Posted on: 14th Jul, 2010 01:04 pm
I'm looking into purchasing a property with 11 acres and 2 houses on it. One house is very livable - just needs a good cleaning and the other needs some renovation - mainly to the kitchen since it was damaged in a fire. Since both houses are on the same parcel, do I need to have *both* be livable or will it work with just one for an FHA appraisal?
Hi lisa20morrighu!
Welcome to forums!
As far as I know, if you want to use both the properties as collaterals and get a mortgage, then both of them should be in a livable condition. If you're planning to take out a mortgage on the property which is in a livable condition alone, then you do not need to appraise both the properties.
Sussane
Welcome to forums!
As far as I know, if you want to use both the properties as collaterals and get a mortgage, then both of them should be in a livable condition. If you're planning to take out a mortgage on the property which is in a livable condition alone, then you do not need to appraise both the properties.
Sussane
If I understand you correctly, this is one property with two dwellings. It appears based on your description that one of the dwellings may not contribute significantly to the value of the property.
First of all, it will be the lender's call on how the property will be valued. If the entire property, with both dwellings, are included in the valuation, FHA guidelines require that both dwellings meet minimum property standards. If there has been a fire, the valuation may be subject to repairs in the burned dwelling. At that point, it is the underwrites decision to waive this requirement or require the repairs be made before closing. It may even be eligible for a 203k loan. I am sure one of the loan professionals on this site could give you more info on that.
Another option would be to value only a portion of the property and exclude the accessory dwelling. This only works if the value of that portion is still equal to or in excess of the sale price. Again it will be at the lenders discretion to do it this way.
I hope this helps. Good luck!
First of all, it will be the lender's call on how the property will be valued. If the entire property, with both dwellings, are included in the valuation, FHA guidelines require that both dwellings meet minimum property standards. If there has been a fire, the valuation may be subject to repairs in the burned dwelling. At that point, it is the underwrites decision to waive this requirement or require the repairs be made before closing. It may even be eligible for a 203k loan. I am sure one of the loan professionals on this site could give you more info on that.
Another option would be to value only a portion of the property and exclude the accessory dwelling. This only works if the value of that portion is still equal to or in excess of the sale price. Again it will be at the lenders discretion to do it this way.
I hope this helps. Good luck!
I surmise that your property will be treated as a multi-family, given the two dwellings. That may present some difficulties for you apart from the repair situation, particularly if there are no comparable properties in the area with two dwellings on a single lot. I know from prior experience (a few years ago) that lots of lenders are in a quandary as to how best to treat such a situation.
Everytime I come across that scenario, both properties must meet HUD's minimal Health and Safety guidelines, so both of them need to be liveable. However, there have been several times when the second home was a Manufactured Home, and nobody lived in it anymore. When that happens, it has to be made "liveable", or completed gutted and converted into storage.
I only do FHA-insured Reverse Mortgages, so that policy may be specific to FHA mortgages.
I only do FHA-insured Reverse Mortgages, so that policy may be specific to FHA mortgages.
Maybe you should get two appraisals and see which one you think looks best. An appraisal is nothing but a supported opinion of value. It is very common for appraisers to have different opinions.
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Joe, keep in mind that a person must pay for an appraisal. Also, keep in mind that an unusual property, such as this, with two dwellings on the same lot, will result in a more expensive appraisal.
We find that most people are aghast at the cost of an appraisal fee to begin with; what would someone's reaction be to the cost of two appraisals, both of which are going to be more expensive than the traditional single-family report anyway...a scary thought for most.
We find that most people are aghast at the cost of an appraisal fee to begin with; what would someone's reaction be to the cost of two appraisals, both of which are going to be more expensive than the traditional single-family report anyway...a scary thought for most.
Only one appraisal is allowed with FHA mortgages. You can get a second one, but only after the first one expires, which is 120 days after the effective date.
Not sure what fees that are being charged to the borrowers.
However, as an appraiser, I can say that the infrastructure put in place by the now-expired HVCC put a middle man in the equation which has probably had the effect of raising appraisal fees for the end user. The appraiser has no idea what is being chaged back to the borrower or lender, but it would not be surprising is the fee is around 50-100% over what the appraiser is being paid.
This could explain why some are agast over appraisal fees.
Regards.
Jeff Deuitch
Manatee appraisal Service
Palmetto ,FL
However, as an appraiser, I can say that the infrastructure put in place by the now-expired HVCC put a middle man in the equation which has probably had the effect of raising appraisal fees for the end user. The appraiser has no idea what is being chaged back to the borrower or lender, but it would not be surprising is the fee is around 50-100% over what the appraiser is being paid.
This could explain why some are agast over appraisal fees.
Regards.
Jeff Deuitch
Manatee appraisal Service
Palmetto ,FL