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Commonly used comments in addendum

Discussion in 'General Appraisal Discussion' started by BJ, Jul 2, 2011.

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  1. BJ

    BJ Sophomore Member

    0
    Jan 21, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    My mentor taught me less is more. To not use too much verbiage. Now every time I review another appraisal they are getting more and more lengthy. Would any of you guys be willing to share your comments that you have with you in one report to the next? I would like to review them and perhaps add to my own report.
     
  2. Marion Rhodes

    Marion Rhodes Elite Member

    Top Poster Of the Month

    247
    Feb 26, 2006
    Professional Status:
    Certified General Appraiser
    State:
    Pennsylvania
    Main comment:

    "Read the narrative addenda for more information."
     
  3. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    300
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    Mission creep. Unfortunately, some of us would likely do well to review our narrative "boilerplate" from time to time and condense it. I don't know what the regulators expect but it seems the tendency is for more an more verbiage.. Here are some of mine that often end up in multiple reports. - some may be specific to rural property (i do more of that.) Some of the commentary was suggested by others on this forum and they may recognize their own statements.

    ERRORS
    While this report has been proofed for typographical errors, mathematical inaccuracies, and other discrepancies, others may be discovered in subsequent reviews performed by the client or their designated agent. We reserve the right to correct any typographical errors, mathematical inaccuracies, or other discrepancies that may affect the estimate of value contained in the report. These corrections will be corrected promptly upon the written request of the client.
    ELECTRONIC TRANSMITTAL
    The appraisal report was created by the appraiser identified on the appraisal report and that the appraisal report is the complete and unaltered report submitted by the identified appraiser. The appraiser cannot be held accountable for alterations made to this report after it has been submitted. The original report remains in our files.
    REQUESTS MADE AFTER COMPLETION OF REPORT
    With the exception of revisions made for the purpose of correction of appraiser errors, appraiser does not anticipate further development or reporting requirements for this assignment. Any additional requests may represent a change in the assignment conditions and require development of a new assignment. Therefore, any additional requests must be in writing and may be subject to additional billing.
    Delivery of the report is considered completion of the appraisal assignment. Requests for additional information, including additional comparables, the Cost or Income Approaches to value when not applicable, reliable, or necessary to form a credible opinion of value etc., may result in additional fees commensurate with the amount of additional work required to satisfy the request for additional data.
    HIGHEST AND BEST USE , CONT
    The highest and best use of the subject is projected based upon location, physical characteristics, past and proposed uses, and applicable zoning.
    The highest and best use of the subject "as if vacant" is for residential construction. It is the most applicable use, the previous or proposed use, and the most profitable use of the site. Surplus land, if any, may be held as investment or agriculture as an interim utility.
    The highest and best use of the subject "as improved" is its current use. The improvements have remaining economic life; is the probable future use; is the current and previous use and is legally permissible by zoning or probable future zoning; appears to be financially feasible; and is the maximally productive use available to the subject.
    The Highest and Best Use of the subject, as revealed by my investigation, is that indicated "as improved."
     
    SUMMARY OF SALES APPROACH
    The sales were compared to subject improved tract and adjustments were made for differences. An adjustment grid is provided to assist the reader in understanding the reasoning behind adjustment applied. Items superior to the subject were adjusted downwards and items inferior to the subject were adjusted upwards based upon the comparative cost analysis methods, paired sales analysis, or by linear regression. The appropriate supporting documents are referenced or held in our files.

    RECONCILIATION
    Reconciliation is the part of the valuation process in which the appraiser attempts to resolve differences among the value indicators derived from the application of the approaches. The conclusion drawn in the reconciliation is based on the appropriateness, the accuracy, and the quantity of the evidence in the entire appraisal. In the final analysis, we based our value on the sales approach as the most appropriate method. However, the cost approach [or does not] support the value and is [or not a ] reliable indicator of value.
    INSPECTION
    The appraisal "inspection" is a value inspection and is no substitute for an engineering inspection. While the appraiser neither sees nor has been told of any obvious defect not otherwise reported, the appraisers are not experts in identification of such items and the appraiser recommends the property have an inspection by a certified home inspector and a structural engineer. The appraiser reserves the right to alter this report upon the client providing that home inspection or structural inspection. The appraiser assumes all structural, system, or HVAC systems are in good working order if no such report is provided. The use of an exterior inspection of a previously appraised property assumes that the condition of the property has not deteriorated since the last interior inspection or that the client has advised the appraiser of any changes in that condition. Only defects readily visible from a street inspection are reported or considered.
    Any statutory road easement, to the county, may exist of one rod either side of all section lines and may apply to the subject. However, this is the typical condition in the market and has no negative effect upon value. Many properties in the county do not have street addresses and many rural property owners do not receive mail at the address. Un-named streets are common. "Address" data presented is, in the Appraiser's judgment, that most useful to a person seeking to visit the locations. Each of the three accepted valuation methods have been examined in this report. Any approach eliminated is explained under that section.

    SUMMARY OF APPRAISAL PROCESS
    The appraisal or "Valuation Process" follows these steps; 1.) identify and describe the real estate; 2.) state the real property interest; 3.) State the purpose & intended use of the report; 4.) define the value to be estimated; 5.) state the effective date of the report and appraisal; 6.) state the extent of the process of collecting, confirming, and reporting data; 7.) state all assumptions and limiting conditions that affect the analysis, opinions, and conclusions; 8.) describe the information considered, the appraisal procedures followed, and the reasoning that supports the analyses, opinions, and conclusions. 9.) describe the appraiser's opinion of the Highest and Best use of the real estate, when such an opinion is necessary and appropriate; 10.) explain and support the exclusion of any of the usual valuation approaches; 11.) describe any additional information that may be appropriate to show compliance with the guidelines of Standard 1 of the USPAP; and, 12.) include a signed certification in accordance with Standards Rule 2 - 3.
    SCOPE OF WORK
    We inspected the property from a public road, reviewed the prior appraisal on the property, gathered current public information from the Assessor's tax parcel card, examined sales and subject offerings from the local MLS, if available, and examined and researched comparable properties.
    SUMMARY OF EXTENT OF APPRAISAL PROCESS
    We utilized public assessor records and MLS records on line and data made available from our prior appraisal of the property. The client furnished additional data upon engagement. Property tax data were obtained in the assessor's office or tax offices. A three year history of ownership was researched in the history section of the assessment property tax cards. The appraiser regularly practices in this market and maintains records of that practice typical in the area. The appraiser keeps records from the regional Northwest Arkansas MLS, Northeast Oklahoma Board of Realtors MLS, compiles data from Oklahoma Assessor and County Records, Inc. (PVPLUS) in addition to Apprentice Information Systems and ActData Scout in Arkansas.
    SKETCH
    Sketches provided are from [our personal measurement] [public records of the county assessor] or [prior appraisal report] and are assumed accurate. They are not otherwise warranted.

    PRIVACY NOTICE
    Providers of personal financial services are required by law to inform clients of our policies regarding privacy of client information. We have been and continue to be bound by professional standards of confidentiality by the Uniform Standards of Professional Appraisal Practice. These standards are even more stringent than those required by law. Therefore, we have always protected your right to privacy.
    Types of Nonpublic Personal Information I Collect
    We Collect nonpublic personal information that you provide for the purpose of preparing real estate appraisals and real estate consulting reports.
    Parties to Whom I Disclose Information
    For current and former clients, we do not disclose any nonpublic personal information obtained in the course of our practice except as required or permitted by law. Permitted disclosures include, for instance, providing information to third parties who assist us in preparing and analyzing data during the course of providing services to you. This includes co-appraisers, technical support staff, and paid researchers. We stress to those third parties the confidential nature of information being shared. We do not disclosure nonpublic confidential information to unrelated third parties, except where required by law to do so.
    Protecting the Confidentiality and Security of Client Information
    We retain workfiles of appraisals and a "true copy" of those appraisal for a statutory five years. We maintain physical, electronic, and procedural safeguards to comply with our professional standards. Please call if you have any questions, because your privacy, our professional ethics, and the ability to provide you with quality financial services are very important to us.
     
  4. Noreen

    Noreen Senior Member

    10
    Feb 5, 2011
    Professional Status:
    Certified Residential Appraiser
    State:
    New Hampshire
    That is a beautiful addendum. That is what I was referring to when I said we will have to attach a narrative on every report once UAD is implimented. If I understand it correctly, we pretty much have to define our thought process throughout the report to be in compliance with our obligations under USPAP as well as to not create a "misleading report" for a non industry, uneducated reader (homeowner). the acronyms are just going to confuse everyone. AND my question is, if FNMA and Freddie are headed out the door, why are we having new forms to comply with THEIR requirements? I have a hard time believing they will, in fact, be disassembled .
     
  5. leelansford

    leelansford Elite Member

    45
    Mar 29, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    As a fellow appraiser (he a USPAP instructor and who taught at the community college where I also taught) observed following his reading of numerous residential appraisals, MANY appraisal reports have the "right" verbiage but that there was a definite disconnect between the words (apparently lifted from another source) in the appraisal and what the appraiser actually did or analyzed. Thus, I hesitate to share "verbiage".

    This all stated, a pet-peeve of mine is when an appraiser estimates the effective age of a dwelling at "10-yrs" (side-note: it happens so frequently I sometimes think that it is inbedded in the form :)) when the house is, say, 60-yr. old and with NO support (at best: "The house is in overall observed average condition") via comments as to "remodeling" or "renovation" of the dwelling and which MIGHT add support to the EA estimate.

    (Side-note: See my post #7; I posted the above as an incomplete thought)
     
    Last edited: Jul 2, 2011
  6. Noreen

    Noreen Senior Member

    10
    Feb 5, 2011
    Professional Status:
    Certified Residential Appraiser
    State:
    New Hampshire
    I was taught that the CAPITAL improvements are what should be the impact of Actual versus Effective, right? No capital improvements are supposed to be reflected in the effective age of the subject. The reason it becomes such an issue here in New England, our "First Period" construction starts in the 1600's. I ALWAYS review what capital improvements have been made both with the homeowner and the building permits reflected at town/city hall. (Roofing, plumbing, heating, electrical, kitchen & baths) Some are magnificent, others are HBU "fire".
     
  7. leelansford

    leelansford Elite Member

    45
    Mar 29, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    As a fellow appraiser (he a USPAP instructor and who taught at the community college where I also taught) observed following his reading of numerous residential appraisals (for use in residential lending), MANY appraisal reports have the "right" verbiage but that there was a definite disconnect between the words (apparently lifted from another source) in the appraisal and what the appraiser actually did or analyzed. Thus, I hesitate to share "verbiage" (as in, "too much monkey-see, monkey-do" to my way of thinking).

    This all stated, a pet-peeve of mine is when an appraiser estimates the effective age of a dwelling at "10-yrs" (side-note: it happens so frequently I sometimes think that it is inbedded in the form :)) when the house is, say, 60-yr. old and with NO support (at best: "The house is in overall observed average condition") via comments as to "remodeling" or "renovation" of the dwelling and which MIGHT add support to the EA estimate.

    My suggestions: Think in terms of IF you were reading your appraisal report and you knew nothing about the subject property, the neighborhood, local market conditions, and the sales comparisons, would you conclude that the appraisal is credible?

    Do you offer comment for adjustments in the Sales Comparison Approach that are not so apparent (i.e., I understand why it is that a 2-car garage vs. a 1-car garage requires adjustment; why it is that one property has "average condition" and another is rated as "good condition" probably requires some comment)?

    Do you add (where appropriate) comments to SOW issues that are not inbedded in the form (i.e., doing more than the minimum requirement)? Specific to SOW, do you explain the search (time, distance, property characteristics) parameters which you employed in your search for comps or do you merely state (in effect) "these are the best available"?

    Are your "neighborhood" comments so generic that one can't determine whether you're describing "Beverly Hills" or "Tobacco Road"?

    Appraisers get paid to communicate; many appraisers fail miserably when it comes to communication.
     
    Last edited: Jul 2, 2011
  8. Noreen

    Noreen Senior Member

    10
    Feb 5, 2011
    Professional Status:
    Certified Residential Appraiser
    State:
    New Hampshire
    Lee, I do these things but I find my head thinks quicker than my fingers typing sometimes. I have also added "Googled the subject address" as we have this "I Sold MY House.com" company here. So many people are starting to turn to marketing their own property after a broker "doesn't get what they want for the house". I also do time and property characteristics but not so much distance as here we have "shared school systems" multiple, sending towns to keep costs down for smaller communities. I find that I reference everything but sometimes I need to be clearer in my descriptions. Some of my work files look like "War & Peace".
     
  9. Marion Rhodes

    Marion Rhodes Elite Member

    Top Poster Of the Month

    247
    Feb 26, 2006
    Professional Status:
    Certified General Appraiser
    State:
    Pennsylvania
    The second most frequent comment is on the 1004MC.

    "There is insufficient data in this analysis to draw a reasonable conclusion, as the analysis is performed for comparables at the exclusion of the rest of the neighborhood information. Read the narrative addenda for more information."

    And this,
    HBU " Subject is in a PUD and use is restricted to SFR per the coventants and restrictions that run with the land and are found in the chain of title. The lot is considered buildable therefore highest and best use is single family residential. No change in zoning in the near future is predicted that would impact the highest and best use opinion."
     
  10. Metamorphic

    Metamorphic Senior Member
    Gold Supporting Member

    41
    Mar 15, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    I have about a page of standard junk that is apparently necessary. I try to do right by the reader and bury this stuff far back in the report and I use a font that is enough smaller than that they'll know its boilerplate.

    Other than that, I started what I call an "Appraiser Style Book". When I write things that are sufficiently generic that they're potentially reusable in another report I'll save them there. If there's site specific stuff there I'll put in ______ in those spots so I'll know to tune them up.

    I'm also looking at modular caned responses. So maybe you'd have a sentence or two like "The comparables used in this report may exceed typical lending guide lines for....." Then you'll have a piece you can stick in that says: "The subject has more GLA than is typical for this neighborhood....this made comp selection difficult, so distance to comps, net and gross adjustments, and age of comps..." Then you'll have a separate module for a Too Small house. A module for "rural area", a module for old/young, a module for odd amenities etc.
     
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