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#372461 - 04/12/11 08:29 PM
Oddball properties
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Veteran Member
Registered: 07/13/09
Posts: 800
Loc: USA
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Today I came across one of the strangest properties I've seen in a while. It is 2 units in a midrise condo that are joined by the owner of each knocking down the wall inbetween. Now this I have seen before a couple times. What made this property odd was that each condo has a lien by a different bank. The first property (A) has the kitchen, a full bathroom, a bedroom and the living room. The second unit(B)they have removed the kitchen from, converted the full bath to only a half bath and then 2 more bedrooms. Somehow the borrower has built a room that is inbetween both rooms with the door in (B) but the majority of the room is in (A). Now the borrower has kept up payments on unit A but is defaulted on unit (B) so it is in forclosure. The HOA originally gave permission for the unit to be converted however now they do not want to give permission to have it converted back into two seperate units.
The client has specified on how they want it valued but I thought I'd reach out to you guys and see what your imput and opinion on this would be.
Also, I'd love to hear of some of the oddest properties you guys have ever had to value if you're willing to share.
J~
_________________________
"Competition brings out the best in products and the worst in people."
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#372462 - 04/12/11 08:38 PM
Re: Oddball properties
[Re: ....J~]
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Major Contributor
Registered: 01/26/09
Posts: 2961
Loc: Old Dominion
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Whoa!
Man!
Wow!
My goodness what a mess.
Sorry all I can think is about the poor bubba who got the BPO.
I just thought it out...have the HOA buy it and convert it to a commerical spot, then franchise out a Starbucks. Bingo. Problem solved.
Edited by Doin' bpose (04/12/11 09:20 PM)
_________________________
Trust your Maker. Watch your manager.
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#372471 - 04/12/11 09:54 PM
Re: Oddball properties
[Re: ....J~]
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Major Contributor
Registered: 07/22/07
Posts: 1574
Loc: PIE/SRQ corridor
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The client has specified on how they want it valued but I thought I'd reach out to you guys and see what your imput and opinion on this would be.
Did all this information regarding the subject come via an interior BPO? If so, then I feel it should be evaluated on what it is now. From what I am reading that means a 3/1.5 unit with the GLA being the combined square footage of the two units. It’s a non-conforming property for the building either way you evaluate it. It is what is now, so the bank(s) just needs to deal with it. It cannot be converted back from what it seems, so evaluating any other way isn't really an option IMHO.
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QC is evil
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#372476 - 04/12/11 10:33 PM
Re: Oddball properties
[Re: ....J~]
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Member
Registered: 04/27/09
Posts: 409
Loc: So Cal
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Today I came across one of the strangest properties I've seen in a while. It is 2 units in a midrise condo that are joined by the owner of each knocking down the wall inbetween. Now this I have seen before a couple times. What made this property odd was that each condo has a lien by a different bank. The first property (A) has the kitchen, a full bathroom, a bedroom and the living room. The second unit(B)they have removed the kitchen from, converted the full bath to only a half bath and then 2 more bedrooms. Somehow the borrower has built a room that is inbetween both rooms with the door in (B) but the majority of the room is in (A). Now the borrower has kept up payments on unit A but is defaulted on unit (B) so it is in forclosure. The HOA originally gave permission for the unit to be converted however now they do not want to give permission to have it converted back into two seperate units.
The client has specified on how they want it valued but I thought I'd reach out to you guys and see what your imput and opinion on this would be.
Also, I'd love to hear of some of the oddest properties you guys have ever had to value if you're willing to share.
J~ Wow, this sounds like a BPO I did about 2 months ago on a property in L.A. It was a condo located in what was orinally a 4 unit building. 2 of the units were combined by knocking out a wall to make a 2 unit property. Now there are 3 condos in the building. Land use says condo but subject property says 2 units. It was hard to comp because the condo was now twice the size of typical condos in the area. That was a weird one. I've done other BPO's where a SFR's was illegal converted into 3 and 4 units with walls and kitchens built. I dont like making adjustments for repairs to convert illegal units back to a SFR
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#372481 - 04/12/11 11:17 PM
Re: Oddball properties
[Re: DueDiligence]
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Veteran Member
Registered: 07/13/09
Posts: 800
Loc: USA
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The same borrower owns BOTH units, but only one is in default? Correct, The borrower owns both units but I guess they bought them seperatly with two different lenders holding the note for each unit. Then they proceeded to knock the wall down inbetween and remodel. They are defaulting on one but the other one which is owned by a different lender they have not defaulted on as of yet. Normally I would agree with Brad regarding comp it as it is and be done with it but since the bank only owns the one side and the other bank has the lien on the other side which hasn't defaulted as of yet...... it makes it a little tricky. J~
Edited by ....J~ (04/12/11 11:23 PM)
_________________________
"Competition brings out the best in products and the worst in people."
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#372506 - 04/13/11 07:38 AM
Re: Oddball properties
[Re: Doin' bpose]
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Major Contributor
Registered: 07/27/06
Posts: 3699
Loc: Dayton Ohio
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Whoa!
Man!
Wow!
My goodness what a mess.
Sorry all I can think is about the poor bubba who got the BPO.
I just thought it out...have the HOA buy it and convert it to a commerical spot, then franchise out a Starbucks. Bingo. Problem solved. Brilliant!!!!!
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#372512 - 04/13/11 08:24 AM
Re: Oddball properties
[Re: ....J~]
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Veteran Member
Registered: 09/02/08
Posts: 761
Loc: Massachusetts
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I would tend to write it up based on the side the current lender owns and then adjust to correct the deficiencies. Those deficiencies being clouded title, functional utility, and corrective repairs (conversion back to a single unit) and the legal costs to address the issues. The cost of correcting all these issues could well result in a negative value.
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#372518 - 04/13/11 09:19 AM
Re: Oddball properties
[Re: JackREO]
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Major Contributor
Registered: 04/12/08
Posts: 4726
Loc: Vermont's North-East Kingdom
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I would tend to write it up based on the side the current lender owns and then adjust to correct the deficiencies. Those deficiencies being clouded title, functional utility, and corrective repairs (conversion back to a single unit) and the legal costs to address the issues. The cost of correcting all these issues could well result in a negative value. I had to do that on some Condominiums recently where they had built 16' too close to the property line; couldn't get a Certificate of Occupancy, were cited for Zoning Violations; ran out of Appeals; and were then subjected to a Tear Down Order. Now the Mortgagee is trying to sell it "as is" with the prospective Buyer picking up the pieces. I don't like to estimate legal costs; but I threw in a figure of $75,000 to $100,000 for corrective (retro-active?) Permitting; property line adjustment/land acquisition/swapping; Survey revisions; revised Septic Design and Engineering; et cetera; along with some Legal Expenses . . . . and the Client then asked whether I shouldn't maybe double that? I said I could; but it may be a whole lot worse than that. The Market has a way of speaking for itself, and this $949,000 building can't even be unloaded for $250,000 because of the uncertainty. The Market hates uncertainty.Don't legal expenses always vary greatly as a function of "who's paying" ?
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Dale C. Hittle of GOLDEN RULE PROPERTIES in Glover, Vermont
Where We're Always Striving To Put Together "THE FAIR DEAL"
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#372520 - 04/13/11 09:34 AM
Re: Oddball properties
[Re: ....J~]
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Major Contributor
Registered: 07/22/07
Posts: 1574
Loc: PIE/SRQ corridor
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Normally I would agree with Brad regarding comp it as it is and be done with it but since the bank only owns the one side and the other bank has the lien on the other side which hasn't defaulted as of yet...... it makes it a little tricky.
J~ Along with Vermont, this is more of a legal issue than anything else. IMO this should not involve the mill, the BPO agent hired to do the report or you as a QCer. The property is what it is now, and should be evaluated as such. The lender who is currently being defaulted on will need to tackle all this with their legal department, which I feel should not be factored in the report. Just my $0.02.........
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QC is evil
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#372533 - 04/13/11 10:40 AM
Re: Oddball properties
[Re: Brad - W4BJM]
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Major Contributor
Registered: 06/12/06
Posts: 1973
Loc: Arizona Bay
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Along with Vermont, this is more of a legal issue than anything else. IMO this should not involve the mill, the BPO agent hired to do the report or you as a QCer. The property is what it is now, and should be evaluated as such. The lender who is currently being defaulted on will need to tackle all this with their legal department, which I feel should not be factored in the report.
Just my $0.02.........
I'll double that to 4cents. Since when are we supposed to provide the Seller's Net Sheet on a BPO? The price is the price and if the seller loses money on that price, so be it.
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#372534 - 04/13/11 10:45 AM
Re: Oddball properties
[Re: PalmBeach BPO]
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Major Contributor
Registered: 06/30/09
Posts: 2255
Loc: Margaritaville
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We had an REO that was a mobile home built in the late 60's that was the interior base of a house built (cobbled one room at a time) around it.
The kitchen was the kitchen from the mobile home and everything had been cobbled around it. When we took rear photos you could see the tail lights of the mobile home sticking out of one rear wall.
Oh, They also put a screened pool in and it had a seperate 20X40 foot lot for water access about 4 blocks away. Unfortunately it had not been maintained so the access was blocked by a protected species of tree (mangroves) that could not be cut down so it was worthless.
Even more surprising it sold in about 5 days.
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"Be who you are and say what you feel, because those who mind don't matter and those who matter don't mind."
Dr. Seuss
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#372537 - 04/13/11 11:09 AM
Re: Oddball properties
[Re: ....J~]
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Veteran Member
Registered: 08/24/08
Posts: 1008
Loc: Middle of Ohio
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Grampa - you are just trying to get people to laugh!!! That can not be true! The tail lights were sticking out of the back wall and it sold in 5 days?? No way. I bet you just jumped for joy the first time you walked around that one and thought to yourself - yep - this is my new listing.
As far as the condo - I am all for the Starbucks - but how about you call the bank that owns the other side - not in default yet - but I am sure it will be soon - and sell the defaulted side to them? The way I look at it - they are a built in buyer.
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"No cause is lost as long as there is one fool left to pursue it". Wil Turner
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