Drive by appraisals

[ohiodoug]

Here's my two cents. Our job is to give as reasonable and reliable an opinion of the value of a piece of real estate as we can under the terms of the assignment. The client can order whatever they want; that is none of our concern. I HATE drive-by appraisals and I don't think they should be allowed, but I don't make the rules. If a client requests a drive-by, I do it. But I make sure to protect myself by stating the limits of a drive-by assignment. I ALWAYS state that the drive-by was requested by the client and that my opinion of value may change with an interior inspection. I state the extraordinary assumptions made and why they are made. If common sense ruled, there would be no such thing as a drive-by.

 

[Mike Kennedy]

"Lenders must upgrade to an interior and exterior appraisal inspection if an exterior only inspection does not provide sufficient information about the property to perform the inspection.

For example, if the following conditions exist, the appraisal must be upgraded:
• the appraiser cannot adequately view the property from the street,
• apparent adverse physical deficiencies or environmental conditions are observed,
• the appraiser needs additional information about the physical conditions of the property.

Part B, Origination Through Closing
Subpart 4, Underwriting Property
Chapter 1, Appraisal Guidelines, Appraisal Document Standards,​

Report, and Property Inspections

Printed copies may not be the most current version. For the most current version, go to the online version at​

http://www.efanniemae.com/sf/guides/ssg/.

 

[Lawrence R.]

Dv-by exteriors have been around forever. Same with desktops. If you really think they're an issue, USPAP would have addressed it and said they can't be done. That's not the case. You guys are desparetly trying to create a rule by stretching snippets of USPAP. How many appraisers have ever been charged with doing a 2055 exterior because it was not in compliance with USPAP? Please post links.

I have never really thought of it this way, but you make a salient point! Knowing that we have a large portion of our discussions over drive by and comp check appraisals..surely the ASB would address it specifically by name if they wished to prohibit it. I think I will move off this particular debate...since Dave has settled it for me.

Of course you can do them...USPAP has addressed 700 million other things BY NAME and has yet to come out and say DON'T DO THIS.

I agree that USPAP isn't(and shouldn't be) written in secret code. I will have to find a good desktop comp check form and start doing them.

 

[DWiley]

I personally do not think that to caveat the interior condition away by assuming it equals the exterior condition is an appropriate, reliable, way to do it.

Perhaps that is why Fannie does not allow this practice.
An appraiser who is just assuming the quality and condition of the subject are average is not in compliance.

The "new" 2055 isn't very new anymore, but many still do not understand the basic difference that Fannie introduced with the new form. An extraordinary assumption regarding the interior is NOT allowed when using the new form; the appraiser must have a data source for the interior quality and condition. Fannie suggests using the same type of sources that one uses for the comparables, which just seems like common sense to me.

 

[DWiley]

I dare to suggest that less than an interior visual observation (at a minimum) directly contradicts the actions of TYPICAL and Local Buyers.

I am not sure that is the test we want to apply to measure acceptable practice.

Doesn't measuring a home to determine its actual size also contradict the actions of TYPICAL and Local Buyers? If we are supposed to do what buyers do, then why don't we just take the size from the listing or the tax card?

 

[Mike Garrett RAA]

An important part of the discussion should be..."who is the intended user(s)?" If it not Fannie Mae why can't the appraiser condition the value on an extraordinary assumption?

 

[residentialguy]

Perhaps that is why Fannie does not allow this practice.
An appraiser who is just assuming the quality and condition of the subject are average is not in compliance.

The "new" 2055 isn't very new anymore, but many still do not understand the basic difference that Fannie introduced with the new form. An extraordinary assumption regarding the interior is NOT allowed when using the new form; the appraiser must have a data source for the interior quality and condition. Fannie suggests using the same type of sources that one uses for the comparables, which just seems like common sense to me.

Interesting take on this. I agree that you just can't assume the int equals the exterior with no other data to back that up, but I don't believe that the use of EA on interior is prohibited. I've always tried to gather as much data as possible, including the use of data that we all use with our comparables - listings. But we all know Realtors don't always tell the truth and I think it would be safe to say that we all are making extraordinary assumptions that the Realtor is telling the whole truth, nothing but the truth and the listings are a true reflection of the interior.

 

[Couch Potato]

No, an extraordinary assumption is not prohibited. As noted earlier in the thread, there is a box on the form to indicate an extraordinary assumption was needed. I doubt most clients would find its use acceptable since it passes the risk back to them.

The current 2055 has been in use for about 5 years now. I really expect to hear stories about appraisers getting into trouble over failing to disclose problems with the interior condition by now. Maybe I just haven't heard about it, or maybe it will just take a little more time.

 

[DWiley]

But we all know Realtors don't always tell the truth and I think it would be safe to say that we all are making extraordinary assumptions that the Realtor is telling the whole truth, nothing but the truth and the listings are a true reflection of the interior.

The statement that the appraiser has used data sources believed to be accurate is made in all 2055 assignments. It is not assignment specific, so it is not an EA.

 

[Mike Kennedy]

I am not sure that is the test we want to apply to measure acceptable practice.

Doesn't measuring a home to determine its actual size also contradict the actions of TYPICAL and Local Buyers? If we are supposed to do what buyers do, then why don't we just take the size from the listing or the tax card?

Unlike Subjective RE Agents and Assessors with vested interests in inflating values (for profit and increased tax revenue) Independent, entirely objective, Competent and Ethical Appraisers are relied upon by their Clients and Consumers to opine the current reality of subject site improvements which "are what they are" for a non-contingent fee.:icon_idea: It is also not a rare event for Buyers to measure homes themselves and/or contract with professionals to obtain independent measurements prior to making an offer (independent of a mortgage financing appraisal). Considering the Number 1 reason for complaints against Appraisers is GLA challenges, IMO, it is essential we actually be the "eyes and ears" our Clients, and typical Consumers, expect us to be. Measure Twice, Cut Once.