Actual Cost to Construct
Appraising ACV for Permits
Appraising ACV for Permits. As an Appraiser I work with homeowners, builders and Realtors on a daily basis. When the subject property is situated within a designated flood zone, things can get a bit complex. I hear the same words repeatedly. Those words are “I had no idea”.
The scenario that prompts these words is typically something like this…The consumer purchases a house. The property is not waterfront but is in a flood zone that requires flood insurance in order to secure a loan. The Realtor does their due diligence and advises the home is within the 100-year flood plain. The buyer may mention the likelihood of renovations in the future. The loan closes and everyone goes on their merry way.
Shortly into the future, the homeowners prepare for renovations. They may decide to update the kitchen, bathrooms or enclose a porch. They hire a contractor and head to the permitting office.
The permitting office is where they learn the dollar amount, they are allowed to spend on renovations according to the FEMA 50% Rule. This is half of the actual cash value of the allowable areas, less depreciation, land, land improvements and infrastructure. This allowable amount is typically far less than desired.
This is the point where they say…I had no idea! Often the Realtor and Contractor had no idea either. Until you are faced with it, most don’t hear about it. The guidelines have become much more stringent and will impact more people with additional mitigation zones.
Hiring an appraiser, most importantly with experience in Actual Cash Value appraisals can help. Permit appraisals in FEMA zones can help the homeowner to glean additional allowable monetary amounts. For further information, please contact Shari Peterman 727-505-6706 speterman@tampabay.rr.com
