My first “Monday Mail Bag” post. Every week I field many questions from brokers, mortgage professionals, homeowners/buyer, attorneys and other interested parties in real estate. On Mondays I will share some of the questions and answers. Here we go:
Q#1 – Broker: I have buyer considering purchasing a 2-family in Manchester. It is assessed as a 2-family, but does not have a certificate of compliance. The current owner has lived in the property since 1948 and says it is “grandfathered”. Do my buyers need to get a new Certificate of compliance?
Jack: YES!!! In the late 1980s when the Certificate of compliance (COC) program came into effect for rental properties, the city grandfathered 2-4 unit properties that were owner occupied for as long as that owner lived in the building and retained ownership. Any new buyer must obtain a new COC. A buyer will have to do some due diligence as some of the items, emergency exits, electrical, smoke detectors etc. can be expensive. There may be an issue with the financing since the buyer will being doing the work after closing. It would have been smart for the seller to obtain the COC prior to listing the property to appeal to a broader group of buyers. (note: Link to Manchester NH housing code: https://www.manchesternh.gov/pcd/Regulations/HousingCodeOrdinance.pdf )
Q#2 – Mortgage Professional: Does FHA allow “Driven Point Wells” for drinking water?
Jack: Yes, they are allowed however they must meet the Private well guidelines set forth in the HUD Handbook 4000.1 The handbook does not specifically address driven point wells therefore they are acceptable providing the local municipality allows them, it is an approved well and meets the current setback and flow guidelines. If the town allows it, and it meets all the other criteria, then HUD will accept it. HUD and the mortgage investor will most likely want to see evidence (by showing comparables) that other properties have this type of well.
Q#3 – Homeowner/Seller: The IRS has agreed to release a lien on my house I am selling and they have asked for an appraisal. Do I need to get my own or can I use the one the buyers are getting from the mortgage company
Jack: You really should get your own appraisal for several reasons. 1) The IRS has different definition of value called “Fair Market Value” which is different than Fannie Mae’s definition of “Market Value”. 2) The mortgage appraisal does not come with the permission to use for another use such as having the lien released by the IRS. 3) If the IRS questions the appraisal you will want to have YOUR appraiser available to back up his/her appraisal. There is not incentive for the bank appraiser to do so since you are not their client. Getting an IRS lien is a BIG deal. It is worth the money for your own appraisal.
If you have any real estate, appraisal, investing or financing related questions don’t hesitate to call Jack Lavoie, SRA at (603) 644-1000 or email at: firstname.lastname@example.org
Thank you, we'll be in touch!