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Buyer, Seller and Broker Beware! "As Is" may not cut it anymore. PDF Print E-mail

There is a new twist to an already complicated, difficult real estate market on the financing side.  Ever hear of the Uniform Appraisal Dataset Definitions?  No?  I thought so.  Nobody has unless you are an appraiser.

These are the new standards mandated by Fannie Mae which create a schedule to be used by appraisers for condition and quality.  This came to our attention because of a couple of problem escrows where the condition of the carpet and a very subjective call on a driveway had become deal killers and had me scratching my head wondering what was going on in the appraisal world. 

Daryl Flem, BIC of our Mauna Lani office, invited Suzanne Hart, a well known and respected real estate appraiser on the Big Island, to address our offices and give us an update. 

Well, the answer is now clear. This new rating criteria can be a coup de grace for older properties that are a bit worn or wanting of upgrades.  The ratings are from one to six, one being the best and six the worst.  Five is the deal killer level. 

What this means is that an older property that is in need of repairs and/or upgrading may appraise at the sale price, or over, but then be rejected by underwriting because of a 5 rating on condition and quality.

Who is going to be affected?  Distressed sellers that have no money to repair or upgrade, and marginal buyers, especially first timers, that have a limited amount of cash to contribute.  On the Big Island of Hawaii, North and South Kona, Hilo, Puna, Hamakua, Kau and Kohala, there are many homes left over from the era of sugar plantations and early days of coffee or that were built 30 or 40 years ago that are very desirable and affordable but will be excluded from the market because of this new rating system. 

What to do?  Not too sure, but buyers, sellers and brokers now need to pay closer attention to condition and quality issues up front to avoid problems with underwriting. Taking on a property that needs TLC maybe an exercise in futility.  A worn carpet could be a deal killer. You have got to be kidding!

 If you would like to read the Uniform Appraisal Dataset Definitions for yourself, you can view them here.

To find out about real estate on the Big Island, contact me directly at (808) 331-3244 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

 

Volcano, Big Island Hawaii

By Bud Norwood, Principal Broker
Office: (808) 331-3244
Cell: (808) 896-0144
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it


 "Not just another pretty face"

Last Updated on Wednesday, 02 November 2011 10:00
 

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