California - What Constitutes a Complex Assignment

Discussion in 'General Appraisal Discussion' started by Randolph Kinney, Jul 30, 2006.

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  1. Randolph Kinney

    Randolph Kinney Elite Member

    15
    Apr 7, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    What Constitutes A Complex Appraisal Assignment ?

    Taken from:

    http://www.orea.ca.gov/forms/CAv15n01.pdf

    Under current licensing regulations, the scope of practice for the holder of a residential appraisal license (AL) in federally related transactions is limited to the appraisal of any non-complex 1-4 family property with a transaction value up to $1 million; and non-residential property with a transaction value up to $250,000. The definitions of "transaction value" and federally related are relatively straightforward, but what exactly constitutes a "complex" appraisal assignment?

    The definition of a complex appraisal assignment is found in Section 225.62(e), Subpart G, Part 225, Subchapter A, Chapter 11, Title 12 of the Code of Federal Regulations, which states:

    "Complex 1-to-4 family residential property appraisal means one in which that property to be appraised, the form of ownership, or market conditions are atypical."

    Some examples of appraisal assignments that would be considered complex include:

    A 1-4 unit residential property located on a commercially zoned site. The assignment is complex because the determination of highest and best use must include an analysis of the alternative potential uses for the site, including those uses that would be allowed under the commercial zoning designation.

    A 1-4 unit residential property when the ownership encompasses less than a fee simple interest, such as a leased fee or a leasehold interest. The assignment is complex because it involves the valuation of partial ownership interests (leased fee and leasehold).

    A 1-4 unit residential property located on rural acreage, where the highest and best use is agricultural in nature, not residential. The assignment is complex because a determination of the value of the agricultural use is required.

    A single-family residence of 3,000 square feet (recently remodeled and expanded) located in a market area comprised of single-family residences constructed in the 1970's and ranging from 1,600 to 2,000 square feet. The assignment is complex because the 3,000 square foot recently remodeled and expanded residence is not typical within the subject market area.

    A single-family residence in a custom home market, where the quality of materials utilized and amenities differ significantly between residences. The assignment is complex because it will involve detailed identification of the quality of materials utilized in constructing the subject property improvements, the ability to quantify value influences for differences in the quality of materials utilized in the subject property improvements as compared to the comparable sale property improvements, and an analysis of higher cost amenities and determination of their contribution to value.
     
  2. Terrel L. Shields

    Terrel L. Shields Elite Member

    62
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    What a great question and one I asked many times. In fact, buried in regulation somewhere, I found a reference that it was the call of the REGULATED INSTITUTION what constituted a complex property....????

    I don't think it is defined beyond the three examples above and its an example of a "failure to communicate" between regulator and appraiser.

    Example. Lots of houses on 10 acres with a hen coop. Quite a few in my community that also has a couple of economic chicken houses. And an equal number with economic chicken houses that are not being used - vacant. Clearly the coop is a non-event that has little to do with the value of the property, a blip on the old grid. But a larger farm...well? And is the HBU different for the economic farm and the abandoned one? Well, yeah...but... How big does a coop have to be to break over from one class to another, and what is it? Residential? Complex Residential? Commercial Agricultural?

    I plead the Sargeant Schultz defense, I know nothing...
     
  3. Randolph Kinney

    Randolph Kinney Elite Member

    15
    Apr 7, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    I believe the key word for determining if an appraisal is a complex appraisal is the word "atypical". Forms of ownership, zoning, highest and best use other than what it is, degree to which the subject fits in with characteristics of the neighborhood, the idea of custom built (unique) home, significant contributing factors that influence value, etc., all of these could produce a complex appraisal assignment.

    I believe many appraisals are done by appraisers who do not have that kind of experience appraising specific properties or licensure. Both USPAP and Fannie Mae have regulations governing appraising a property where you do not have the competency to do it.
     
  4. Smokey Bear

    Smokey Bear Elite Member

    0
    Dec 8, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    I was looking for that one. Thanks.
     
  5. Mike Garrett RAA

    Mike Garrett RAA Elite Member

    1
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    Very good answer.

    I like to ask myself this question..."Is this a property I really want to appraise?". The second I have doubts about my ability to handle the assignment, it's complex.

    "Atypical" just solved the question.
     
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