7.6.6 Occupancy Percentage

A. Unless otherwise noted, the occupancy used in the valuation of properties for acquisition or refinance should be based on the occupancy that is prevalent for the subject’s area. This is reflected in Criterion 3 on form HUD 92264-A. The Underwriters may need to use more conservative (lower occupancy/higher vacancy) rates to comply with FHA program guidance in sizing the debt-service constrained mortgage comparisons. The estimate of occupancy should consider the historical performance of the subject and the vacancy and collection loss typical for the subject’s market area to determine the occupancy percentage. The appraiser should ignore unsustainable market conditions and short-term spikes in the occupancy rate due to seasonal changes and short-term demand for specialized employment (e.g., disaster relief workers.)