Fred,
First, most of the statement that you attributed to me was my quote of Brad Ellis' post which you have jumbled together.
Read the 2002 Standard below:
Standards Rule 1-4 (This Standards Rule contains specific requirements from which departure is permitted. See the DEPARTURE RULE.)
In developing a real property appraisal, an appraiser must collect, verify, and analyze all information applicable to the appraisal problem, given the scope of work identified in accordance with Standards Rule 1-2(f).
(a) When a sales comparison approach is applicable, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion.
(b) When a cost approach is applicable, an appraiser must:
(i) develop an opinion of site value by an appropriate appraisal method or technique;
(ii) analyze such comparable cost data as are available to estimate the cost new of the improvements (if any); and
(iii) analyze such comparable data as are available to estimate the difference between the cost new and the present worth of the improvements (accrued depreciation).
Fred, notice departure is permitted from completing an approach to value.
Read 1-2(f)
f) identify the scope of work necessary to complete the assignment; 6
Comment: The scope of work is acceptable when it is consistent with:
the expectations of participants in the market for the same or similar appraisal services; and
what the appraiser’s peers’ actions would be in performing the same or a similar assignment in compliance with USPAP
An appraiser must have sound reasons in support of the scope-of-work decision and must be prepared to support the decision to exclude any information or procedure that would appear to be relevant to the client, an intended user, or the appraiser’s peers in the same or a similar assignment.
An appraiser must not allow assignment conditions or other factors to limit the extent of research or analysis to such a degree that the resulting opinions and conclusions developed in an assignment are not credible in the context of the intended use of the appraisal.
Now read the Departure Rule:
DEPARTURE RULE1
This rule permits exceptions from sections of the Uniform Standards that are classified as specific requirements rather than binding requirements. The burden of proof is on the appraiser to decide before accepting an assignment and invoking this rule that the scope of work applied will result in opinions or conclusions that are credible. The burden of disclosure is also on the appraiser to report any departures from specific requirements.
An appraiser may enter into an agreement to perform an assignment in which the scope of work is less than, or different from, the work that would otherwise be required by the specific requirements, provided that prior to entering into such an agreement:
1. the appraiser has determined that the appraisal process to be performed is not so limited that the results of the assignment are no longer credible;
2. the appraiser has advised the client that the assignment calls for something less than, or different from, the work required by the specific requirements and that the report will clearly identify and explain the departure(s); and
3. the client has agreed that the performance of a limited appraisal service would be appropriate, given the intended use.
Fred, do you see the word BINDING as you mentioned in your post in any of this silly USPAP stuff????? Nope. There is a difference between BINDING and SPECIFIC. Of course you can't depart from binding requirements but you can depart from specific requirements.
Now since all of this is addressed in the 2055 Certification, FNMA is aware of the departure. They are not asking that you depart from a Binding requirement, only a Specific requirement. And since FNMA will not rely on an appraisal report with the value based solely on the Cost Approach, what does that tell you? They don't need no stinkin Cost Approach, they won't underwrite on it, so why do it?
Ben
