1007 only (Certifications needed?)

[glenn walker]

I actually made up a USPAP compliant addendum for this to stick in the report. And I do use Ala Commode Software.

Exactly you can do that..Thats what we do all the time on in situations like this. Good job..think outside the box.

 

[George Hatch]

I've done a number of "market rent" assignments over the years. SR1+SR2 compliance. I just did one involving market rents going back several years, so there was a value conclusion for each year. My reports include a definition of value (market rent) as well as the appropriate disclosures of my SOW, assumptions and limitations and an SR2-3 cert.

Speaking of value that's a defined term in our professional standards:


The monetary value of a leasehold interest to it's owner get's valued on the regular. On the conceptual basis what's the difference between a lease and any other type of agreement? The tenant gets the benefit of that enumerated property right for a given length of time in exchange for the rent or other consideration they paid. After which that particular property right reverts to the landlord. That property right is only a subset of the bundle of rights attributable to a fee simple interest, but it's still a property right that can be valued on its own.

 

[JGuerrera]

I fully understand the premise. And yes, the case I presented: "rent is an estimate of the value of a property to be used for a specific period of time" is technically a form of a partial interest. A more common form of partial interest, however, is when there is more than one owner of a property, and an appraiser is asked to estimate the MV of that interest, which is generally not associated with some interim time period. Again - as I said, I get the thought process, I just disagree that estimating rent is an appraisal. And again - that's just me. I'm not here to convince anyone to come around to my crazy ideas.

Well, first of all, a borrower isn't going to determine a purchase decision based on the rent estimate without some method of associating that rent to an overall value right? IOW - even if not explicitly developing a GRM (or cap rate), in their mind, they're using some tool to associate that rent with a purchase price (or value).

Of course others can quantify that - but in your scenario, the appraiser isn't.

 

[JGuerrera]

Yes, I agree. Separating the Chicken from the egg... The horse from the Buggy...

 

[glenn walker]

it's still a property right that can be valued on its own.

 

[alebrewer]

it's still a property right that can be valued on its own.

Which I think is the rub... so speaking strictly from an 'is it an appraisal in YOUR mind' - I'd agree. And if you were engaged on that premise (something like: "Please estimate the leasehold interest of property X, as of effective date y, expressed on a monthly basis") - I'd agree you're being engaged to perform an appraisal. If, however, you're being engaged to perform a 'rental analysis', it seems to me the expectation of the client is NOT that the estimate of market rent is an appraisal, but rather that he/she will use that information for estate planning, combining with a ratio that they can then use to estimate the overall value, or even to determine if the rent they're charging is too high or too low - whatever they're using that estimate of market rent for - ASIDE from the expectation that it is an aprpaisal.

In Ale's world, the expectation of the client is part of what drives the appraisal problem (as I think it should be in everyone's world). Kind of like being engaged by an acquaintance to provide an 'opinion of value' - if the expectation is that it will be an appraisal because they are engaging an appraiser - then the appraiser can't call it a BPO.

Again, though - not a hill to die on. I'm happy calling a rent analysis an appraisal if the powers that be require me to do so.

 

[Tom D]

this is simplistic, but the only people you should care about seeing your report, or appraisal, is the state board. and if they ask you for a work file. the important note is to have a proper work file.
you also can never over do saying it's an appraisal. but you certainly can under do what is needed by the state's definition of USPAP rules, not your own definitions.

 

[George Hatch]

I doubt you'd ever get hassled for ignoring some of the SR2 elements of the assignment if/when the subject is a 1-4.

With that said, it takes so little "extra" time/effort to hit all the minimums that I don't see a downside to making the effort. Even if the user isn't appraisal-savvy. Some things we do for our users, some things we do for ourselves.

 

[ZZGAMAZZ]

I seriously doubt if I've ever had an original thought...

quite the contrary; most of your comments present concepts that go directly to the essence of a scenario, certainly far-&-above any of my "original thoughts." Be careful, or you might eventually be labeled as an "intellectual," and that would probably upset you!!!!!! LOL

 

[alebrewer]

quite the contrary; most of your comments present concepts that go directly to the essence of a scenario, certainly far-&-above any of my "original thoughts." Be careful, or you might eventually be labeled as an "intellectual," and that would probably upset you!!!!!! LOL

Haha - very gracious of you, ZZ. Intellectual - not quite. Curious observer - absolutely!