Change in GLA from Plans & Specs

[RSW]

I can agree with Richard and PE in posts 86 & 87 as long as there is a clear description of the improvements in the 1004D so that the report is not misleading to the reader. A 1004 is not necessary and it could be done on the 1004D. But, doing it on the 1004 would make it clear what was present at the time of the final inspection and would not be misleading. I am still having problems with the value stated in the original appraisal report since the improvements were not built per plans and specifications.

 

[Richard Carlsen]

If the original appraisal was done in January of '08 why wouldn't the borrower want a new appraisal done?

That is simple to answer: The client does not need one.

This is moving from a construction loan to an end mortgage and the normal process is to have the appraiser certify that the value is at least what it was before construction began when the lending decision was made. All they need is the certification which we know constitutes an up-date. This is normal operating procedures for lenders.

We need to stop trying to interpose our wants and desires upon the client who knows what he needs to complete the loan process.

 

[Webbed Feet]

What?

I was requested to do a final inspection with a recertifiction on a plans & specs appraisal report I completed in 01/2008.

What would be the proper form(s) to use? The satisfactory completion with recertification form states <...... snip......>

Cathy0405,

What in the world are you posting about? What is the exact form number on the bottom right hand side of this form? There are no longer any current "Recertification" forms the way you are wording your posts to indicate. I think you need to post what you think a "recertification" is.

Webbed.

 

[Webbed Feet]

<..... snip.....>All they need is the certification which we know constitutes an up-date. <......... snip......>

...............an update, which we also know constitutes a new appraisal assignment.

So just what are the minimum standards under USPAP for a new assignment regarding all of Standard One and Two anyway? I really find it curious how you are posting the client doesn't need what USPAP says the client is in fact asking for. Just because the client doesn't understand that they are asking for a new real estate appraisal does not excuse any appraiser for failing to recognize they are.

Webbed.

 

[Webbed Feet]

I can agree with Richard and PE in posts 86 & 87 as long as there is a clear description of the improvements in the 1004D so that the report is not misleading to the reader. A 1004 is not necessary and it could be done on the 1004D. But, doing it on the 1004 would make it clear what was present at the time of the final inspection and would not be misleading. I am still having problems with the value stated in the original appraisal report since the improvements were not built per plans and specifications.

RSW,

It can't be done on the 1004d, without so many addendum additions, alterations, and additional certifications needed to comply with USPAP, that attempting to do it using a 1004d would take as much time and cost as just doing a new 1004 report for them.

Almost all of this thread is directly due to Fannie coming out with an abortion of a form that should have never existed in it's present format at all. It was a joke from day one when it was released, and it's a joke today. The 1004d should be immediately retired. The very unstable markets all over this country have been proof that a one page form, half of which is supposedly a real estate appraisal, is a total joke. Just for warm ups there is inadequate room on the form just to analyze the market conditions alone.

Webbed.

 

[Webbed Feet]

I was requested to do a final inspection with a recertifiction on a plans & specs appraisal report I completed in 01/2008. Only one additional more recent comparable sale was required for the recert. Upon my inspection, the 900 SF unfinished attic as identified in the original report was a finished u/s level with 2 bedrooms, den and bathroom. Also there was a 20 x 30 workshop in the back yard not noted in the original report. I called the lender to inform her of the change in GLA and workshop and was told to base the final and recert. on the original appraisal report since no additional value was necessary for loan purposes. I told her I should perform a new assignment since the GLA changed significantly (from 3100 SF to 4000 SF) and will have an impact on market value. She stated that other appraisers in the past would just base the final and recert. on the original report and that as long as the plans and specs were followed as outlined in the original report anything "far and beyond" what was stated in the report does not have to be taken into consideration (not in her exact words). I told her I would have to at least disclose the upstairs finished area and make a statement "For the purpose of this appraisal report and at the request of the lender, no value will be given to the 900 SF finished upstairs area which was listed as an unfinished attic in the original appraisal report". She was hesitant about the statement but told me to do what was necessary. Is statement acceptable or does a new report need to be conducted since GLA changed significantly? Any advise would be greatly appreciated.

Ms. Cathy,

I don't want to read the entire thread. But I did see you only posted twice and never mentioned what I am going to say. Tell me, did you reply to this person working for your client that since she was asking for a "recertification" as you call it, which is an "Update" and "New Assignment" as called by USPAP, that in order to opine value using only one new additional comp not only would fail to comply with any minimum standards of your peers....... a USPAP violation .... but doing so based on a house that does not in fact actually exist on the land would be using a Hypothetical Condition in order to do that?

Tell me, did you ask her if she was planning on selling the loan to someplace like Fannie that will NOT allow such a hypothetical condition in Fannie lending? That Fannie expects ALL hypothetical conditions and Extraordinary Assumptions to be cleared before the loan is sold to Fannie? Do all these other appraisers, in the face of substantial changes that go far beyond a simple "hardwood instead of carpet in one room" alteration of the plans and specs require a new engagement letter out of her approving the hypothetical conditions she is asking for? Are they

Disclosure Obligations (SCOPE OF WORK RULE)

The report must contain sufficient information to allow intended users to understand the scope of work performed.

Comment: Proper disclosure is required because clients and other intended users rely on the assignment results. Sufficient information includes disclosure of research and analyses performed and might also include disclosure of research and analyses not performed.

Standards Rule 2-1

Each written or oral real property appraisal report must:

(a)
clearly and accurately set forth the appraisal in a manner that will not be misleading;

(b)
contain sufficient information to enable the intended users of the appraisal to understand the report properly; and

(c)
clearly and accurately disclose all assumptions, extraordinary assumptions, hypothetical conditions, and limiting conditions used in the assignment.

Because they should be or they are violating USPAP.

Webbed.

 

[RSW]

RSW,

It can't be done on the 1004d, without so many addendum additions, alterations, and additional certifications needed to comply with USPAP, that attempting to do it using a 1004d would take as much time and cost as just doing a new 1004 report for them.

Almost all of this thread is directly due to Fannie coming out with an abortion of a form that should have never existed in it's present format at all. It was a joke from day one when it was released, and it's a joke today. The 1004d should be immediately retired. The very unstable markets all over this country have been proof that a one page form, half of which is supposedly a real estate appraisal, is a total joke. Just for warm ups there is inadequate room on the form just to analyze the market conditions alone.

Webbed.

I couldn't agree with you more, Webbed! It could be done on the 1004D but would require a lot of addendums to comply with USPAP. It would be much easier to do it on the URAR 1004.

 

[PropertyEconomics]

I couldn't agree with you more, Webbed! It could be done on the 1004D but would require a lot of addendums to comply with USPAP. It would be much easier to do it on the URAR 1004.

Well the onus on meeting the requirements is that of the apprasier .. but it can be done which has been the thrust of this thread. The requirements of the appraisal hypothetical condition have been met and or exceeded.

 

[Jalexi]

That is simple to answer: The client does not need one.

This is moving from a construction loan to an end mortgage and the normal process is to have the appraiser certify that the value is at least what it was before construction began when the lending decision was made. All they need is the certification which we know constitutes an up-date. This is normal operating procedures for lenders.

We need to stop trying to interpose our wants and desires upon the client who knows what he needs to complete the loan process.

I understand perfectly well that he client doesn't need a new appraisal. My rhetorical question is why would a lender or borrower put their faith in an 8 month old appraisal on a subject that increased 29% in HLA and 600 square feet in a detached building? Is the Real Estate market so stable in Fla that an 8 month old appraisal is considered accurate? It's possible that the sales of the comparables in the original report could have occured in January of 07, what was the market like back then?

 

[PropertyEconomics]

I understand perfectly well that he client doesn't need a new appraisal. My rhetorical question is why would a lender or borrower put their faith in an 8 month old appraisal on a subject that increased 29% in HLA and 600 square feet in a detached building? Is the Real Estate market so stable in Fla that an 8 month old appraisal is considered accurate? It's possible that the sales of the comparables in the original report could have occured in January of 07, what was the market like back then?

It might be such that the easiest thing to do is just tell the client you will complete a new 1004 for the cost of a final inspection, replace the comparable sales, change the report to reflect what is actually there, and move forward. Its a business decision thats for sure.
Im sure the lender and the appraiser will decide upon a scope of work that will address all of the issues which will then lead to a fully USPAP compliant assignment.