Here’s a situation you’ll run into once or twice in your career. There is a new subdivision. Now, new subdivisions sometimes have model homes. Model homes typically have furniture, fixtures, and equipment – usually upgraded. The subdivision has completed its sales program and the developer is now selling the model(s). Your job is to appraise one of the models, since the developer has it under contract to a retail buyer. You do your inspection thing, take pictures of the interior, conclude your value, then send the report off to the client. One thing though; you marked the property as vacant – since, as a model home, it is vacant. Nobody lives there. There are no tenants. It may have been used as the venue for greet-and-grins with local brokers, but it’s a vacant house.
Two days later the underwriter emails you ordering you to change “vacant” to “occupied” since there is clearly furniture in the house, thus someone is living there (notwithstanding you included a photo of the toilet bolted shut so nobody can use it). Since somebody is living there, it is “occupied”.
After thinking silently to yourself that this request merely cements your conclusion that most underwriters are drooling cretins, you patiently explain this was a model home, thus was furnished, etc. as part of the developer’s marketing program. The underwriter, whose first language is clearly not English, pretends not to understand and repeats the demand you change “vacant” to “occupied” because of the furniture in the house.
So, what do you do?
You stand your ground, that’s what you do! With as much patience and diplomacy as you can muster, you email back the house is not occupied. Yes, there is furniture there since it was a model home. Yes, it has upgraded everything – but this is because it was a model home. Yes, this house is spotlessly clean, totally organized, and without the first signs of habitation since it was a model home. Yes, the toilets are bolted shut since this was a model home. But, it is vacant since there are no tenants. There are no owner tenants. It is vacant. There are no lessee tenants. It is vacant.
The key here is to stand your ground. Just because the 1004 form does not lend itself to out-of-the-box thinking does not mean your thinking must always be in-the-box. Just because the underwriter has a rigid checkbox does not mean you are subject to those limitations. If the underwriter does not like your appraisal, then let the underwriter appraise the property. Oh, but the underwriter can’t. The underwriter is not an appraiser! So, really, you are in charge. It is time to act like it!
So, do you give it a C1 or a C2; that is a question for another day, my friends.
For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: