"Condominimum Appraisal Checklist Template - Republic Mortgage Insurance Company"

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Appraisal Checklist
Loan #
Borrower Name
Single Family Appraisal or Marketability Report type required:
1004
2055 Exterior Only
2070 Exterior Only
2075 Exterior Only
*This appraisal checklist is a TOOL only and does not consti tute an approval of the appraisal.
**For Condominiums use 1073 or 1075, Manufactured Homes use 1004C, and for 2-4 Family use 1025.
APPRAISAL TYPE
Yes
No
Do you have the correct appraisal (or better) as requested by the DU Finding or LP Feedback?
PHOTOS/LOCATION MAP
ACTIONS/COMMENTS
NOTES
Look at these first!
Does the subject appear to need
Yes
No
If Yes – And appraiser did not require repairs to be
1.
repairs?
completed, the appraiser must comment on repairs
and provide cost to cure.
Do the comps appear to be
Yes
No
If No – Check location map to insure sales are from
2.
similar to the subject in
subject’s neighborhood.
appearance/design and
condition?
Do the photos and map of the
Yes
No
If No – Have Appraiser provide necessary
3.
subject coincide with the
clarifications and/or corrections.
descriptions in the neighborhood
section with regard to build up
and density (urban, suburban,
rural)?
Does the street view show any
Yes
No
If Yes – Appraiser must comment on any external
4.
boarded-up or vacant buildings?
inadequacies of the surrounding neighborhood and
whether area is in a state of rehab or decline.
NOTE: Comps must come from the same
neighborhood.
Are the comps in a similarly
Yes
No
If No – Appraiser must comment on differences in
5.
populated area?
population and how it would affect the marketability
of subject.
Is the subject and/or comps
Yes
No
If Yes –
6.
located near any external
§ Negative (major highways, railroad tracks, etc.)
influences (highways, railroad
- If subject is located near any of these
tracks, mountain, golf course,
influences, there must be at least one comp
etc.)?
that has the same negative influence and the
appraiser must explain any negative impact
these items may have on our subject’s
marketability .
§ Positive (ocean, lake, mountain, golf course, etc.)
- If all comps are located near any of these
influences and the subject is NOT, the
Appraiser must provide additional comps
(even if no adjustments were made).
SUBJECT
ACTION/COMMENTS
NOTES
Does the property address
Yes
No
If No – Appraiser and/or Lender must clarify and
7.
match the loan application and
make appropriate corrections.
the sales contract?
Is the owner of record
Yes
No
If No – Appraiser should clarify and make appropriate
8.
consistent with the loan file
corrections.
documentation?
If refinance of primary residence, borrower and owner
of record should be same and occupancy should be
owner, not tenant or vacant.
If purchase and seller is an LLC, pay attention to the
remainder of the appraisal to make sure you do not
have a flip transaction. Many transactions involving
LLC’s have resulted in flips and inflated values.
Are the property rights
Yes
No
If No – Check Lender guidelines for leasehold
9.
appraised fee simple?
acceptability .
Is the subject property located
Yes
No
If Yes –
10.
in a PUD or CONDO Project?
§ Look for HOA fees.
§ If PUD – PUD section may need to be completed.
NOTE: With the exception of Site Condos that are
located in projects that consist exclusively of
detached dwellings, condos must be appraised on
Form 1073 or Form 1075 (Form 1075 may be used
only when allowed by DU or LP).
Does the special assessments
Yes
No
If Yes – include in monthly PITI (if it will be a monthly
12.
field contain an amount?
charge).
Does the HOA field contain an
Yes
No
If Yes – include in monthly PITI.
13.
amount?
Intellectual Property of RMIC
Page 1 of 7
Last Revision 10/ 31/07
Appraisal Checklist
Loan #
Borrower Name
Single Family Appraisal or Marketability Report type required:
1004
2055 Exterior Only
2070 Exterior Only
2075 Exterior Only
*This appraisal checklist is a TOOL only and does not consti tute an approval of the appraisal.
**For Condominiums use 1073 or 1075, Manufactured Homes use 1004C, and for 2-4 Family use 1025.
APPRAISAL TYPE
Yes
No
Do you have the correct appraisal (or better) as requested by the DU Finding or LP Feedback?
PHOTOS/LOCATION MAP
ACTIONS/COMMENTS
NOTES
Look at these first!
Does the subject appear to need
Yes
No
If Yes – And appraiser did not require repairs to be
1.
repairs?
completed, the appraiser must comment on repairs
and provide cost to cure.
Do the comps appear to be
Yes
No
If No – Check location map to insure sales are from
2.
similar to the subject in
subject’s neighborhood.
appearance/design and
condition?
Do the photos and map of the
Yes
No
If No – Have Appraiser provide necessary
3.
subject coincide with the
clarifications and/or corrections.
descriptions in the neighborhood
section with regard to build up
and density (urban, suburban,
rural)?
Does the street view show any
Yes
No
If Yes – Appraiser must comment on any external
4.
boarded-up or vacant buildings?
inadequacies of the surrounding neighborhood and
whether area is in a state of rehab or decline.
NOTE: Comps must come from the same
neighborhood.
Are the comps in a similarly
Yes
No
If No – Appraiser must comment on differences in
5.
populated area?
population and how it would affect the marketability
of subject.
Is the subject and/or comps
Yes
No
If Yes –
6.
located near any external
§ Negative (major highways, railroad tracks, etc.)
influences (highways, railroad
- If subject is located near any of these
tracks, mountain, golf course,
influences, there must be at least one comp
etc.)?
that has the same negative influence and the
appraiser must explain any negative impact
these items may have on our subject’s
marketability .
§ Positive (ocean, lake, mountain, golf course, etc.)
- If all comps are located near any of these
influences and the subject is NOT, the
Appraiser must provide additional comps
(even if no adjustments were made).
SUBJECT
ACTION/COMMENTS
NOTES
Does the property address
Yes
No
If No – Appraiser and/or Lender must clarify and
7.
match the loan application and
make appropriate corrections.
the sales contract?
Is the owner of record
Yes
No
If No – Appraiser should clarify and make appropriate
8.
consistent with the loan file
corrections.
documentation?
If refinance of primary residence, borrower and owner
of record should be same and occupancy should be
owner, not tenant or vacant.
If purchase and seller is an LLC, pay attention to the
remainder of the appraisal to make sure you do not
have a flip transaction. Many transactions involving
LLC’s have resulted in flips and inflated values.
Are the property rights
Yes
No
If No – Check Lender guidelines for leasehold
9.
appraised fee simple?
acceptability .
Is the subject property located
Yes
No
If Yes –
10.
in a PUD or CONDO Project?
§ Look for HOA fees.
§ If PUD – PUD section may need to be completed.
NOTE: With the exception of Site Condos that are
located in projects that consist exclusively of
detached dwellings, condos must be appraised on
Form 1073 or Form 1075 (Form 1075 may be used
only when allowed by DU or LP).
Does the special assessments
Yes
No
If Yes – include in monthly PITI (if it will be a monthly
12.
field contain an amount?
charge).
Does the HOA field contain an
Yes
No
If Yes – include in monthly PITI.
13.
amount?
Intellectual Property of RMIC
Page 1 of 7
Last Revision 10/ 31/07
Does the amount of monthly
Yes
No
If No – Correct PITI.
14.
taxes listed on the appraisal
support the amount shown in
the PITI payment?
NOTE: If new construction confirm accurate amount.
Has the subject been listed for
Yes
No
If Yes – Check investor guidelines. Properties listed
15.
sale within the 12 months
for sale in the last 6 to 12 months may not be eligible
preceding the appraisal date?
for individual investors or programs.
NOTE: If Refinance, property cannot currently be
listed. If it is listed (unless investor guidelines differ)
it should be removed from the market – Appraiser
must verify its removal and an acceptable
explanation letter from borrower is required.
CONTRACT
ACTIONS/COMMENTS
NOTES
Did the appraiser review the
Yes
No
If No – Appraiser must review the sales contract on
16.
sales contract?
all purchase transactions.
Does the information in this
Yes
No
If No – Appraiser needs to clarify and make
17.
section of the appraisal agree
corrections.
with the information on sales
contract?
Are any indicated seller
Yes
No
Be prepared to review adjustments to comps if
18.
concessions within
needed.
lender/program guidelines?
NEIGHBORHOOD
ACTIONS/COMMENTS
NOTES
The information provided in this section will set the basis for the remainder of the report. Review closely for inconsistencies with other
sections of the report.
Is the location rural?
Yes
No
If Yes – Check investor guidelines for rural property .
19.
NOTE: Pay attention to the other characteristics of
the property (zoning, land use, degree of
development, etc.) to determine whether property
should be considered residential.
Does the location designati on
Yes
No
If No – Appraiser must provide acceptable
20.
match what the map reflects
explanation for differences.
(urban, suburban, rural)?
Is the neighborhood less than
Yes
No
If Yes – Appraiser must provide acceptable
21.
25% built up?
comments on degree of development.
NOTE: Degree of development may indicate
whether property is truly residential. Be sure that the
property is not, in fact , agricultural in nature. In
addition, be sure that the appraiser has not us ed
build up to describe the subdivision alone.
Are property values declining?
Yes
No
If Yes – Check investor guidelines.
22.
NOTE: Some investors (as well as RMIC ) will not
allow maximum financing on properties in a declining
market. Loan amount may need to be adjusted
down.
Does the demand/supply
Yes
No
If Yes – Check investor guidelines. Appraiser must
23.
reflect an over supply?
comment on the reason and its affect on the
subject’s value. An oversupply usually means that
the properties are selling slowly with a lot of
competition.
Is the marketing time more
Yes
No
If Yes – Appraiser must comment on the reason and
24.
than six months? Is it
its affect on the subject’s value.
consistent with the
demand/supply?
Purchase transactions - is the
Yes
No
If No – Appraiser must comment on its affect on
25.
sales price within the
marketability of subject property .
neighborhood price range?
Are there any land use
Yes
No
If Yes – Appraiser must indicate the anticipated land
26.
changes (i.e. residential to
use and comment on its affect on marketability of
commercial)?
subject property .
Are the appraiser’s comments
Yes
No
If No – Appraiser to provide further clarification.
27.
consistent with what is
Example: Map reflects subject in a subdivision and
reflected on the map?
comps are all outside of a subdivision.
Are the appraiser’s comments
Yes
No
If No – Appraiser to provide further clarification.
28.
consistent with the other
neighborhood information?
Example: Marketing time vs. sale date of comps.
SITE
ACTIONS/COMMENTS
NOTES
Does the site area meet the
Yes
No
If No – Loan may need to be declined or switched
29.
lender’s guidelines (i.e.
to another program that allows amount of acreage.
maximum acreage limitations)?
Intellectual Property of RMIC
Page 2 of 7
Last Revision 10/ 31/07
Is the zoning classified as non-
Yes
No
If Yes –
30.
conforming or illegal? Is the
Non-Conforming legal use:
property in an area where there
§ 1-4 family or PUD – Appraiser’s analysis must
is no zoning?
reflect any adverse affect on the value and
marketability of the property. Most investors
require that properties can be rebuilt in the event
of partial or full destruction.
§ Condo or Co-op – Appraiser must indicate that
property can be rebuilt in the event of a partial or
full destruction. File must include copy of zoning
regulations or letter from zoning authority that
authorizes reconstruction to current density.
Illegal use (zoned 1 family or 2-4 family):
§ 1 - 2 unit w/illegal additional unit or accessory
apartment (i.e. mother-in-law suite) – must
conform to the subject neighborhood and market.
Appraiser must demonstrate that improvements
are typical for market through analysis of at least
3 comps that have the same illegal use.
NOTE: The size and value of the additional unit
(apartment, etc.) should be of insignificant value
as compared to the total value.
§ 3-4 units w/illegal accessory apartment – IS NOT
eligible for sale to the agencies.
No Zoning:
§ Be sure that this is acceptable to the investor.
The property must be primarily residential in use,
with no income producing agricultural activity.
Is the present use indicated to
Yes
No
If No – Agencies will not purchase properties that
31.
be the highest and best use as
do not constitute the highest and best use and it
improved?
must be residential .
Are there any negative
Yes
No
If Yes – Carefully review to make sure there is not
32.
comments in the site section?
anything that would have a negative affect on
marketability of subject .
Is the property located on a
Yes
No
If Yes – Recorded road maintenance agreement
33.
private road?
required.
IMPROVEMENTS
ACTIONS/COMMENTS
NOTES
Is there a substantial difference
Yes
No
If Yes – Appraiser must comment that property has
34.
between the actual age of the
been maintained better than others in the area and
property and the effective age?
support the reported effective age.
NOTE:
§ This area is one of the most abused sections of
the appraisal.
§ Large unsupported differences between age and
effective age will result in an inflated value.
§ If a building is very well maintained, its effective
age will be less than its actual age. If it has been
poorly maintained, its effective age may be
greater. If it has received some upkeep, its
effective age and actual age may be the same.
Is there an indication of
Yes
No
If Yes –
35.
foundation dampness,
§ Appraiser must comment on its affect on
settlement or infestation?
marketability and value of the subject.
§ The underwriter may need to condition for
evidence that the problem has been corrected or
to provide a professional report indicating that
the problem does not pose any threat of
structural damage to the improvements.
Is the heating system
Yes
No
If No – Is it adequate to heat the property and do
36.
continuous?
the comps support the same type system?
Does the room count and
Yes
No
If No – Appraiser must correct.
37.
square footage agree with
page two of the report and the
NOTE – Pay particular attention to any below
building sketch?
grade area to make sure Appraiser is not including
this in the gross living area.
Does the interior condition
Yes
No
If Yes – Appraiser must address impact on value
38.
description reflect any “fair,
and marketability and make appropriate
poor or inadequate” ratings?
adjustments in the sales comparison section.
Are there any negative
Yes
No
If Yes – Appraiser may need to comment further.
39.
comments in the improvements
Example – If repairs are needed, make sure they
section, if appraisal is “not”
will not affect the structural integrity of the property.
subject to repairs?
If they will, repairs should be made prior to closing.
NOTE: This is where the appraiser should
comment on condition of property and make sure it
supports the subjects effective age as indicated in
#34 above.
SALES COMPARISON APPROACH
ACTIONS/COMMENTS
NOTES
Did the appraiser indicate
Yes
No
If No – Request Appraiser to complete.
40.
number of comparable
This section must be completed by the Appraiser
properties currently listed and
as it provides the underwriter with good information
sold in the neighborhood?
about the available “pool” of comparables in the
neighborhood.
Intellectual Property of RMIC
Page 3 of 7
Last Revision 10/ 31/07
Is the source of data
Yes
No
If No – Appraiser must re-verify the data with a
41.
acceptable?
party that is acceptable or use additional sources.
NOTE: The appraiser must use a source that
provides quality sales data that is confirmed or
verified by closed or settled transactions. Data
source cannot have a financial interest in the sale
or financing of subject property.
Are the comparable sales
Yes
No
If No – Appraiser should adequately explain why
42.
located within subject
he has chosen comps outside of the neighborhood
neighborhood based on the
and why a competing neighborhood is comparable
location (urban, suburban,
to the subject neighborhood.
rural)?
§ Is the subject Rural, which may require comps
further away than normally desired?
§ Are we in a location that is < 25% built up?
NOTE:
NOTE:
§ If the subject is located in a
§ The following will likely result in inflated property
rural area that is relatively
value.
undeveloped or one in which
- Leaving the neighborhood (market area) for
properties often have large
comps (when local comps are available).
lot sizes, reasonable
- Not confirming details of comps (i.e. failing to
comparables may be a
report and adjust for seller concessions, failing
considerable distance from
to properly adjust for quality/condition issues).
the subject property. If the
§ If appraiser has to leave the neighborhood to
subject property is located in
obtain a better comp, they should explain “why
a suburban or urban area,
better comps are not located w/in the subject’s
comparable properties
market area”.
should generally be in the
- Consider an older sale in immediate area.
immediate vicinity of the
- Consider a listing as added support.
property since suburban and
- Request price ranges of houses in the other
urban areas are usually
neighborhoods.
more highly developed.
§ Leaving the neighborhood IS justified when:
§ Pay attention to the map as
- Site influence (water, golf course, etc.).
well as the proximity to
- Few sales, few listings (undersuppl y ).
subject.
- Unique area (historical, etc.).
- Rural or non-conforming area.
§ Leaving the neighborhood IS NOT justified when:
- No sales in neighborhood high enough to
support contract price or refinance amount.
- Subject is unique for the neighborhood.
- Subject is largest in the neighborhood.
- Subject is newest in the neighborhood.
- Lender has request e d it.
Are there three comparable
Yes
No
If No – Appraiser must adequately explain
43.
sales that have closed within 6
reasoning for using comps older than 6 months.
months of the appraisal date?
In Stable Markets
§ Older comps may be used if the appraiser
believes it is appropriate and selects comps that
are the best indicators of value.
§ The entire appraisal (neighborhood section, i.e.
marketing time and comments) should
adequately support the need for using older
comps.
In Declining Markets
§ All comps should be < 12 months old.
§ If all comps are older than 6 months, obtain at
least 2 additional recently closed comps.
§ If recent comps are not available, obtain analysis
of recent listings from appraiser.
§ If appraiser indicates there are no recent comps
or listing, appraiser must address the market
conditions and fully explain adjustments to
ensure appraised value is not overstated.
§ Third party resources can be leveraged (AVM,
etc.); however keep in mind data may lag behind
the current market, especially if declining.
Is property in a new
Yes
No
If Yes – Appraiser must provide at least 1 comp
44.
subdivision or a new (or
from the subject subdivision or project and one
recently converted) condo or
comp from outside the subject subdivision or
PUD project?
project.
NOTE: At least one of the comparables used
MUST be outside of the influence of the
builder/developer/seller, and it is preferred that any
comparables from within the subject subdivision
not involve the builder or developer of the subject
property.
Intellectual Property of RMIC
Page 4 of 7
Last Revision 10/ 31/07
Are the comparables similar to
Yes
No
If No – Appraiser must explain why the specific
45.
the subject ? Compare the
comps where chosen. Adjustments to the
locations, designs, gross living
comparables must be reasonable and should be
areas, room counts, ages,
explained and supported.
conditions and other amenities
of the comparables to the
BE AWARE OF:
subject.
§ Comps outside of the 10%, 15% and 25%
guidelines.
§ Whether the sales price was bracketed.
§ Use of across the board adjustments
(particularly if not explained or supported by
information).
§ Square footage adjustments t h at are not the
same for each comp.
Remember to ask the Appraiser to provide an
explanation for items and/or adjustments that don’t
make sense!
Is our subject a Non-
Yes
No
If Yes – Check investor guidelines for acceptable
46.
Traditional/Atypical home (Log,
property types.
Earth, Geodesic)?
§ Does it conform to the neighborhood?
§ Has the appraiser provided adequate
information to develop a reliable market value?
NOTE:
§ The property is Acceptable – If the appraiser
cannot locate recent comps of the same design
and appeal, but is able to determine sound
adjustments for the differences to demonstrate
the marketability of the property – based on
older comps, comps in competing
neighborhoods, existence of similar properties in
the market area, etc.
§ The property is NOT Acceptable – If the
appraiser is unable to find any evidence of
market acceptance and the property is so
significantly different that value cannot be
established.
Has the subject had any prior
Yes
No
If Yes –
47.
sales within the 36 months
§ Is there a substantial increase in value?
preceding the appraisal date?
§ Is it reasonable?
§ If not, appraiser must provide further information
on previous sale and any repairs/renovations
along with dollar amount of repairs/renovations.
Have the comps had any prior
Yes
No
If Yes – Is there a substantial increase in value? Is
48.
sales within the 12 months
it reasonable? If not, appraiser must provide
preceding the appraisal date?
further information on previous sale and any
repairs /renovations.
** Look closely at the comparables and ask yourself “would the purchaser have considered these as alternatives to the subject property?”
RECONCILIATION
ACTIONS/COMMENTS
NOTES
49.
Is the appraisal made “subject
Yes
No
If Yes – Condition for property
to completion, repairs or
completion/repairs/inspections.
inspections”?
50.
Is the appraisal less than
Yes
No
If No – Appraisal cannot be more than 12 months
twelve months old? Will it be
old at time of closing otherwise a new appraisal
at the time of loan closing?
will be needed.
FNMA
§ If appraisal is over 120 days, (regardless of
whether the property was proposed or existing
construction) the appraiser must inspect the
exterior of the property and review current
market data to determine the property has not
declined in value since original appraisal.
§ If it has declined a new appraisal is required.
§ If it has not declined an update to the appraisal
is allowed, using the exterior inspection and
knowledge of current market conditions.
FHLMC
§ If appraisal is over 120 days – the appraiser
must provide an update to the appraisal
indicating property has not declined (or)
§ 180 days if construction is completed after
mortgage application.
51.
Is the market value supported
Yes
No
If No – Why do they not support the value? Is it
by the comparables?
logical to request more comps? Are new comps
available based on Appraiser’s comments (i.e.
less than 25% built up)?
Intellectual Property of RMIC
Page 5 of 7
Last Revision 10/ 31/07