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2055 int/ext considered a limited appraisal?

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brunge

Sophomore Member
Joined
Aug 24, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Wow, what a hot topic. I’ll take a stab at it too…..

I think some of the respondents here forget one of the main purposes for USPAP: Appraiser Accountability.

The State Courts could care less when the appraiser who is found to have been negligent in the value conclusions tells the Judge; the client didn’t need the cost approach.

As a licensed appraiser you MUST do what is appropriate for each and every assignment, regardless of the fact that the lender wants to shave the fee and receive a “restricted use report” such as a 2055 (suitable only for in-the-know readers) .

Invoking the Departure Provision is when the appraiser and the client communicate that one of the commonly used approached to value will not be preformed and that it will not be included in the work file. The appraiser can only use the departure provision if the appraiser is confidant that the elimination of that analysis will not result in a non-credible value opinion.

When appraising odd ball houses with limited sales comparables, the cost approach is often as credible, or perhaps, more credible than the sales comparison approach. In such a case the Departure provision would not be appropriate. You could still provide the 2055 report, however, you would not invoke the departure provision because you would need the cost approach in the work file to do a credible appraisal. (This would be a complete appraisal)

In theory we can offer the 2055 for a reduced fee, because, we technically spend less time writing the report that summarize the results: not necessarily because we spent less time developing our opinion of market value….. If we are confidant that we can depart from one of the approaches to value and provide a credible opinion we can save ourselves the time and not perform that approach to value. It must be disclosed.

To answer the original question… a 2055 is a Restricted use Appraisal Report. A Limited appraisal is when the departure provision has been invoked in the development of the opinion of value.

The work file MUST be sufficient to produce a Summary Appraisal Report unless the departure provision is evoked, regardless of the method or the form used for communicating the results. (See USPAP / 2002 Advisory opinion AO-11).

We use the departure provision because we as appraisers are confidant that we can do it and still provide a credible opinion of value, not because the client wants us to or is only willing to pay less.
 

bradellis

Member
Joined
Jan 16, 2002
Brian,

Sorry old chap, but you need to get up to date on your stuff.

First, the 2055 is not now nor has it really ever been a restricted use type of form.

Second, you are going to find, when you take your next USPAP update course from an AQB Certified instructor, that departure playa a very limited role in the interpretations. It is the scope of work that rules- and that may well be defined by the client.

Credibility is now determined under the scope of work; what is credible under one scope may not be under another scope. And the scope of work will be determined by the client in consultation with the appraiser based upon intended use and users and other factors.

Don't get hung up on this and DO take the 7 hour course as soon as it becomes available.

Brad Ellis, IFA, RAA
 
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