What are the appraisal requirements when an institution finances construction of a condominium building(s)?
For a condominium building with five or more units, an institution must obtain an appraisal of the building that reflects appropriate deductions and discounts for holding costs, marketing costs, and entrepreneurial profit. An institution may not use the aggregate retail sales prices of the individual units as the market value to calculate the LTV ratio. For purposes of this document, condominium buildings are distinguished from other types of residential properties if construction of the entire building has to be completed before any one unit is occupied.
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