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Answers (12)
- billden664
- Contributions:28
Hello all, Sorry to get in on this late but I have a duplex as well and got a lower than desired appraisal fro a refi. It appears from discussions with my appraiser that he could not find many comps for a property where both sides were owned by the same owner. Therefore my comps were old beaten-up duplexes. There were many more half-duplexes he could have used as comps but he didn't. So the question is should I divide the duplex into separate properties and set up a party wall agreement? I have been told this will increase my annual taxes. Are there any other downfalls to doing this? Will I then need two mortgages?
Lastly, I have huge cash flow from the property double my mortgage payment. Will anyone appraise as an investment property and look at cash flow not just bricks? Thanks in advance.
I just want to pull money out on a refi?
Lastly, I have huge cash flow from the property double my mortgage payment. Will anyone appraise as an investment property and look at cash flow not just bricks? Thanks in advance.
I just want to pull money out on a refi?
- arihollander
- Contributions:4
My home was built in 1910, within a year or so of and in a similar style to the houses to which I was comparing it. The "Current Use" standard seems logical. If the rehab loan option doesn't pan out, it will be quite inexpensive to undo the division that was done in the 70's. Thanks all of you who made useful comments.
I believe that short-sighted (if not just plain evil) lending systems set us up for the current housing crisis and poorly designed, reactionary changes to these systems are making it harder to achieve a recovery. However, people blindly accepting these systems without thought is both the initial and ongoing motive force driving the problem.
I believe that short-sighted (if not just plain evil) lending systems set us up for the current housing crisis and poorly designed, reactionary changes to these systems are making it harder to achieve a recovery. However, people blindly accepting these systems without thought is both the initial and ongoing motive force driving the problem.
- Shane Milne, "ShaneTheMortgageMan"
- Contributions:463
nwhome.us - correct I do not know Capitol Hill as well as locals would. I am a geography buff so I am familiar with it being an affluent neighborhood, but other than that, not so much.
- Andrew Adams, "203K Specialist"
- Contributions:9349
Your home is worth/valued based on similar properties. If yours is a duplex you willo have to compare it to a duplex. What a SFD has sold for is irrelevent unless you are going to renovate and convert your home to a SFD.
Like most folks I have a feeling you are having a hard time accepting the current value of your home.
Like most folks I have a feeling you are having a hard time accepting the current value of your home.
- John Stewart, "nwhome.us"
- Contributions:2162
Shane, if you knew Capitol Hill, you'd also need to consider the appraised value of the structure. There was a time period where large properties on the hill were divided and mid-century duplex structures were infilled next to turn-of-the-century mansions. The housing stock is very diverse.
Ari, is your home of the same age and design as the ones that you are comparing it to?
Collusion with appraisers is also one of the negative issues that brought the housing industry too its knees. Lenders are now separated from relationships with them for this reason. This isn't to say that if you ask 3 different appraisers what the value of a property is, you won't get 3 wildly different opinions. It happens all of the time. But the lender is one who gets to choose which one they believe.
If you doubt the value that the lender's appraiser has presented, get 2 more appraisals done. Stay away from the national brands of lenders, in particular B of A and Chase unless you are using a broker. A mortgage banker/broker will have access to a broader field of available products and will have at least been able to choose the appraisers that went into their pool. A small, local lender will also have more flexibility on the qualifications but will have a higher interest rate. Rate is not the be-all of mortgages. Sometimes there are advantages to paying a higher one.
Ari, is your home of the same age and design as the ones that you are comparing it to?
Collusion with appraisers is also one of the negative issues that brought the housing industry too its knees. Lenders are now separated from relationships with them for this reason. This isn't to say that if you ask 3 different appraisers what the value of a property is, you won't get 3 wildly different opinions. It happens all of the time. But the lender is one who gets to choose which one they believe.
If you doubt the value that the lender's appraiser has presented, get 2 more appraisals done. Stay away from the national brands of lenders, in particular B of A and Chase unless you are using a broker. A mortgage banker/broker will have access to a broader field of available products and will have at least been able to choose the appraisers that went into their pool. A small, local lender will also have more flexibility on the qualifications but will have a higher interest rate. Rate is not the be-all of mortgages. Sometimes there are advantages to paying a higher one.
- Shane Milne, "ShaneTheMortgageMan"
- Contributions:463
The home would be appraises in it's current use - if the assessor says it's a duplex but when the appraiser shows up it's 1 house - it'll be appraised as a single family residence. One thing to note, the "highest and best use" per the appraiser may not be a SFR but instead a duplex (which could pose an issue to a lot of lenders if you were trying to obtain SFR financing on it).
- arihollander
- Contributions:4
It is not a question of "Getting the value up" it is about getting the valuation up: I am not selling my home. I am refinancing, and so there is no reality-check for appraisals. The online sites vastly disagree: our Z-estimate is just over $600k, and homegain lists us at $975k.
I am not convinced that the tax records are actually that relevant: will appraisers really evaluate a home as a duplex because the tax records say it is, even if it has clearly been turned back into a SFR? (It was converted to a duplex in the late 70's.) I would love to get the definitive word on this.
I am not convinced that the tax records are actually that relevant: will appraisers really evaluate a home as a duplex because the tax records say it is, even if it has clearly been turned back into a SFR? (It was converted to a duplex in the late 70's.) I would love to get the definitive word on this.
- Annette Lawrence, "DunedinRealtor"
- Contributions:10
Yes, that is a conundrum. However, it is not unlike the situation every home seller finds themselves in today..."Getting the value up!"
On the other hand every buyer believes they are paying too much in light of the risk they are taking with future value.
In regards to your property, it is essential to know who your buyer is. As pointed earlier. you can't be both a SFH and duplex. Adding an interior passage to connect the units will not turn it into a SFH. If the tax records show 'duplex' it's a duplex!
Your property will appeal to an investor or extended family needs. The former needs income and expense numbers, and the latter floor plan and potential financial options.
The real value of your property will be what a buyer is willing to pay. Appraisals and other evaluations, especially Zestimates home owners confront on Zillow are obstacles that one must be prepared to overcome. This can not be accomplished by comparing duplexes to SFH. It can be accomplished by knowing who your most likely buyer is and presenting the persuasive informaton they need.
On the other hand every buyer believes they are paying too much in light of the risk they are taking with future value.
In regards to your property, it is essential to know who your buyer is. As pointed earlier. you can't be both a SFH and duplex. Adding an interior passage to connect the units will not turn it into a SFH. If the tax records show 'duplex' it's a duplex!
Your property will appeal to an investor or extended family needs. The former needs income and expense numbers, and the latter floor plan and potential financial options.
The real value of your property will be what a buyer is willing to pay. Appraisals and other evaluations, especially Zestimates home owners confront on Zillow are obstacles that one must be prepared to overcome. This can not be accomplished by comparing duplexes to SFH. It can be accomplished by knowing who your most likely buyer is and presenting the persuasive informaton they need.
- Shane Milne, "ShaneTheMortgageMan"
- Contributions:463
203k interest rates usually are about .125-.250% higher than regular FHA interest rates. You can also look into the Fannie Mae HomeStyle Renovation mortgage loan program.
- SoCal_Engr
- Contributions:5663
Don't think you can have it both ways. It's either SFR or a duplex. One is not the other, nor vice-versa.
- arihollander
- Contributions:4
Thanks! I did some research on rehab mortgages and it seems like they might be an option. 203k? What are 30-year fixed rates like for this kind of loan?
Ideally we would love to hang onto our grandfathered-in legal duplex status in our SF-5000 zoned neighborhood. Is there any way to have our cake and eat it too? We are thinking about connecting the two units with lockable pocket doors such that the house can convert between SFR and Duplex.
Ideally we would love to hang onto our grandfathered-in legal duplex status in our SF-5000 zoned neighborhood. Is there any way to have our cake and eat it too? We are thinking about connecting the two units with lockable pocket doors such that the house can convert between SFR and Duplex.
- Shane Milne, "ShaneTheMortgageMan"
- Contributions:463
How can we get our duplex to appraise like a SFR?
By converting it to a SFR. Appraisers compare your home to "like" homes, and a single family residence won't be compared to a multi-unit home, even if it is very similar in most aspects. In most markets the reason being is demand, there isn't as much demand for a duplex than there is with a single-family residence.
Single family residences are purchased to live in, rental homes are purchased to make income. Investors usually are only willing to spend a certain amount on a home, as it a pure numbers game for them, whereas a homebuyer living in the home is concerned with much more than "cash flow".
In order for a new lender to consider your home a SFR instead of a duplex, you will need to obtain a construction/rehab mortgage for the conversion of it into a SFR - so the lender will require the home be appraised "subject to completion per plans".
By converting it to a SFR. Appraisers compare your home to "like" homes, and a single family residence won't be compared to a multi-unit home, even if it is very similar in most aspects. In most markets the reason being is demand, there isn't as much demand for a duplex than there is with a single-family residence.
Single family residences are purchased to live in, rental homes are purchased to make income. Investors usually are only willing to spend a certain amount on a home, as it a pure numbers game for them, whereas a homebuyer living in the home is concerned with much more than "cash flow".
In order for a new lender to consider your home a SFR instead of a duplex, you will need to obtain a construction/rehab mortgage for the conversion of it into a SFR - so the lender will require the home be appraised "subject to completion per plans".
How Can I Get My Duplex to Appraise at a Rational Value?
How can we get our duplex to appraise like a SFR? We are actually planning on connecting/merging the two units and occupying the whole house, but paradoxically we believe that our house is more valuable as a legal duplex: the flexibility of having the potential for rental income and the higher conforming loan limits are worth preserving. I also have no idea how we would go about officially changing the status of our house so that an appraiser randomly chosen by a lender will actually recognize the change and assign us a sensible value.
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