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Uspap Standard 1-5

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by Ty Lam, Aug 10, 2007.

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  1. Ty Lam

    Ty Lam New Member

    0
    Feb 4, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Texas
    I got an assignment to appraise a property for contract negotiation. The seller/client bought the property less than 3 years ago. He does not want the sale history to be reported. Will I be violating Standard 2-2 if I don't report the sale history of the subject? Also, I'm not sure how to label the report as Self-Contained, Summary or Restricted Use, as the buyer will also be using the report as part of the negotiation. Any input would be appreciated.
     
  2. Fred

    Fred Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Retired Appraiser
    State:
    Virgin Islands
    IMO, you have to report the prior price. It seems you already know it. so, it was clearly available in the "normal course of business." I can understand that the seller might not want the buyer (an intended user) to see it, because it may appear he is making a large profit, but you cannot favor one party or the other.

    As to what to call it, restricted is out because there are two intended users. No one really knows what self-contained means. That leaves you with the usual "safe" choice, summary.
     
  3. Tom Woolford

    Tom Woolford Elite Member

    37
    Nov 20, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Though you apparently were retained by the seller, apparently the buyer is an intended user. To favor one party over the other would, IMHO be a clear violation.
     
  4. leelansford

    leelansford Elite Member

    45
    Mar 29, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois

    First: When you state that the "buyer will also be using the report", does that mean that you have agreed (after, I assume, discussion with your client) to specifically identify the prospective buyer as an Intended User?
    If you identify the prospective buyer as an Intended User, you can not communicate a Restricted Use Appraisal Report (see current USPAP, Std. Rule 2-2, lines 687-690).
    And do keep in mind, that ANYONE can "use" your appraisal report, but only you can specifically identify an Intended User (but this important detail--who is an Intended User--might be lost on a disgruntled prospective buyer who believes that he is a "user" of your appraisal; be careful!).

    Second: See Standards Rule 2-2 (a) and (b) in part (side-note: also see "c"):
    "When reporting an opinion of market value, a summary of the results of analyzing the subject sales...in accordance with Standards Rule 1-5 is required."
    Now, this same section goes on to state: "If such information is irrelevant, a statement acknowledging the existence of the information and citing its lack of relevance is required."
    IF you were communicating a Restricted Use report, I believe that the latter statement could apply: the owner already is aware of the prior transfer and the appraisal report is intended solely for your client. Given the circumstances that you are working with, I don't think I would want to take the position that the prior transfer lacks relevance.

    Good luck.
     
    Last edited: Aug 11, 2007
  5. CANative

    CANative Elite Member

    205
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Your client is hiring you to provide an appraisal report he can wave in front of his buyer. I don't think that makes the buyer an intended user (unless you say so) Exclude the buyer as an intended user and tell your client that you have to report the sales history. Your client can always use a big fat Sharpie to cover up any information he doesn't what anyone else to see.
     
  6. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    324
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    ...or simply open up the report and doctor it up the way he likes it..
     
  7. Fred

    Fred Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Retired Appraiser
    State:
    Virgin Islands
    Sorry, but both of these arguments are wrong. Accepting an assignment means accepting the legitimate assignment conditions that come along with it. The client states what they intend to do. Your options are to agree to that or not.

    It is hard to imagine either of you arguing that if a bank tells the appraiser that they need a FNMA appraisal, and that it would be OK for the appraiser to unilaterally usurp the client’s intended use and violate the guidelines. Or a bank asking for an appraisal for an FRT, and the appraiser agreeing to do the appraisal, but trying to limit the use to exclude FRT's.
     
  8. xm72mhd

    xm72mhd Elite Member

    0
    Aug 13, 2005
    Professional Status:
    General Public
    State:
    Florida
    Would you say the definition and even the concept of intended user as we once knew it has been usurped into an unrecognizable oblivion? I doubt it is even any help in staving off liability. Intended use may have some life left in it, but it is dying too?
     
  9. CANative

    CANative Elite Member

    205
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Steve,

    I'll have to defer to your superior experience with the USPAP. Since the other party is an intended user, would the appraiser owe a responsibility to that additional intended user to provide an unalduterated copy of the appraisal report should the client delete information?
     
  10. xm72mhd

    xm72mhd Elite Member

    0
    Aug 13, 2005
    Professional Status:
    General Public
    State:
    Florida
    I know you adressed your question to Steve, but I have an observation. That is just one of the concerns about the expanding universe appraisers are finding themselves in. They are in a tight right now since we can't be sure any longer that the clients aren't modifying our stuff.
     
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