Adding a defintion/description of an Appraisal Inspection in this report.

[AnonApprsr]

I have now decided to include a brief (maybe 4 sentences) description of what an "appraisal inspection" is. This statement would be used in appraisal reported on the 1004 for finance purposes.

The appraisal "inspection" is a value inspection and is no substitute for an engineering inspection. While the appraiser neither sees nor has been told of any obvious defect not otherwise reported, the appraisers are not experts in identification of such items and the appraiser recommends the property have an inspection by a certified home inspector and a structural engineer. The appraiser reserves the right to alter this report upon the client providing that home inspection or structural inspection. The appraiser assumes all structural, system, or HVAC systems are in good working order if no such report is provided. The use of an exterior inspection of a previously appraised property assumes that the condition of the property has not deteriorated since the last interior inspection or that the client has advised the appraiser of any changes in that condition. Only defects readily visible from a street inspection are reported or considered.

Does anyone have a brief one they use? Something along the lines of:

Please note that the inspection performed for this appraisal consisted of the appraiser viewing the property and its components readily observable during a walk through and around the Subject improvement. The inspection was not a home inspection, the appraiser is not an engineer, the inspection was made to support the process of the estimation of value. The appraiser did not look under the couch or behind the refrigerator etc..

Urgent because I'm shipping a report in about 45 minutes and would like to include such a statement. Thanks!

 

[Lee Lansford]

Understanding that a single descriptive statement of a SOW issue is not one-size-fits-all, and without diminishing Fannie's "complete visual inspection" SOW, it is wise for the appraiser to explain (briefly and to the point is fine) what is, and what is not, a "complete visual inspection" (e.g., the appraiser did/did not view all areas of the crawl space; did/did not view all areas of the attic; and, 'viewed' the roof from where--at ground-level or while standing on the roof? et cetera...think about it).

Is the appraiser's "complete visual inspection" at the same level as might be expected of a home inspector?

Is the inspection of readily observable surface areas only, or is the inspection intrusive (e.g., removing a few of the drop-ceiling panels in the finished basement)?

What do your "peers" (as defined in USPAP, not 'peers' as the run-of-the-mill licensed appraiser who virtually runs through the improvements) do for their "complete visual inspection"? And, by the way, if an appraiser is running through a, say, 3000 sf/GLA house in 15 minutes, the appraiser likely is not absorbing (and noting) important details of the dwelling.

"Complete visual inspection" certainly means different things to different people.

 

[Couch Potato]

It is always wise to provide commentary on the inspection of the property. It is not wise to add a canned statement that does not apply to the specific property. The phrase, "unless otherwise stated" should never appear in texted entered by an appraiser. It is fine for preprinted text over which you have no control, but when you are the one stating otherwise it indicates an unnecessary contradiction in the report.

 

[Lee Lansford]

It is always wise to provide commentary on the inspection of the property. It is not wise to add a canned statement that does not apply to the specific property. The phrase, "unless otherwise stated" should never appear in texted entered by an appraiser. It is fine for preprinted text over which you have no control, but when you are the one stating otherwise it indicates an unnecessary contradiction in the report.

100% correct you are!

Thus, I avoid providing examples (when an appraiser comes seeking "examples") of appraisal "comments" here at the AF as some appraisers will certainly understand such as "one-size-fits-all" and, thus, applicable to all appraisal assignments when they are certainly not.

There is more than a little bit of "monkey-see, monkey-do" among appraisers.

 

[Terrel L. Shields]

Be aware that the statements I made were mostly pulled from my narrative reports and not everything I wrote is necessarily in any report. It was bits and pieces from templates and narrative templates.. so do modify the report accordingly. I have merge functions 'stops' in the narrative template that allows me to stop and look if the situation is correctly stated.

Is the appraiser's "complete visual inspection" at the same level as might be expected of a home inspector?

Again, defining the inspection and doing so comparatively (it is not a home inspection and not an engineering inspection) sets reasonable limits imho. "Complete", again, is a totally misleading moniker to place in the context of a value inspection, but fannie saddled us with it, like so many other things...

Certainly, some comments could be similar to

"I relied upon the sketch found in the assessors field notes for the gross living area." or, "I personally measured the dwelling, the shop, and the garage, but did not measure any other outbuilding or shed. I relied upon the assessor' s measurements for minor outbuildings." or "I personally measured all buildings and improvements that contributed value to the property using a laser disto measuring device. Sketchs may reflect rounding to the nearest foot as typical of what the assessor and/or my peers would deem to be appropriate for a similar assignment."

Frankly, more is less and less is more but it is still impossible to predict what an UW or reviewer deems "appropriate"; and a complaint filed against you will bring up things you absolutely wouldn't think could possibly be the issue. Trust me...been there done that.

I was once accused of using the previous mortgage as the basis for my value decision when I didn't even have a copy of it.

 

[Metamorphic]

Thinking about this I believe one of the key concepts that should be incorporated is the "typical buyer".

After all, we're supposed to value the property through the eyes of the typical buyer, so shouldn't we be seeing and inspecting like a typical buyer? If our inspection were to be significantly inferior or superior to that of a buyer, we're building a bias into our reports by the different in exposure.

 

[Lee Lansford]

Thinking about this I believe one of the key concepts that should be incorporated is the "typical buyer".

After all, we're supposed to value the property through the eyes of the typical buyer, so shouldn't we be seeing and inspecting like a typical buyer? If our inspection were to be significantly inferior or superior to that of a buyer, we're building a bias into our reports by the different in exposure.

I'd rather judge what is an appropriate level of inspection based upon what my peers (as defined by USPAP) and I deem appropriate versus having to guess how the typical buyer "inspects" a property. After all, who is the professional?

 

[Metamorphic]

I'd rather judge what is an appropriate level of inspection based upon what my peers (as defined by USPAP) and I deem appropriate versus having to guess how the typical buyer "inspects" a property. After all, who is the professional?

You're free to inspect however you like based on whatever you like. That has nothing to do with what you put in a statement of limitation and I *would* encourage you to inspect to a peer standard, and the good peers at that not the schlepps. But in terms of statements of limitations (presumably something to limit liability), It makes a lot of sense from a conceptual valuation perspective, and from a liability minimization to perspective, to not indicate that you'll be more through than the typical buyer.

 

[Terrel L. Shields]

I deem appropriate versus having to guess how the typical buyer "inspects" a property. After all, who is the professional?

but if we rely upon the "market" to guide our valuation, don't we need to be conizant of the way the buyer thinks? Sometimes we might be over-thinking that part of the equation. Often the buyer is less sophisticated than we are and determine their purchases without regards to a lot of things we might think important..

And unfortunately, a way to many of our so-called "peers" are crackpots. I'd retire if I was paid a nickel for every appraiser in the past 20 years who told me that they never appraise a property for more than the contract no matter how low the price was. Or have made statements that exhibit an incredible bias such as "I would never appraise a property very high that backs up to an interstate or railroad", etc.

 

[Webbed Feet]

Wow... Anon and Meta, you both need some help and rethinking... For starters, any appraiser that tries to reduce a definition of an "Appraisal Inspection" to four sentences is seriously asking for legal troubles someday, but so is one that thinks the use of the words "Typical Buyer" is something that is going to be some sort of escape from liability. There are so many aspects of real estate that trying to boilerplate something like that in four sentences is a fools mission, and the moment it goes in print that "Typical Buyer" is an element of definition you've set yourself up for having to provide a definition of "Typical Buyer" so that the definition using it itself can be understood. More, the likelihood of a judge holding an appraiser to a far higher standard than any "Typical Buyer" is almost a certainty regardless of the attempt to disclaim responsibility by trying to claim you only had the eyes of a typical buyer.

This thread should be renamed "Wishful Thinking"