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USPAP Question RE: Proposed Improvements

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by G-man, Feb 18, 2009.

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  1. G-man

    G-man Member

    0
    Feb 4, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Ohio
    I'm having a difference of opinion with another appraiser in my office regarding USPAP and completing a "Subject To" appraisal. The other appraiser is stating that USPAP requires an estimated completion time and what the cost of the work will be. I can't find it anywhere within USPAP that I have to estimate a completion time or the cost of the work. I can sort of see estimating a "Cost to Complete", but that sounds more of a Fannie Mae requirement than USPAP.
    As for a completion date, I'm dealing with a government organization, not a bank, for this appraisal (rehab appraisal for an older, inner city home), and it takes them months just to get the paper work in order. I have no idea when, or if, the work will be completed. I have completed about a dozen reports for them and have never been out to do an a construction "inspection" or update or anything like that.

    Any help in settling this would be appreciated.

    Thanks in advance.
     
  2. Restrain

    Restrain Elite Member

    7
    Jan 22, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    USPAP is silent on this. Your job is to prepare a reasonable and defensible estimate of value, and that includes reporting the condition at the time of the appraisal, the basis of the valuation (as if completed) and making it subject to a satisfactory completion certificate.

    Cost to complete, time to complete, etc is not part of USPAP. It may be part of the requirements of the lender.
     
  3. PropertyEconomics

    PropertyEconomics Elite Member

    0
    Jun 19, 2007
    Professional Status:
    Certified General Appraiser
    State:
    New Mexico
    If you are asked to provide a "prospective market value" you would need to estimate a completion date and your opinion of "market value" as of that prospective date.

    The manner in which you are doing your reports, it sounds, is under the hypothetical condition the improvements were complete as of the effective date of your report and the opinion of market value is "subject to" that hypothetical condition.

    USPAP has no such requirements but does provide for hypothetical valuation.
     
  4. Joyce Potts

    Joyce Potts Elite Member

    5
    Feb 6, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    I would suggest disclosing what you're doing and the parameters of the assignment within your Scope of Work. You're not going to find any specific in USPAP addressing this question, other than the SOW and hypothetical conditions and/or extraordinary assumptions.
     
  5. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    149
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    IF you project a future date of appraisal (a prospective report) you have to pretty much assume the building to be done at that time. I think most of us make the hypothetical as if the building is already done...as of the date of the report.

    In any case, i would think it appropriate to estimate the time of construction. Something on the order of "The improvements should take approximately 180 days to complete once construction commences and typical effort to complete the project is made." Or some such. If the building is a huge Condo for instance, you might also project that the project could take several years to complete and might depend upon sufficient sales be made in order for the project to proceed.
     
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