2055 int/ext considered a limited appraisal?

[mark peters]

Question:
When doing a 2055 interior/exterior appraisal, is it considered to be a limited appraisal. No place on the form for the Income or Cost approach.
Are we still to consider the Income and Cost approach? If not, are we invoking departure? Boss wants us to call it a limited. Any thoughts out there? Thanks

 

[Jo Ann Meyer Stratton]

I can email you my sample template as a pdf file with all my canned statements. The template is set up for an exterior view, but can be easily changed to an interior view report. And any USPAP instructors out there that I have already emailed my template too----what is your opinion, am I handling them correctly???

jmstratton@aznex.net

 

[Ben Vukicevich SRA]

Mark,

Tell the boss to read the 2055 Certification page he signs. Items 8 and 9. All of his questions are answered there.....

Ben

 

[Steve Owen]

If you do not do an approach that would normally be done, it is a limited appraisal and you are invoking departure. Only rarely do I find an SFR where the Cost Approach is not applicable, therefore it is a limited appraisal. More often, the Income Approach is not applicable because of lack of available data; however, if enough data is available to produce a credible GRM then the Income Approach should also be done, otherwise it is a limited appraisal. If an approach is not applicable it may be eliminated without invoking departure. However, in the case of the Cost Approach, it should be done, even if it is going to be weighted lightly because of a large amount of depreciation. The 2055 form is outdated (along with most of the rest of FANNIE and FREDDIE's forms) and needs additional comments, including the words "Limited Appraisal" in a prominent location near the top. Just my opinion. This also is my opinion: You may only do a limited appraisal if you can still come to a credible opinion of value without the eliminated approach. Don't be afraid to turn these things down if a complete appraisal is necessary.

 

[Tim Hicks (Texas)]

I put this comment on all 2055 reports:

THIS IS A LIMITED/SUMMARY APPRAISAL REPORT. BY AGREEMENT WITH THE CLIENT, DEPARTURE WAS INVOKED AS THE COST APPROACH WAS FOUND TO BE APPLICABLE, BUT NOT NECESSARY TO PRODUCE REPORTS THAT ARE CREDIBLE. THIS REPORT DEPARTS FROM STANDARD 1-4(B). THE INCOME APPROACH WAS CONSIDERED BUT NOT APPLICABLE.

If it is a 2005 exterior only. I change the first line to:

This is a limited/summary appraisal report with an exterior only inspection.


I think I am covered and my lenders like that statement, but anybody who wants to point out I am wrong, please put me on the straight and narrow road.

The key to the assignment is the lender does not care about the cost or income approach. It is their priority not ours. It is our job to recommend an upgrade to a full URAR if the property reflects the need for other approaches. My examples: new home construction and rental homes. I have been forced to do 2055's on new construction anyway and I believe that there is nothing preventing us from doing it. JMHO.

 

[Pamela Crowley (Florida)]

Tim,

I like your statement better than mine. I think mine came from AI but yours says the same thing in fewer words.

Re: new construction on 2055 form - I add the M&S form 1007 and then it's a complete summary. I feel better that way.

 

[jtrotta]

Having gone thru most of the forms a while back, I remember there were some that offered the statements you are refering to. Perhaps, ya'll need to check some of those documents in your software packages.

Tim,
good comments :idea: , I just can't see adding or writting anymore than I have to.


8)

 

[bradellis]

Mark,

Whether or not it is limited depends entirely upon the scope of work. This is something you and the client must agree upon.

It looks to me as if the client does not care about the cost or income approaches. If so, then the scope of work involves only the direct sales comparison approach and not doing another approach does not involve departure.

Define your scope of work. Unless they specifically want the cost approach, you are not departing. Your work must, of course, still be credible. If YOU believe that the cost approach is necessary to arrive at a credible opinion, then, by all means do it. I doubt very much if the client will care if you include it. While the form has no place for it, you can use a supplemental form to do it.

Brad Ellis, IFA, RAA

 

[John Hassler]

My understanding of USPAP Departure it that it needs to be invoked when your are deviating from standard appraisal practice (among other reasons). As the 2055 is becoming a defacto standard there is no need to invoke Departure. Any USPAP teachers out there?

John Hassler

 

[Ben Vukicevich SRA]

John,

Good point. The 2055 is a limited to begin with as departure has been invoked in the Certification.

As an aside....I always wondered....do we "un-depart" if we make it complete by adding stuff they don't want...... :?: :?:


Ben