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

I agree with TNHermit. Especially when it is the last house on the block....sounds like someone somewhere has plans for that property and it probably isnt good for your friends.
What is the zoning like for the house area. If it has been change from residential to commercial they may not have a leg to stand on....but it could be a good thing.......

Alice in Virginia

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There is nothing any worse than an angry little old lady, they've had a lifetime to learn all the dirty tricks and people get upset if you hit them!

Around here (in Raleigh, Char. etc.) they are buying these old houses on large lots for 250,00+ and tearing them down to build multi million dollar houses. It's the same with commerical --they will appraise the house for what the lot is worth...to them the house is worthless.. It's a fact of life. Have your friends go to the tax off and see the value of the land around them.. They my be sitting on a gold mine..Queen Bee

P.S. I thought you were going to say because it was cluttered!! I 'might' have answered "YES'... QB

If you go by what my family thinks, my WHOLE place is unlivable and below their standards.

If they decide to sell, perhaps they can take some of the original flooring & wall materials with them. Carry some of their heritage with them into their future.

This might not be helpful but...

I did some temp work for a national home inspector "certification" agency. If you had $49,95, you were certified for a year, no test, no questions, here's your Id card, kthxbye. One of the agency's mailing lists consisted of federal prisoners scheduled for release within a year. Very experienced real estate valuators

heck my house is unlivable by MY standards.

lol

My experience with appraisers is that they are pretty much idiots. One recent project, a 250,000 remodel of a neat home that had been designed by an architect that had one wing with a semi-circular end, about a 16 foot radius to the curve. My friend, an interior decorator and contractor was waiting on the bank releasing the funds so we could all start work and the bank was waiting on their appraiser to finish his appraisal. After 6 weeks of delays after the appraiser's visit to the site, my guy calls this appraiser and asked what was the big delay to which the appraiser replied: "How do you figure out the square footage of a curved room? My computer program won't let me enter a room that isn't a square or rectangle..." So my guy told him that he had multiplied length times width and knocked off a little...
I had another appraiser come out to the farm and give me its value and he only looked at the main floor of the house and was uninterested in walking around the property or seeing the features of the land. When I questioned him about that he told me that they used "formulas" for that sort of thing...When I received his estimate it was 30% below one made by a real realitor with experience showing and selling farms.
Get another opinion, one from someone who ain't trying to help manipulate you into letting their cousin steal it for development into historical flavored condos...

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you have to be smart to feel stupid

You know, before you start giving advise on real estate you really ought to know what you are talking about which, based on the above, is little to none.


Most likely the appraiser has a Scope of Work from his client, the lender and has appraised the house accordingly.

Old and deferred maintenance are NOT synonymous with "historical".

Actually, by law the borrower CANNOT chose the appraiser. In fact, by law, the appraiser cannot even discuss the appraisal with the borrower, even though the borrower pays for the appraisal, without his/her client's permission. The client, in this case, being the loan officer who, again by law, was the one who ordered the appraisal.

Mold is not a structural condition and an appraiser is an appraiser, not an inspector. An appraiser can call for an inspection, however.

As an appraiser, I would not ever use the term "unliveable" myself. However, I do describe the condition of a house in detail, supported by photographs. Because I am the eyes for the client and they hired me to get an objective, unbiased and independend opinion of value. And while there are lenders and loan packages for this type of property, obviously this lender appears to be not one of them.

As far as the commercial aspect is concerned, from the description in the OP it appears to be located in a neighborhood that is now predominently commercial and the house is grandfathered. Because an appraiser must always consider the Highest and Best Use of a property, it is possible that in this case the Highest and Best Use of this property is not as a residence. Yet another thing to consider for the lender.

The job of the appraiser is to give his/her objective, independent opinion of value, NOT to make the deal work regardless of the data.

Here is another winner

In the first case, whoever ordered the appraisal should have done the research and made sure the appraiser was competent and experienced to deal with such an unusual property.

In the second case I would have taken the opinion of the appraiser over the one of a realtor.

As far as appraisers being idiots .... yeah, there are some dim ones around. But in my experience the majority of appraisers' IQ is far above the average citizens'.

As an appraiser, we must appraise a property for it's "highest and best use". I think the appraiser means that the highest value for your friends property would be commercial. Not all appraisers are licensed to do both residential and commercial. Perhaps, if you read between the lines, the appraisers report is saying " find a good commercial appraiser, and the value will be greater"

Chris

Exactly

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"If you have ten thousand regulations you destroy all respect for the law." -- Winston Churchill

Doubt it. If an appraiser comes out to your house to do an appraisal for a loan which, I believe, is the case here, the appraisal will be done on a residence, not a commercial property. There is a section on the form that deals with that and if the residence is NOT the Highest and Best Use, it will be discussed in that section. That, and the zoning is very important to the lender because if the residence is located in an area that is now mostly commercial, it is very likely that the zoning was changed from Residential to Commercial and that the residence is grandfathered, which means that if something happens to the house it won't be able to be rebuilt as a residence ... it will lose its grandfathered status. Many lenders won't lend on that.

So it would NOT be appraised as commercial. And FYI, a Certfied Residential Appraiser's license CAN do small commercial properties provided the appraiser is competent (has the experience and knowledge) to do so.

Simpler Times,

You are really asking a number of questions:

1) You are asking how an appraiser could write off your friends home as unlivable. There is a perjorative sense and a descriptive sense. Your friends should ask the lender if they can get a copy of the appraisal. The descriptive sense would mean "this structure doesn't even come close to code and local zoning requirements. If the lender were to foreclose they would have to sink money into it before they could hope to be able to sell it" This use of the term might be used (for example) in a community which requires home inspections when a home is sold.


2) You are asking/pointing out about your friends hurt feelings. This is a financial transaction. Either your friends meet the requirements or they don't. Anything other than that is irrelevent. There is only one number that counts....what is the valuation placed on the property.

3) I have never heard of a lender (openly) telling an appraiser to go back and change their appraisal (particularly higher). That would generally come under the heading of fraud. I have heard of lenders leaning on or indicating to an appraiser upfront where they "hope" an appraisal would come in. This was happening more frequently in recent years. We can all see one of the outcomes of this sort of practice.

We finally come to the crux of the matter. What should your friends do? If their medical bills and other financial problems are that great, they are likey to lose the house anyways. The holder of their medical debts will end up putting a lien on the property and tie it up. This happened to a neighbor of mine.

The first thing they need to do is find out the real value of the property in todays market. Seeing as they inherited the property they are ahead of the game regardless. The real question would be what their basis is and whether they have been there long enough to get the exclusion on a home sale.

It may be that the property is not worth all that much as a commercial property even if most of the properties around it are commercial. It sounds like a tear down and not a remodel. In that case and given the tight credit market I would expect (all things being equal) that it miight move slowly in todays market.

Just a few thoughts.

Mike

Your friends need to set aside hurt feelings and passions and look at the financial issues they are dealing with.

Actually, that happens quite frequently. It is illegal for the appraiser to give in to that, although it does happen and more frequently than I'd like. But laws are toughning up and now it is illegal in several states for a LO to put that kind of pressure on an appraiser.

Great post Mike!!

I am reading and digesting all the posts. Thanks everyone! There is a lot of insightful information to consider and then to convey. Just as a note, the lender is not pressuring for a "higher" appraisal....they are requesting "an" appraisal because that is what the guy was paid for. The appraiser did not provide a monetary value for the place of any kind! Instead he evidently devoted his report to describing the faults of the property in every detail. There was no balance in terms of pointing out the property's attributes and there was no dollar value assigned. The lender is now obviously at a loss as to what to do because they have not been provided with a monetary value. Despite the appraiser's *qualitative* impression of the place as being "unlivable", my friends are living there quite contentedly and (again as an aside) many people in my circle at least would feel blessed with such a home. Even if a loan is not granted, surely the appraiser is obligated to provide a *quantitative* value for the place as a whole, lot and house included. Even if the house represents a negative in the equation, for example if the appraiser had to calculate the costs to tear it down and have it removed, the lot has to be worth something and the sum of values would be the total worth. That, of course, would place the property on the dividing line between residential and commercial I guess so how would a lot value be assigned? Does commercial property that is being used for residential property still benefit from the inherent price increase typically associated with commercial land? Surely appraisals are completed routinely of residential property that is actually zoned commercial? Keep in mind when considering these questions that the entire city block where this property sits is now occupied by a multi-million dollar cultural center. This is a high growth area and an area where property values are definitely on the upswing. This one house is all that is left on the block. There are other residences across the street from this property but they too are actually in a commercial area.

Just read the previous post ..and a thought popped into my head. (really?)

Anyway, suppose the original appraiser is able to obtain permission from the current owner to do a commercial appraisal. Would that, through some sort of legal loophole, eliminate the 'grandfather' clause from Residental, and automatically revert it over to 'Commercial'?

Probably not, but I have seen stranger things happen (in a legal sense).

I have always told my kids and grandkids that you are better off to own a shack than to rent a palace.A place with a roof and four walls is livable in my book.The goal should be to get a house paid off,not to get another mortgage on it.You can not afford the house if you need a second mortgage.

No, because 1) it isn't up to the owner. The appraiser's client is the lender. And 2) the loan application is for a residence. Appraising it as a commercial property would negate the residence, thus there won't be a residence to finance.

There are too many unknowns to come up with a meaningful answer. But your statement that this is the only residence left on the block may be your answer ........

If they can afford to buy supplies to fix thehouse, they can afford to work with, and pay off their debtors. Tell them to keep their noses to the grindstone, Tighten their belts, call thier debtors, and work out payment plans.

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