Extraction Method

[bnmappraisal]

I came here for an argument!

No you didn't.

That was a good Sig line you had

 

[ZZGAMAZZ]

Why do residential lending clients almost inevitably require the CA if most reports presumably disclaim the significance of the approach--even though it is uplifting to develop it with pertinent vacant land sales being available, and results that are, indeed, similar to results of the SCA?

 

[Terrel L. Shields]

Why do residential lending clients almost inevitably require the CA if most reports presumably disclaim the significance of the approach-

why not? It can be useful as a test. It develops the value of the land. It aids in determining the depreciation. It aids in determining the effective age (age-condition) and it can be used to reverse engineer the sales so that you can extract age and total life thus remaining life.

 

[alebrewer]

Why do residential lending clients almost inevitably require the CA if most reports presumably disclaim the significance of the approach--even though it is uplifting to develop it with pertinent vacant land sales being available, and results that are, indeed, similar to results of the SCA?

As I understand, many lenders require it for purposes other than the appraiser actually reconciling value. Insurance purposes appears to be the primary motive.

 

[BRCJR]

As I understand, many lenders require it for purposes other than the appraiser actually reconciling value. Insurance purposes appears to be the primary motive.

Not a wise move on the lenders part to do so.

 

[alebrewer]

Not a wise move on the lenders part to do so.

No doubt. Not sure where that mentality ever came from in the first place.

 

[BRCJR]

No doubt. Not sure where that mentality ever came from in the first place.

When I first came to work here (a lender) they did that. I convinced them what they had been doing for 30 years wasn't really right.
The Letter of Commitment now states the minimum coverage must be at least the outstanding loan amount. Our only interest, strictly business, is to be made whole in the event there is an issue. Of course, the human element side, we want the customer to be properly insured.
The insurable value is up to the property owner and their insurance agent to figure out.

 

[alebrewer]

When I first came to work here (a lender) they did that. I convinced them what they had been doing for 30 years wasn't really right.
The Letter of Commitment now states the minimum coverage must be at least the outstanding loan amount. Our only interest, strictly business, is to be made whole in the event there is an issue. Of course, the human element side, we want the customer to be properly insured.
The insurable value is up to the property owner and their insurance agent to figure out.

lol - exact same experience at my current employer. They required CA (among other BS items), but fortunately, I was able to help convince them that is not an agency, or HUD, guideline. Before someone goes off again - it is still the appraiser's prerogative whether he/she decides to perform/report it, but we don't require it.

 

[CANative]

Why do residential lending clients almost inevitably require the CA if most reports presumably disclaim the significance of the approach--even though it is uplifting to develop it with pertinent vacant land sales being available, and results that are, indeed, similar to results of the SCA?

Because so many residential appraisers work at a relatively low technical level?

 

[CANative]

As I understand, many lenders require it for purposes other than the appraiser actually reconciling value. Insurance purposes appears to be the primary motive.

And I've heard directly from those who make these decisions state their reason is for understanding or confirming there is enough REL in their prospective asset. Not to mention testing the reasonableness of the SA and/or IA conclusion.