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Self Contained

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by Abester, Aug 8, 2007.

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  1. Abester

    Abester Senior Member

    0
    Jun 12, 2003
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    I’ve done a little searching, but I haven’t found the answer I’m looking for – even though Mr. Santora provides particularly great insight.

    The Assessment Board, of which I am a member, has been provided with a report that is labeled as self-contained. It provides only brief commentary about the adjustments used such as, “sale is adjusted at 3% annually.” However, the 3% figure appears to magically appear from thin air. The same is true of other adjustments.

    Just how much analysis is an appraiser required to show given this reporting option?

    The report was prepared for a property owner as part of an assessment appeal. The Assessment Board is contemplating turning this appraisal in to the state because is does not appear impartial and might have trouble qualifying as a summary report.
     
  2. Mike Kennedy

    Mike Kennedy Elite Member

    38
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    Regardless of the reporting format......all adjustments must be fully supported and explained.
     
  3. Abester

    Abester Senior Member

    0
    Jun 12, 2003
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    Mike,

    Could you provide the chapter and verse for that?

    Thanks!
     
  4. T.E. Faravelli

    T.E. Faravelli Member

    0
    Jan 12, 2005
    Professional Status:
    Certified General Appraiser
    State:
    California
    The Self-Contained Appraisal Report (SCAR) should contain all the information that is significant to the solution of the problem. This is measured or determined in the context of the needs of the intended use and intended users in the assignment. The SCAR should have all the significant data reported in comprehensive detail. It is not expected to contain all the information and data contained in the appraiser's workfile. The litmus test is also the expectations of the intended users of the SCAR and the actions of the appraiser's peers when performing a similar type of assignment using the same reporting option.

    If a reader of the SCAR does not understand the analysis, opinions and/or conclusions of the appraiser then something, somewhere is missing.
     
  5. Abester

    Abester Senior Member

    0
    Jun 12, 2003
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    Well, as a Board, we're not convinced that the adjustments are not just made up. The question becomes, is this an offense that should be turned in to the state, or are we just expecting too much?
     
  6. T.E. Faravelli

    T.E. Faravelli Member

    0
    Jan 12, 2005
    Professional Status:
    Certified General Appraiser
    State:
    California
    Perhaps more germane to the issue is how is/was the appellant's appraiser compensated? If they were paid on contingency or a portion of the reduced rate or tax savings I'd say that got som' explainin' to do.
     
  7. xm39hnu

    xm39hnu Senior Member

    0
    Jul 10, 2003
    Professional Status:
    General Public
    State:
    Florida
    Putting it plainly, he should have explained how the adjustments were derived, and shown his calculations for market-derived adjustments, in a report labeled "Self-Contained." An appraiser can make adjustments based on experience and judgement; sometimes we have no choice. But when that is done, it should be so stated in the report. When I do it, I provide my reasoning: "This one's better than that one, but not as good as the other one. The first sold for X, the second sold for Z. I reason that the value should be Y."

    My recommendation is to call the appraiser to explain the adjustments. If he refuses, or his explanation is inadequate, then turn the report in to the State. See your state's appraisal board's website; there should be a complaint form available for download there.
     
  8. leelansford

    leelansford Elite Member

    24
    Mar 29, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    I don't know if I have ever seen a Self-Contained Appraisal...though I've seen a couple labled as such.
     
  9. Abester

    Abester Senior Member

    0
    Jun 12, 2003
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    Thank you. Just for clarification, this is a self contained report. All the adjustments are direct percentage adjustments, but there is absolutely no way to know if the adjustments are reasonable based on what is included in the report.

    For another example, the manufacturing facility has a 2nd floor that is part office and part light manufacturing with a freight elevator (all of which was built in the 1990s). The appraiser indicates that none of the 2nd floor contributes since a typical market participant would give it no value. This ignores the fact that the owner built the space, it using it, and the definition of value is market value in use.
     
  10. Fred

    Fred Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Retired Appraiser
    State:
    Virgin Islands
    I guess the operative question is whether the adjustments are significant.

    Ted, it may be of interest to note the AO you are nearly quoting from says the same thing about the summary report.

    Ooh, can I have some of your reports, Jim? I'd like to try some of that.

    You may recall that on another forum someone posted a set of three sales with three variables saying it was mathmatically impossilbe to derive the adjustments? I came with a set of adjustments. Using my adjustments, if you held out sale 1, sales 2 and 3 adjusted to the exact price of sale 1. If you held out sale 2, sales 1 and 3 adjusted to the exact price of sale 2. If you held out sale 3, sales 1 and 2 adjusted to the exact price of sale 3. The interesting point about that was that no one would admit the adjustments were correct. :rof: Although I contacted Austin privately and he thought they were correct.
     
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