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Commercial BPO review

Discussion in 'Commercial/Industrial Appraisals' started by Caligirl, May 24, 2009.

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  1. Caligirl

    Caligirl Senior Member

    0
    Jan 27, 2006
    Professional Status:
    Certified General Appraiser
    State:
    California
    A friend's brother works for a company which produces BPOs for a variety of clients. I was approached to do 'reviews' on commercial BPOs, which best I can tell from a brief and vague conversation are performed for portfolio management companies. The work product was explained to me as an 'appraisal without USPAP'. :eyecrazy:

    I have yet to see one, but have the following questions.

    1. As an appraiser, one must comply with USPAP in reviewing a non-USPAP compliant report produced by a non-appraiser. ??? Does one note that reviewing for USPAP compliance is not part of the USPAP-compliant review? Isn't USPAP compliance req'd for an appraisal review? How can this be reconciled.

    2. Let's be serious-is this 'review' strictly for the purposes of attaching an appraiser's signature and E&O to some POS? As explained to me, only the Sales Approach is used, and sales can date back up to 4 years, and no Income Approach is used (*how* are they looking at cap rates). How can an Income Approach be excluded from any kind of valuation for income-producing properties?

    Apparently these 'appraisals without USPAP' are quite popular. They are so busy at this company they now have 60 full-time employees. :shrug:

    Has anyone else seen one of these reports or have any idea how appraisers are reviewing them?
     
  2. Pamela Crowley (Florida)

    Pamela Crowley (Florida) Elite Member

    3
    Jan 13, 2002
    Professional Status:
    Retired Appraiser
    State:
    Florida
    That just can't be right... this wasn't supposed to affect commercial appraisers.
     
  3. Boonders

    Boonders Junior Member

    0
    Oct 31, 2006
    Professional Status:
    Certified General Appraiser
    State:
    Iowa
    I think this forum could use rules against trolls.

    You'd have to comply with USPAP.
     
  4. PL1957

    PL1957 Senior Member

    6
    Jul 19, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Illinois
    BPOs have been done on commercial properties for years. Virtually every special servicer I know has both an appraisal and a BPO done on every commercial property that have. Most workout groups within banks make extensive use of BPOs for their problem loans and have for years. Users know the strengths and weaknesses of BPOs, just like they know the strengths and weaknesses of the appraisals that they engage. The only reason I could imagine asking someone to "review" a BPO would be to reconcile differences with an appraisal.

    And very simply, if you are acting as an appraiser, you are subject to USPAP.
     
  5. PropertyEconomics

    PropertyEconomics Elite Member

    0
    Jun 19, 2007
    Professional Status:
    Certified General Appraiser
    State:
    New Mexico

    Its for asset valuation .... most lenders in the past have done their own internal asset valuation ... now they have gone out and found others to do it for them ... Id bet they are not lending using BPOs ... and in my state if they are paid for their BPOs and are not licensed or certified as an appraiser they would be in violation of law. That being said, however, there are commercial brokers here that know as much if not more about value than most commercial appraisers.

    Im constantly amazed at the number of residential appraisers, or former appraisers, that take such glee and have such hope commercial appraisers will be suffering as well and as much as they are. Misery loves company I suppose but I dont think the comparisions are nearly the same.
     
    Last edited: May 24, 2009
  6. leelansford

    leelansford Elite Member

    28
    Mar 29, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois


    Bingo! ! ! !
     
  7. Caligirl

    Caligirl Senior Member

    0
    Jan 27, 2006
    Professional Status:
    Certified General Appraiser
    State:
    California
    Reading comprehension

    Go back and read my post. I did not say the appraiser didn't have to comply with USPAP. I was asking about complaince with USPAP Std. 3 in reviewing a non-USPAP complaint, non-appraisal work product. As opposed to, perhaps, a consulting assignment.

    Read Standard 3 and you might understand why I'm asking the question.

    I did not intend this to become an 'us vs. you' thread, or cater to reading-comprehension questions. This is a serious question, and if anyone has some educated or experienced pointers I would appreciate it very much.
     
  8. Caligirl

    Caligirl Senior Member

    0
    Jan 27, 2006
    Professional Status:
    Certified General Appraiser
    State:
    California
    That was also my thought, but apparently the review process would be for the BPO as a stand-alone report. Hence my confusion over Std. 3, vs. perhaps a consulting assignment.
     
  9. Ken B

    Ken B Elite Member

    61
    Feb 18, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    I'm not entirely convinced that Boonders first statement was directed towards you.
     
  10. PropertyEconomics

    PropertyEconomics Elite Member

    0
    Jun 19, 2007
    Professional Status:
    Certified General Appraiser
    State:
    New Mexico
    Cali ... I think you have to comply with Standard 3 .... in doing so you simply point out the deficiences in the report ... even if it were not intended to comply with USPAP you would have to show what is lacking from the view of an appraiser. IF you believe their intent is to attach a E&O Policy, Id simply turn the assignment down ... you could, however, ask for a review they have received on others so you could get an idea of what they are looking for. Im sure they have had them done in the past.
     
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