USPAP compliant data source for remodel adjustments

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by tim1962, Oct 22, 2009.

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  1. tim1962

    tim1962 New Member

    0
    Jan 30, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    I work in Florida, where our appraisal board has really came down hard on workfile data requirements. Basicly every adjustment in the sales grid has to be backed up by matched pairs, or some other form of data agreeable with USPAP. Every adjustment must have proven documentation in file or you're considered in violation, or that's my understanding anyway.

    Most of the time I appraise an older property, it and the comps. have had some degree of remodeling. I feel the degree of remodeling requires an adjustment, but it's difficult since you can't be sure the of the degree of remodeling the comps. have had simpley by MLS sheets or a drive-by of the comps. in question. Any ideas on an USPAP compliant method of adjusting for remodeling?
     
  2. Terrel L. Shields

    Terrel L. Shields Elite Member

    55
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    I am not sure how you can or why you would adjust for remodeling. I would tend to find remodeled comparables. In the Cost App, you would have to address remodeling and all its built in functional obsolescences if you use Reproduction cost new. I would use replacement costs instead and avoid that issue.

    Reread The Appraisal of Real Estate. There are a lot of ways to make adjustments and if the board is attempting to 'whack' appraisers that don't rely entirely upon paired sales, then they need removed for the boards, gently, of course, as you would treat any person that is obviously mentally handicapped. I suspect however, that they are simply wanting to make sure you at least use some technique.

    If you insist that "remodeling" is an appropriate adjustment, then determining the degree of remodeling would almost certainly require a very detailed inventory of the things done and additions made. AND, the only method I would be comfortable with would be to gather a lot of data in an area from remodel / non-remodel houses of the same quality and vintage and do regression analysis on it. A regression would likely identify such an adjustment should one exist.... again, I think I would try to adjust everything else and let that one "fall out" of the data.
     
  3. Michigan CG

    Michigan CG Moderator Staff Member Moderator

    20
    Nov 1, 2006
    Professional Status:
    Certified General Appraiser
    State:
    Michigan
    Appraisers do research. Call the Realtors, interview them thoroughly. Ask their opinion of the remodeling and quote them in your report.
     
  4. Lloyd Bonafide

    Lloyd Bonafide Senior Member

    0
    Jan 15, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    That's just stupid.
     
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