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Anyone in here do bankruptcy appraisals?

Discussion in 'General Appraisal Discussion' started by Jordan Scott, May 17, 2006.

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  1. Jordan Scott

    Jordan Scott Junior Member

    0
    Aug 2, 2005
    Professional Status:
    Licensed Appraiser
    State:
    Maryland
    Thanks for your help
     
    Last edited: Mar 22, 2007
  2. bart nathan

    bart nathan Member

    5
    Jun 9, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    nope.. use the old form and be sure to describe what you are doing in your scope of work.
     
  3. Jordan Scott

    Jordan Scott Junior Member

    0
    Aug 2, 2005
    Professional Status:
    Licensed Appraiser
    State:
    Maryland
    Bart

    I can use the old drive-by form? Also, why can't I use the new one?
     
  4. xm72mhd

    xm72mhd Elite Member

    0
    Aug 13, 2005
    Professional Status:
    General Public
    State:
    Florida
    Do every appraisal, and especially this one as if you were going to be crucified on the witness stand. Be sure everything you do is based on fact. Use the old forms, if that's what the cleint wantrs, but have a work file that would support the most difficult review you can imagine.
     
  5. leelansford

    leelansford Elite Member

    48
    Mar 29, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    Intended Use....Intended User...Scope...

    Where do we start and where do we end?
     
  6. Denis DeSaix

    Denis DeSaix Elite Member

    534
    May 16, 2005
    Professional Status:
    Certified General Appraiser
    State:
    California
    Jordan-

    Please take my comments as they are intended- a hopefully helpful answer to your question:

    The way you phrased your question leads me to infer that you have specialized in mortgage finance transaction appraising. No surprise (or shame!) here, as mortgage lending is where the largest volume of appraisal work comes from. The majority of my work is mortgage related, so consider me one of your "peers".

    Your specific questions:
    A. Can I use the new form?
    and
    B. Do I need to add anything in the addendum?
    indicate to me that you may not fully realize the importance of the concepts of "Intended User" and "Intended Use": Fannie has provided all the identification requirements in their pre-printed forms for mortgage appraisal purposes; as a practical consequence, the appraiser that does mostly (or only) mortgage work rarely needs to consider how these concepts are applied to the "typical" mortgage appraisal.

    A bankruptcy appraisal, or any other non-lender appraisal, is a much different type of assignment. It is required that the appraiser be able to properly identify the client, intended user and intended use, and then to develop the analysis that is appropriate for the assignment, and report it in a manner that is meaningful to the intended user.

    Your question regarding the form and the addendum fail to take into consideration the following:
    1. On the form itself, it clearly says that the intended use of the report is for a mortgage finance related transaction. Furthermore, if you plan on signing the form's certification, you are certifying that the intended use is for a mortgage finance related transaction, and that no change to this intended use is possible.

    2. The question "do I have to put anything in the addendum stating its for a bankruptcy" fails to acknowledge that any appraisal report format one uses needs to identify somewhere that the intended use is for a bankruptcy.

    3. Inherent in the above is my inference that you may not realize that you are required to transmit your analysis (the way you write your report) in a manner that is meaningful to the client. This means, if your bankruptcy appraisal is going to a non-lending entity for a non-lending purpose, chances are very good that things like "15% net adjustment guidelines, 1-mile radius for comps, comps no more than six-months old" are not only meaningless to the user, but there application in the analysis could be very inappropriate given the intended use.

    I originally started appraising doing only lender work. When I tried to expand my practice to non-lender work, it was painfully clear to me that by working only in the "mortgage finance environment", there were many appraisal concepts that were "taken for granted" with lender work that I had to really re-educate myself on for non-lender work.

    If you have specialized in mortgage finance appraising up to this point, and want to expand your services, this is a smart thing to do. However, if you are not fully comfortable (and, as required by USPAP, professionally competent) in being able to apply the basic concepts of intended user and use to a non-lending appraisal assignment, my suggestion would be to get with someone who has expanded their services and who regularly does non-lender work.
    Another alternative is to take a refresher course in USPAP, and concentrate on everything up to SR-4.

    Good luck!
     
  7. Mike Kennedy

    Mike Kennedy Elite Member

    461
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    Back to Class!

    short n sweet.

    a. are you Certified, Licensed, or a Trainee? (your question implies that regardless of which "paper" you hold, you have no clue re: new FANNIE MAE FORMS..........! (i.e. ONLY to be used for mortgage transactions currently or in future on loans to be sold to FANNIE).

    b. Intended User and Intended Use - if you are not certain both are required in EVERY appraisal.........surrender your license.

    c. Unless you secure the services of a Supervisory Appraiser, your lack of competency precludes you from accepting the assignment. USPAP Competency and Ethics - go read them . twice.

    d. it's the Appraiser's responsibility to advise the Client (the attorney) whether a Limited Scope Appraisal on "short form" with Exterior Only is sufficient for the purpose of the appraisal.

    e. cutting corners can lead to disaster.

    f. recommend, in the strongest terms, BACK TO CLASS.
     
  8. Doug Meyer

    Doug Meyer Senior Member

    4
    Sep 13, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Indiana
    Do be prepared to defend your appraisal in court if necessary. Have you done professional court testimony? I always quote a fee for this service UPFRONT to the homeowners and lawyers.
     
  9. xm39hnu

    xm39hnu Senior Member

    0
    Jul 10, 2003
    Professional Status:
    General Public
    State:
    Florida
    Ditto the other responses. I'd use a narrative or the new AI forms, if the client will accept them.

    "For bankruptcy purposes" is not a good statement of intended use. Ask WHO will be using the report; get specific answers. After you get specific answers, ask "In addition to those people, will anyone else be using the report?"

    Then ask, "WHAT information will they be looking for in the report?" and "HOW will they use this information?"

    Ask also whether reduced market times should be considered. Are you looking for market value, or for liquidation value?

    Sample intended use: "The report will be used by the client attorney to aid in preparing a petition for bankruptcy for his client, Joe Sixpaque; it will be used by the Trustee to determine an asking price for the real property assets of the bankruptcy estate; and it will be used by the bankruptcy Judge to determine whether the assets of the estate have been liquidated fairly and properly."

    Purpose of appraisal: To determine the (fair market value)(market value)(liquidation value) of the (real)(personal) property belonging to Joe Sixpaque. [Choose as many options as may apply]

    Definition(s) of value(s) sought: Cite the sources of your definitions.

    This is by no means comprehensive in scope, and will vary with the needs of the client and court.
     
  10. xm72mhd

    xm72mhd Elite Member

    0
    Aug 13, 2005
    Professional Status:
    General Public
    State:
    Florida
    Quite often, not always, but usually, a bankruptcy appraisal is used to convince the trustee and the court that there is no equity in the property, therefore nothing for the trustee to get for the creditors. A potentially large audience for your appraisal, and it will become a part of the files of multiple attorneys and perhaps the basis of a bone of contention if someone doesn't agree with you.
     
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