Posted on: 03rd Dec, 2007 05:17 pm
I own a 2 familly - 4 story brownstone that has 3 kitchens (1st, 2nd, 3rd) and a kitchenette at the 4th (just refrigerator and sink with cabinets). It seems that it is a issue for a buyer getting a loan because of the appraisal shows more kitchens that the amount of famillies on the C of O. What am I suppose to do? Demolish one kitchen just to facilitate the loan process? I can not understand why this is such a big issue. Please advise. Thanks
Hi,
It seems a bit rediculous that one extra kitchen is creating problem for you to sell the house.
It seems a bit rediculous that one extra kitchen is creating problem for you to sell the house.
the issue might be that there are no comparable properties in the area and as such it is hard to determine its value. Therefore a lender would consider it a major risk factor. Should you stop paying on your loan they would be stuck selling it at an auction and chances are they don't want to lose alot of money should this happen. Some lenders have Loan to value restrictions on a unique properties but you should still be able to get a loan so long as its not above 90% of your house worth.
why is there a kitchen in the basement? Is it an apartment that you rent out? If so then
yes this is going to creat a big issue. Because of the way the house is set it looks to the bank like you have an illegal three unit. Banks have problems with illegal properties. also if the pricing of a loan changes for a 3-4 unit property which is another reason that the bank is giving issue.
The answer is not to demolish the kitchen completly. You should be able to remove the appliances (simply put in garage or storage) and cap the pluming to allow for an appraiser to overlook the basement kitchen. The appraisal will charge the buyer for a redo and the buyer will probably have to find a different lender. The appraiser will then simply write the property up as a finished basement.
The other option is if their is not a seperate basement entrance then the appraiser could write it up as an in law apartment. or if it is simply an extra kitchen that italian families are known to have the the appraiser needs to write it up that way and find comparible properties in the area. The banks want to see at least three like properties in the area and to know that basement kitchens are the normal for the area. If not this affects the marketability of theloan to incvestors as it becomes a unique property and they may nopt be intrested because if they have to take ownership resale on their part may become an issue.
If you have any further questions please feel free to ask.
yes this is going to creat a big issue. Because of the way the house is set it looks to the bank like you have an illegal three unit. Banks have problems with illegal properties. also if the pricing of a loan changes for a 3-4 unit property which is another reason that the bank is giving issue.
The answer is not to demolish the kitchen completly. You should be able to remove the appliances (simply put in garage or storage) and cap the pluming to allow for an appraiser to overlook the basement kitchen. The appraisal will charge the buyer for a redo and the buyer will probably have to find a different lender. The appraiser will then simply write the property up as a finished basement.
The other option is if their is not a seperate basement entrance then the appraiser could write it up as an in law apartment. or if it is simply an extra kitchen that italian families are known to have the the appraiser needs to write it up that way and find comparible properties in the area. The banks want to see at least three like properties in the area and to know that basement kitchens are the normal for the area. If not this affects the marketability of theloan to incvestors as it becomes a unique property and they may nopt be intrested because if they have to take ownership resale on their part may become an issue.
If you have any further questions please feel free to ask.
You have gotten some really good advice here hope that you have enough to make an informed decision.
"The answer is not to demolish the kitchen completly. You should be able to remove the appliances (simply put in garage or storage) and cap the pluming to allow for an appraiser to overlook the basement kitchen. The appraisal will charge the buyer for a redo and the buyer will probably have to find a different lender. The appraiser will then simply write the property up as a finished basement. "
I would go this route if I were you, that way you are doing less work.
"The answer is not to demolish the kitchen completly. You should be able to remove the appliances (simply put in garage or storage) and cap the pluming to allow for an appraiser to overlook the basement kitchen. The appraisal will charge the buyer for a redo and the buyer will probably have to find a different lender. The appraiser will then simply write the property up as a finished basement. "
I would go this route if I were you, that way you are doing less work.
Or maybe because you have an extra kitchen the loan company is worried it is actually a 3 family set up and you've reported it as only a two story. That would be in the same lines as what Jason said, illegal use or not recorded with the Assessor.
yeah i think it might be because they think that you have 3 families living there.
Can you get it permitted?
other than jason's thinking that there is a kitchen in the basement, i have to agree with what he posits. there is inherent risk in a property that is advertised as a 2-family dwelling, yet contains 4 kitchens; which makes it look more like a 4-family dwelling. yes, indeed, lenders are wary. 4-unit properties are dramatically more risky investments than are 2-units, and if there is even a faint whiff of illegality in the number of tenants in occupancy, you can best believe you'll have trouble getting financing.
