2055 int/ext considered a limited appraisal?

[Mike Garrett RAA]

[b When doing a 2055...the appraisal is a limited appraisal because you don't do all of the things normally done in the appraisal process.

The 2055 appraisal report form is a Summary Report. Read the certification.

USPAP does not say what form should be used....only that we must do certain things regardless of the form.[/b]

 

[Frederick R. Ruffell]

Mike,
it (the 2055) is also Limited by default, read #9 on page 3 of the 2055 form. I did not know this about the form untill someone on this forum pointed it out to me a couple of months ago. So If you want to do a complete appraisal and use the 2055 form you must uninvoke the departure rule and provide all of the approaches to value that are "necessary AND applicable". Please do not confuse the word "and" with the word "or". So it is possible to have a complete appraisal on a 2055 with only one approach to value. Can it be done in all situations? no.
But Mike, I know you know this already and so do most of the others here on the forum.

 

[bradellis]

Mike,

The 2055 is a form, not an appraisal. It cannot be "limited by default" as only appraisals are limited, not reports.

That said, your scope of work will rule the day. If you and your client jointly decide that only the sales comparison approach is needed and relevant, then the other approaches are unnecessary and you are not departing at all. In that case, you have done a complete appraisal and reproted it in a summary format (2055 is a summary format).

If you believe that the other approaches are needed to produce a credible appraisal, then do them. They do not need to be included, necessarily, in the report. They can reside in your work file. However, I've always been one to say that, unless the clleint has some formal restriction on their inclusion, why not include them. The income approach can be done in a paragraph. You can use the form 1007 for a rent schedule. If the cost approach is needed, you can also use the M&S form- available in virtually all of the software.

Keep this one thing in mind, however, the less information in your report, the more information in your file.

Brad Ellis, IFA, RAA

 

[Tim Hicks (Texas)]

Brad, I do not agree with you. If departure is invoked, regardless of who agrees with you, you are still invoking departure and it is a limited report. My clients ask for the limited by agreement departure statement on all 2055 reports I do for them. Your reasoning does not make since. You could never use the 2055 form because line 9 of the limiting conditions states it is a "limited' report.

 

[Ben Vukicevich SRA]

Brad,

The 2055 is a limited appraisal, summary report by default, well at least for 2002-don't know about 2003-maybe you have the inside scoop being one of those 2003 USPAP instructors??? ....or else FNMA would have created boxes for the Cost Approach and Income Approach in their divine wisdom??

O great Fannie has "pre-mutually" agreed on the Certification page that such approaches are not necessary for them for a single family home-no 2-4's allowed on 2055's. If you add the additional credible approaches--why you would, I don't know-- then the appraiser must state it's a Complete Appraisal, Summary Report. I'm biting my tongue now with this statement since I know you're a fan of the Cost Approach, but the report must also be marked as a Complete Appraisal, Summary Report if the Cost Approach is not applicable/credible due to the age of the home..... A truly wonderful and confusing report format.

I hate that extra USPAP stuff and the liability, even though I'm not in North Carolina-the Cost Approach capital of the world, so I just fill in the form..........note the type of appraisal and let it fly.

So here's how I see it. Fill out the form to make FNMA/Intended User happy, then call it what you want when you're done writing it. Just be USPAP proper in your type of apprasial-Complete or Limited

A MS 1007 on the side? In the file? You guys kill me..... :lol: :lol:

Let us depart and be glad. It's Monday and I'm already thinking too much for the week already.....

Ben

 

[Steve Owen]

I absolutely disagree with Brad, and anyone else who says that the scope of work is what determines whether an appraisal is limited. You take departure anytime you leave out an approach that is applicable. Whether an approach is applicable is determined by whether there is enough data or market information to use the approach. If there is enough data to use the approach, then your peers would do so and any scope of work agreed to with you client to leave the approach out makes it a limited appraisal. Period. If you doubt me, ask your appraisal commission, the ASB, or any USPAP instructor. They are all going to have the same answer.

 

[Frederick R. Ruffell]

You take departure anytime you leave out an approach that is applicable. .

Steven, this is not accurate. You invoke departure any time you leave out an appraoach that is "Necessary AND Applicable".
In other words If an approach is:
A.) Necessary AND Applicable Departure is not allowed.
B.) Not applicable then no departure is taken therefore it is NOT Limited.
C.) Applicable but not necessary (to arive at a credible opinion of value) then departure is allowed

 

[Mike Garrett RAA]

Well, guess I will get the correct answer this weekend in Denver at the USPAP Instructor Seminar.

We have been teaching (registered appraiser's pre-license 75 hour course with 15 hours of USPAP) that when an appraiser does an appraisal and uses the 2055 form, he/she is doing a Limited Appraisal and the report is a Summary Report. Departure is envoked since neither the cost or income approach is done.

If it walks like a duck, quacks like a duck, and tastes like a duck....calling it a chicken doesn't change the fact IT IS A DUCK! I still say, read the certification...and remember, FANNIE MAE does not accept reports with the certifications modified.

Thus sayth the old guy....who will be much older after this weekend!

 

[Judy Whitehead (Florida)]

Even when I do a drive-by report, I do a cost approach for my files. Have a birthday boy here, do we!

Therefore, my report is not limited, as I did consider the cost approach even though it was not on the form that I used (2055).

 

[bradellis]

Mornin, folks,

I just love it when a plan comes together. In this case, it is to open your eyes to the changes in USPAP since 1999. Mike Garret will see this clearly when he attends the Denver course.

Tim (Texas)- when you take your next USPAP course you will find a lot of time is spent on scope of work. Yes, it IS true that when you depart, you are doing a limited appraisal. However, you will find that departure is a relative thing that depends PRIMARILY upon the scope of work. Departure is now a subset decision under assignment conditions. Used to be the all encompassing determinant- not any longer. Departure ONLY occurs when you a) do not do the scope of work agreed to by you and the client- for whatever reason- and remember you must have the client's agreement to do so, or b) the scope of work dictates that you do not do something that would otherwise be required to arrive at a credible opinion of value.

So, when your client tells you to do a drive by without income or cost approaches, you would only be departing IF one of those approaches would be necessary to produce credible results. Your scope of work already tells you that you are doing a limited level of work- but it is NOT departure.

Steve- see above.

Ben- old friend, I frankly could not give a rat's patootie what Fannie produces in a form. While Fannie may the driving force behind forms, they do not set the rules for USPAP. If their form is inadequate, it is incumbent upon the appraiser to make sure it is USPAP compliant according to STD-2. Period.

How long since you did a form 2000 review? If you provide a different value opinion, do you not have to use another form? Is the 2000 USPAP compliant? Nope. That is why it is being revised- got the new version yesterday.

Folks, do NOT get all uptight over the 2055 and what kind of appraisal it is. It is a report- not an appraisal. The form is irrelevant. It is just a form- a reporting format. It is called a summary format, but has nothing at all to do with the type of appraisal you do. They are two different things.

DO take the new USPAP course as soon as you can- 2003 is only a few months away. It will open your eyes- it will save you lots of grief and aggravation- and time.

Brad Ellis, IFA, RAA