Draft Reports

[Mr Rex]

The best I understand its a commercial quasi Comp Check/Feasibility/ heads up type thingama jiggy.

 

[PropertyEconomics]

A draft of the whole report is a comp check?

 

[Mr Rex]

Seems to serve the same purpose, and like a comp check is an attempt at an end around USPAP reporting and development requirements

 

[PropertyEconomics]

Interesting. The world of the unethical constantly amazes me. What is it about honest that appraisers dont get.

 

[Mr Rex]

I'm not sure, but I know a certain percentage of the population is color blind. Where some folks see black and white, others see gray (or grey).

I've heard some with the worst case(s) are highly educated, with juris doctorate degrees.

 

[Hamlet]

An appraisal is complete when the opinion of value is communicated to the client. The paperwork is the medium used by the appraiser to communicate and record research, analysis, development, reconciliation and final opinion performed. USPAP establishes the limits of how that opinion is to be developed, communicated, certified and recorded.

 

[PL1957]

The best I understand its a commercial quasi Comp Check/Feasibility/ heads up type thingama jiggy.

Not even close.

A "Draft" report or any other type of interim product is simply a form of communication with the client, just the same as an email or a phone call. With sophisticated properties, there can frequently be differing opinion as to how various things can be interpreted, i.e., lease clauses, extracting capital expenses from statements, what is recoverable, etc. Also, the client can ask that certain areas of the report be explained better, i.e., absorption, vacancy estimates, market rental rates, etc. It's also used a check to make sure that the appraiser didn't miss something that is obvious to the client, but may not be obvious to a third party. It is simply a tool to arrive at a better work product - nothing more and nothing less.

As I use it, the term "draft" is used to indicate that the report does not necessarily constitute the finished work product, not that it is some WAG. I have never submitted a "draft" report to a client that I wouldn't feel comfortable signing on the spot.

 

[Mr Rex]

So why not sign it? Its an appraisal and must have a signed certification. Nothing wrong with a staged assignment, but nothing in USPAP that allows conveying an opinion of value, indication in direction of value from a benchmark, or range of values etc without a signature. So, you may think its way beyond the scheme of comp checks, but its the same thing, maybe just more professionally prepared. Toe mat o. Toe mah toe.

 

[PropertyEconomics]

Not even close.

A "Draft" report or any other type of interim product is simply a form of communication with the client, just the same as an email or a phone call. With sophisticated properties, there can frequently be differing opinion as to how various things can be interpreted, i.e., lease clauses, extracting capital expenses from statements, what is recoverable, etc. Also, the client can ask that certain areas of the report be explained better, i.e., absorption, vacancy estimates, market rental rates, etc. It's also used a check to make sure that the appraiser didn't miss something that is obvious to the client, but may not be obvious to a third party. It is simply a tool to arrive at a better work product - nothing more and nothing less.

As I use it, the term "draft" is used to indicate that the report does not necessarily constitute the finished work product, not that it is some WAG. I have never submitted a "draft" report to a client that I wouldn't feel comfortable signing on the spot.

Then sign the report and if they find things that need to be changed you change them. I see no need for drafts to be delivered prior to the whole report. Every report is subject to change because of intrepretation of leases, things missed, etc. Whether there is a draft or a signed report they are both the same, except, one is an appraisal that doesnt meet USPAP requirements and that will come back to bite you sometime.

 

[PL1957]

So why not sign it? Its an appraisal and must have a signed certification. Nothing wrong with a staged assignment, but nothing in USPAP that allows conveying an opinion of value, indication in direction of value from a benchmark, or range of values etc without a signature. So, you may think its way beyond the scheme of comp checks, but its the same thing, maybe just more professionally prepared. Toe mat o. Toe mah toe.

Frome the horses mouth ...

"FREQUENTLY ASKED QUESTIONS

196. Providing a draft of a report

Question:
My client has asked that I provide a draft of my appraisal report prior to issuing the report in final form. Is this permitted under USPAP?

Response:
USPAP does not explicitly define or address drafts of reports. When clients, other intended users, and appraisers use the term “draft,” they may mean many different things, from preliminary spreadsheets to a written document that contains all that will be in the “final” report except it is labeled as “draft” and does not contain signatures. Report drafts have traditionally been part of certain types of appraisal practice but have never been considered acceptable in other types of appraisal practice. (My emphasis added)

State-regulated appraisers should be aware of applicable state laws and regulations. Many laws define a “report” as any communication, written or oral, of an appraisal.

Whatever a “draft” may be in a particular context, it would always be part of “appraisal practice,” because it is a valuation service provided by an appraiser. When performing a service that is considered appraisal practice, but for which there are no applicable Standards Rules, an appraiser must still comply with the portions of USPAP that apply generally to appraisal practice. These include the DEFINITIONS, PREAMBLE, ETHICS RULE except for the Record Keeping section, COMPETENCY RULE, and JURISDICTIONAL EXCEPTION RULE.

The second sentence of the PREAMBLE states: It is essential that appraisers develop and communicate their analyses, opinions, and conclusions to intended users of their services in a manner that is meaningful and not misleading. Additionally, the ETHICS RULE states: An appraiser must not communicate assignment results in a misleading or fraudulent manner. Therefore, if an appraiser communicates with intended users prior to completion of an assignment, the communication must not be misleading.

The purpose of issuing a “draft” cannot be to allow the client to improperly influence the appraiser.

See Advisory Opinion 21, USPAP Compliance for further guidance."

If you don't want to provide "drafts", then don't. Just don't tell me I'm in violation of USPAP if I do.