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Complete Vs. Limited

Discussion in 'General Appraisal Discussion' started by Indiana Jones, Sep 16, 2003.

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  1. Indiana Jones

    Indiana Jones Member

    1
    Oct 16, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Indiana
    Is this correct?

    Complete Appraisal
    -Self Contained = Narrative
    -Summary = 1004 & 2055 w/ interior
    -Restricted = 2055 exterior only

    Limited Appraisal
    -Self Contained = Drive by narrative
    -Summary = 2070/2075
    -Restricted = Verbal
    ????????????????????????????????

    Please help me get this straight...
    Thanks
     
  2. George Hatch

    George Hatch Elite Member

    308
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    Dig out your USPAP manual and start reading Standards 1 (Appraisal Process) and 2 (Appraisal Reports). I mean it. Spend an hour of your time and really read what they have to say, and then review all of your work to see how it complies with those requirements.


    Complete vs. Limited refers to the appraisal process, which is dictated by SR1. Incidentally, the level of inspection, whether it's a interior/exterior, exterior only, or even no inspection, have no bearing on whether the assingment would be classified as a Complete or a Limited Appraisal Process. For example, what if the improvements were proposed construction or had been burned down? No improvements to inspect. Does that mean you can't do a Complete appraisal process on the property as a whole?

    Self-Contained, Summary, and Restricted Use refer to the appraisal report, which is dictated by SR2. The difference between Appraisal and Appraisal Report is that the former deals with the process of developing the opinion of value whereas the latter deals with the communication of that opinion. The reason people mistake the two is because most appraisers develop their opinion of value in an appraisal while they're writing the report. Talk about doing two things at once.....

    Content, not format, determines compliance with the reporting requirements of SR2. For instance, I have narrative formats for all three reporting options, the difference between them being in the level of detail. On the other hand, I've seen appraisal reports filled out using narratives that are so short of original writing that they don't even come close to adressing the relevant items when compared to a corresponding form report format. It depends on who is writing the report and how familiar they are with what does and doesn't need to be in the report. To reiterate, a narrative format (regardless of length) does not insure more appraiser competency or a better appraisal report.

    Getting back to content, use the requirements in SR2-2 as a checklist to ensure that your reports cover all the bases. The 2070/2075 formats aren't even appraisal reports (no opinion of value), and should not be used as such; they're property inspection and verification reports. Verbal appraisal reports, one example is oral testimony given in court, are supposed to address the same substantive issues to comply with the Summary Report option (which may be relied upon by third parties) rather than Restricted Use Report (which can only be relied upon by the Client).

    Try to avoid getting into the "report form dictates appraisal process" trap. The form doesn't make the appraisal or the appraisal report; the Appraiser does.
     
  3. Fred

    Fred Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Retired Appraiser
    State:
    Virgin Islands
    Mike,
    You can certainly get a lot of different opinions on the technical aspects of the topic. I am going to go a different route.

    In January, the ASB issued a paper acknowledging that these classifications do not produce meaningful labels. The paper is a call for suggestions on how to fix it.
    Link = Concept Paper on the Role of Departure...

    So, from a practical standpoint:
    -if it doesn't make sense to begin with
    -if most appraises are going to disagree with some part of your system anyway (like why can't a narrative be "restricted")
    -and the whole thing is going to change
    then, how much time and effort do you want to invest worrying about it?
     
  4. Indiana Jones

    Indiana Jones Member

    1
    Oct 16, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Indiana
    George- I am about to turn in my trainee log to get an LR. In Indiana we have this matrix that breaks every thing down into Limited vs. Complete etc. I'm trying to make sure that I have these coded correctly.
     
  5. Paul Ness MAI

    Paul Ness MAI Member

    0
    Jan 14, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Pennsylvania
    Steve - to answer your question with all due respect and politeness...because until it's changed, one should understand it while it's still in force.
     
  6. Indiana Jones

    Indiana Jones Member

    1
    Oct 16, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Indiana
    This is how our matrix makes us break our reports down:

    1.Single Family
    Complete Appraisal
    a. Self Contained = 6 hrs
    b. Summary = 4.5 hrs
    c. Restricted = 3 hrs

    Limited Appraisal
    d. Self Contained = 4.5 hrs
    e. Summary = 3 hrs
    f. Restricted = 1.5 hrs

    2. Multi-Family (2-4 units)
    Complete Appraisal
    a. Self Contained = 12 hrs
    b. Summary = 9 hrs
    c. Restricted = 6 hrs

    Limited Appraisal
    d. Self Contained = 9 hrs
    e Summary = 6 hrs
    f. Restricted = 3 hrs

    Also, we get double the hours if the property is rural, however, it has to haveat least 10 acres to be coded as such. Again, I have to make every report that I've done fit into one of these catagories and I want to make sure I'm doing it accurately.
     
  7. Chris Colston

    Chris Colston Elite Member

    0
    Jul 24, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    I would venture to guess that 90% of a trainee's work is either COMPLETE SUMMARY REPORTS or LIMITED SUMMARY REPORTS.

    I have a very serious doubt that you did very many Restricted Reports. B) Check USPAP for what makes it restricted.

    Single family reports on a 1004/2055 Interior or exterior only are mostly 99.44% SUMMARY reports where you have summarized the data used to form your value opinion.

    If its SELF CONTAINED, than all of your research data is included in the report. Multi-family and condo and land forms work the same way.

    If you don't know these differences how do you expect to pass the test? These are basic terms defined in USPAP and should be being used on a daily basis when you write or present a verbal report. :confused:
     
  8. GeorgiaBoy

    GeorgiaBoy Junior Member

    0
    Jul 23, 2003
    Professional Status:
    Licensed Appraiser
    State:
    Georgia
    You are kind of mixing your terms:

    These are the two types of APPRAISALS:

    Complete appraisal- A report that uses all applicable approaches to value

    Limited appraisal- A report that does not include all applicable approaches to value thereby utilizing the Departure Rule (see USPAP)


    These are the three types of REPORTS:

    Self Contained (Narrative)- A report that is descriptive of all the methods and data that was used in the appraisal process.

    Summary (usually a form 1004, 2055, etc.)- A report that summarizes the methods and data that was used in the appraisal process.

    Restricted Use (stated value)- simply states the value arrived at after completing the appraisal process and can only be used by the client.


    Every appraisal is combination of one category from each of the above groups. I hope this helps. It is all pretty confusing but this is how I understand it. There are definitely more knowledgeable people in this forum than I, that may have a better take on it (or at least a better way to explain it), but USPAP lays it all out for you. I suggest that you read USPAP Standards 1 and 2.
     
  9. Paul Ness MAI

    Paul Ness MAI Member

    0
    Jan 14, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Pennsylvania
    Brian - one slight but important correction. A complete appraisal is one that complies with all portions of uspap relating to real estate valuation, while a limited appraisal is one that departs from one or more non-binding standards. With regard to your example of using all three approaches...a complete appraisal is one in which the appraiser considers all three approaches and applies those that are relevant. An appraisal can have less than three approaches and still be a complete appraisal.
     
  10. Farm Gal

    Farm Gal Elite Member

    0
    Jan 14, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Nebraska
    :rofl:
    Now that the 'rest of the story has been posted' I vote Chris Colson's answer most lcosely approximates the inquirors immeidate NEED.

    George gets prize for best umbrella answer, Steve for clear future vision, Paul for directing traffic... and last but not least me for gratuitous posting :D
     
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