2024 USPAP - "Personal Inspection" definition revised

[Ricky LaFleur]

Working RE: "Finally, the inspection must be performed as part of the scope of work for the assignment. For example, if an appraiser had made a personal inspection of a property six months ago and is subsequently engaged to perform a new appraisal on the property, the appraiser cannot certify that they made a personal inspection of the property unless they inspected it again as part of the scope of work for the new assignment."

Curiosity has me wondering about several particular past cases and how they would be handled with the new definition, if indeed it changed the way the article states.

Let's say you have already made a personal inspection of a property on 01/01/2024, and subsequently you are engaged in another assignment for the same property later in the month (call it 01/30/2024) for an estate. Under previous USPAP, you could state that you made a personal inspection of the property on 01/01/2024 and either 1) use the retrospective effective date of the same 01/01/2024 or 2) make the effective date current as of 01/30/2024 and rely on the past inspection with the EA that property is in same condition. Is the updated USPAP saying you cannot state that you made a personal inspection unless it was part of your present assignment, and to state such means you must revisit the property, or is the article reading more into the update than what was actually changed?

 

[Dublin ohio]

Working RE: "Finally, the inspection must be performed as part of the scope of work for the assignment. For example, if an appraiser had made a personal inspection of a property six months ago and is subsequently engaged to perform a new appraisal on the property, the appraiser cannot certify that they made a personal inspection of the property unless they inspected it again as part of the scope of work for the new assignment."

Curiosity has me wondering about several particular past cases and how they would be handled with the new definition, if indeed it changed the way the article states.

Let's say you have already made a personal inspection of a property on 01/01/2024, and subsequently you are engaged in another assignment for the same property later in the month (call it 01/30/2024) for an estate. Under previous USPAP, you could state that you made a personal inspection of the property on 01/01/2024 and either 1) use the retrospective effective date of the same 01/01/2024 or 2) make the effective date current as of 01/30/2024 and rely on the past inspection with the EA that property is in same condition. Is the updated USPAP saying you cannot state that you made a personal inspection unless it was part of your present assignment, and to state such means you must revisit the property, or is the article reading more into the update than what was actually changed?

This part should answer your question

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​ the inspection must be performed as part of the scope of work for the assignment.

 

[Ricky LaFleur]

performed as part of the scope of work for the assignment.

I know you're sharing to help answer the question, so don't take this as being aimed at you, but rather USPAP. It looks that way from the way the USPAP instructor has worded it, but it doesn't make sense.

If this is true: Under option 1 for a retrospective appraisal, why then would you be required to have a current inspection to state that you made a personal observation of the property? It would serve no purpose to have a more current inspection, and would actually be less accurate than the original inspection that was the same as the retrospective effective date. It would only obligate additional time from the appraiser and therefore cost to clients who are already wondering why appraisals cost so much in the first place. Would you state that you didn't make a personal observation but happened to have photos, measurements, details of the property that magically appeared out of the air?

 

[Dublin ohio]

If this is true: Under option 1 for a retrospective appraisal, why then would you be required to have a current inspection to state that you made a personal observation of the property?

Again. Scope of work.

Edits were also made to Advisory Opinion 2, Inspection of Subject Property, to reflect the revised definition. AO-2 also clarifies that not all appraisal assignments require a personal inspection of the subject property as part of the scope of work.

 

[Ricky LaFleur]

AO-2 also clarifies that not all appraisal assignments require a personal inspection of the subject property as part of the scope of work.

I'm aware. The issue is that you already have inspected, and should be able to rely on that past inspection.

Would you state that you didn't make a personal observation but happened to have photos, measurements, details of the property that magically appeared out of the air?

Of course, you could choose to not make a current inspection. But because you have, in fact, inspected the property on the 01/01/2024 date, are you supposed to lie and state that you didn't make a "personal observation" as they now defined, as if you were never there? That seems misleading to the user. Maybe that would mean you can't rely on observations and measurements taken at the past inspection as well.

This interpretation doesn't seem logical, and appears "off" from typical USPAP. I'm wondering if other USPAP instructors could help interpret the implications of the change. Instructors from Mckissock (who were quoted by Working RE) are the only ones I've heard this from so far.

 

[Surf Cat]

I haven't taken a class on 2024 USPAP however, the way I see it from what you posted, is the rule is giving the okay for hybrid assignments for the appraiser chained to the desk that didn't personally inspect.

I've always reinspected even if it was 2 days later if the borrower decided to change lenders. Different assignment conditions from a different lender. I didn't remeasure however, I walked through the dwelling to make sure the borrowers didn't gut the kitchen. Took a few new photos.

 

[Ricky LaFleur]

I've always reinspected even if it was 2 days later if the borrower decided to change lenders. Different assignment conditions from a different lender. I didn't remeasure however, I walked through the dwelling to make sure the borrowers didn't gut the kitchen. Took a few new photos.

Sure, I understand why some choose to handle it that way. But in non-residential work, it can be a different scenario. Inspecting a more distant subject can easily add 4-6 hours to the assignment.

 

[Dublin ohio]

Let's say you have already made a personal inspection of a property on 01/01/2024, and subsequently you are engaged in another assignment for the same property later in the month (call it 01/30/2024) for an estate. Under previous USPAP, you could state that you made a personal inspection of the property on 01/01/2024 and either 1) use the retrospective effective date of the same 01/01/2024 or 2) make the effective date current as of 01/30/2024 and rely on the past inspection with the EA that property is in same condition. Is the updated USPAP saying you cannot state that you made a personal inspection unless it was part of your present assignment, and to state such means you must revisit the property, or is the article reading more into the update than what was actually changed?

I still read it as saying it depends on the scope of work. If you are doing a 1004. You are signing a report that says the inspection date and effective date are the same. With estate appraisals. The effective date is typically not the inspection date (if inspected). Which is something that is determined through the scope of work you determine is required with input from the client.

 

[Dublin ohio]

But in non-residential work, it can be a different scenario. Inspecting a more distant subject can easily add 4-6 hours to the assignment.

From the context of the article. I would assume that the author's comments were geared toward residential lending work. I wouldn't try to directly apply the comments to non residential work. None the less I still think it all boils down to scope of work.

 

[Terrel L. Shields]

None the less I still think it all boils down to scope of work.

The problem is you often have to waste time with a client when they send some form Letter of Engagement and includes FNMA language. I had one client that was notorious for sending an FNMA SOW for a ranch or poultry farm.