bit before anyone else comes to look at it, but given the situation, I think they ought to seriously consider selling it as commercial property rather than taking out a loan with possibly a Depression coming in a year or so. Being in debt is the worst possible position to be in! While it may be a family heirloom of sorts, it sounds like they could probably sell it for enough to buy a home in better condition in another area, and have money left over for the medical expenses. And yes, as someone else said, they'd better do it before the city gets in there and condemns it or takes it.

Kathleen

Wolf mom · #20 01/12/08, 05:22 PM

If it is the only house in an area that has gone commercial, the value is in the land as commercial property and the appraiser is correct in wanting to appraise the land as commercial property.

I agree with whomever stated that the owners need to think about moving before it gets condemed & taken by the city. There comes a point where it's cheaper to tear down a structure than rehab it. This sounds like one of those houses.

The only thing is that a commercial appraisal is more expensive than a residential appraisal in most areas and if he's already been paid....

If you're going for a loan, the bank has a roster of appraisers that they choose from. Getting your own done will cost double unless your appraiser is on the bank's list as you will have to get it done by one of their appraisers also.