Ask Henry

Construction Permits

Hello Henry,

First of all thanks for all the information you publish. I have read several of your books and they were all very informative.

Now for the question: Are appraisers responsible for assuring that construction permits were issued for any construction on the subject property? As far as I know, we are responsible for determining whether the property is a legal use, grandfathered, or illegal. However, I really don’t think that researching construction permits is the responsibility of the appraiser. This is the request I've received regarding the property, directly from the Lender.

"There is a discrepancy between the GLA stated by the appraiser and the GLA stated in public records. The appraiser is asked to explain. If additions were made, were final permits obtained? Appraisal reflects 2037 sq ft while public records reflect only 1898 sq ft. Public records also reflect a year built of 1926 but appraisal reflects 2008. Was the subject recently totally rebuilt? If so, was it completed with the proper permits?"

What should I do?

Leading Edge Apppraisal

Dear Friend at Leading Edge:

When you are appraising a new home, you should consult your lender/client as to how much investigation they want you to do. You may wish to charge extra if you have to visit a record center to obtain building permits and occupancy permits. For older houses, you normally would not do this unless it is customary in your market area or you suspect there is a problem.

The Fannie Mae/Freddie Mac forms ask for your opinion about the zoning. You need to do whatever is necessary to offer a correct opinion.
In most areas, it is expected that the appraiser will accurately measure the house. Relying on others is looking for trouble. If you accurately measured the house, you would respond by stating that is what you did, and what you found the GLA to be.

It is worrying that an appraiser would mistake a 1926 house for a 2008 house, no matter how much remodeling was done!

P.S. Thanks for the kind words. We always appreciate reader feedback.