2055 for proposed construction?

[bobburnitt]

Departure can be invoked on a proposed construction. Therefore, a proposed construction CAN ( but of course not always) be done on a 2055.
The 2055 form can be plenty appropriate. The as is value on a PROPOSED construction is the SITE value, which I state in ALL of my reports. Per Barry Shea, a NAIFA USPAP instructor, you don't have to do the as is value unless the transaction is a FRT.

BB in Texas

 

[bobburnitt]

In Texas, all appraisals must conform to USPAP.

Can someone tell me where it says (in USPAP) that departure CANNOT be invoked on a proposed construction?

BB in Texas

 

[Frederick R. Ruffell]

Bob,
Under what circumstances would YOU invoke departure to eliminate the cost approach from you analysis for proposed construction. If ever there was an instance where the cost appraoch would be applicable (necessary is debatable) proposed construction is it, even more so than new construction I would think. I know one can invoke departure for some USPAP requirements other than cost approach, but because we are discussing the 2055 form it is pretty obvious that is what we are getting at, n'est pas?

 

[bobburnitt]

When a lender is specifically interested in what the durn things are selling for. I must say I have never done a Limited Appraisal / Summary Report on a proposed construction that was at the same time a FRT. All of the 2055 proposed I have done have been below the diminmus, which of course doesn't relieve you of USPAP obligations, but as I say, where does it say you CANNOT invoke departure.

What is the difference from invoking departure on a proposed new construction and an existing new construction? Would you explain that to me?

BB in Texas

 

[Frederick R. Ruffell]

Bob,
to answer your first question, and I quote from USPAP 2001 as I do not have my 2002 copy here, DEPARTURE RULE line 484 thru 486, Of the specific requirements that are APPLICABLE to a given assignment, some may be NECESSARY in order to result in opinions or conclusions that are credible. When a specific requirement is necessary to a given assignment, departure is not permitted.

To answer your second question, there is no difference in the invoking part, the difference is in the new vs proposed. It is a time thing, and going back to waht started this whole thread, You can inspect new construction, you cannot inspect proposed construction. i.e. material defects, construction methods, conformity to plans and specs, workmanship, etc.

 

[bobburnitt]

Fred,

The condition, workmanship, quality, blah, blah, is ASSUMED to be at a certain level as stated in the plans and specs, and as stated in the report. Even if you do a proposed on a 1004 you still inspect the interior via the plans and specs. The workmanship, quality etc. will be assumed just the same.

You still have not expalined why you can't invoke departure on a proposed. Of course one is existing and one is proposed, that is a fact, but WHAT is the difference, and while will doing the cost approach cure the problem, most especially when the client DOES NOT CARE about the cost approach? The only cost approach that is worth .02 cents is the quantitative. Anything less is just BS in the first place. It is the most backed into thing in the business.

At this point I must say that we are respectfully, and hopelessly deadlocked on the issue. I think it would be a good question for the ASB or other 'authority'.

BB in Texas

 

[Frederick R. Ruffell]

Bob,
To reiterate from my previous posts in this thread:
I never said you "can't" nor did I say USPAP prohibits it.

Perhaps my background as a contractor and construction estimator has me biased on the issue. All I am saying is that here in southern CA, under certain circumstances (i.e. including but not limited to new/proposed construction), the cost appraoch is aplicable and, under certain circumstances (i.e. including but not limited to new/proposed construction), is necessary thus preventing the invocation of the departure where it concerns the cost approach. Furthermore with availability of land sales it (the cost approach) becomes a valid and accurate indicator of value.

I respectfully agree to disagree.

 

[bobburnitt]

Well now Fred,

If you say it's OK to do it, and USPAP doesn't prohibit it, what are we discussing? I think we are discussing whether or not it is the best option, and to that I would say, not exactly, and certainly not all the time. All I am saying is it is legal to do a proposed on a 2055. The form has a provision for it, and USPAP allows it, so in certain situations it is totally appropriate. If a client request such an appraisal, I will do it in a New York minute IF it is appropriate. We may now at last be connecting, if we are not, we have a friendly disagreement.

Enjoyed the discussion.

BB in Texas

 

[Mike Garrett RAA]

You do not do "Interior Inspection" when appraising from plans and specs. Use the 2055?....I suppose you could, I would not. 1004 and do the cost approach. This is a classic example of when a cost approach is applicable. FHA requires a modified cost approach on all new construction. To say the cost approach is worthless is like saying the only car is a Ford.

 

[Frederick R. Ruffell]

Thanks for your support Mike