2055 Interior Question

[kim grant]

Doug,

The misconception that the form used for reporting is somehow indicative of the minimum procedure for developing the opinion of value escapes me.

If you all are confused over that statment, take a USPAP refresher course or start corresponding with the AF to clarify the difference between development and reporting.

--Kim

 

[DB]

I agree ... and that is what I was trying to say .... but apparently did a very poor job of it ......

 

[Otis Key]

Originally posted by Doug Bingham@Jul 13 2004, 09:12 PM
I agree ... and that is what I was trying to say .... but apparently did a very poor job of it ......

We'll forgive you this time - but don't let it happen again :rofl: :rofl: :rofl: :rofl:

 

[Dan Leggett]

Originally posted by Pat Butler@Jul 13 2004, 07:11 PM
Ask you client how they would like for you to proceed. It's their decision. Personally, I might not even mention it if the client is only paying for a 2055. After all, the form doesn't have any area to comment on condition, so the client obviously doesn't care.

Jeez, no wonder AVM's are gaining in popularity, and with this mindset, in accuracy.

 

[Jungle Boy]

Originally posted by Doug Bingham@Jul 13 2004, 08:05 PM
Most folks on this board charge the same for 2055 as they do for a 1004 .. same liability ... some do it cheaper, but only because it is perceived that there is less work involved ....personally, I do not ... have not.... and will not appraise to a form .... the form is only the reporting mechanism .... the appraisal takes place long before anything starts hitting paper .... that is why I charge the same ....

I got it first time !

Maybe Kim went to UW school ! :rainfro: :rainfro: :rainfro: :rofl: :rofl:

Now Otis, him I'm still trying to figure out.

 

[Pat Butler]

The client is letting you know how much detail they want in the appraisal by specifying which form they want. This, in effect, changes the scope of work- which then affects the development of the appraisal. If the client wants the 2055 Form that does not require much interior information then why are you supplying it?

AVM's are becoming popular because of appraisers who ignore the client's instruction for the amount of detail they want in a report. They might as well use an AVM if appraiser's are ignoring instructions from the client.

Read the definition of scope of work in USPAP. Part of the definition talks about the "AMOUNT AND TYPE of information researched...". Another part talks about 'the DEGREE to which the property is inspected or identified." When the client tells you they want the appraisal reported on the 2055 Form they are telling you the AMOUNT AND TYPE of information they want you to consider and the DEGREE to which the property is inspected. They are essentially telling you what scope of work they desire by specifying the form to use. So why do you then change the scope of work requested by the client by providing them with more information than what was requested? And you wonder why they prefer an AVM?

 

[Ghost Rider]

Pat, I'll admit to not being a USPAP guru, but I think you should look into a USPAP update, and quickly. While a client can tell you what they need, the scope of work decision is that of the appraisers. A client cannot ask you to provide an appraisal report that would be considered misleading. Not disclosing a problem with the interior of the dwelling would be considered misleading.

By way of example - When a client orders a 2055, You assume that they want a limited appraisal in summary format?? What if you get to the property, and find it is rented?? Do you ignore this fact, and simply complete the grid, and call your report a limited appraisal, with no consideration to the income approach?? I'd say thats HIGHLY misleading.

The important point to remember is that the Scope of Work decision is to be made by the appraiser - not the client.

 

[Otis Key]

ETHICS RULE
To promote and preserve the public trust inherent in professional appraisal practice, an appraiser must observe the highest standards of professional ethics. This ETHICS RULE is divided into four sections: Conduct, Management, Confidentiality, and Record Keeping. The first three sections apply to all appraisal practice, and all four sections apply to appraisal practice performed under Standards 1 through 10.

Comment: This Rule specifies the personal obligations and responsibilities of the individual appraiser. However, it should also be noted that groups and organizations engaged in appraisal practice share the same ethical obligations.

Compliance with these Standards is required when either the service or the appraiser is obligated by law or regulation, or by agreement with the client or intended users, to comply. In addition to these requirements, an individual should comply any time that individual represents that he or she is performing the service as an appraiser.



An appraiser must not misrepresent his or her role when providing valuation services that are outside of appraisal practice. 1



Comment: Honesty, impartiality, and professional competency are required of all appraisers under these Uniform Standards of Professional Appraisal Practice (USPAP). To document recognition and acceptance of his or her USPAP-related responsibilities in communicating an appraisal, appraisal review, or appraisal consulting assignment completed under USPAP, an appraiser is required to certify compliance with these Standards. (See Standards Rules 2-3, 3-3, 5-3, 6-8, 8-3, and 10-3.)

Conduct

Management

Confidentiality

Record Keeping





Conduct
An appraiser must perform assignments ethically and competently, in accordance with USPAP and any supplemental standards agreed to by the appraiser in accepting the assignment. An appraiser must not engage in criminal conduct. An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests.

In appraisal practice, an appraiser must not perform as an advocate for any party or issue.

Comment: An appraiser may be an advocate only in support of his or her assignment results. Advocacy in any other form in appraisal practice is a violation of the ETHICS RULE.

An appraiser must not accept an assignment that includes the reporting of predetermined opinions and conclusions.

An appraiser must not communicate assignment results in a misleading or fraudulent manner. An appraiser must not use or communicate a misleading or fraudulent report or knowingly permit an employee or other person to communicate a misleading or fraudulent report. 2

Pat - that is direct from USPAP - if, as Merriman indicated, you want to just accept what you are told to do by the "client" and do the minimum, which IMHO would appear to be "misleading", then that is your choice. However, I don't think that if you read the above USPAP quote that you can say that you've got an out just because the "client" said only that report. This is especially true if you read that last paragraph.

 

[Otis Key]

Originally posted by Raimo Kumpulainen@Jul 14 2004, 10:45 AM
I got it first time !

Maybe Kim went to UW school ! :rainfro: :rainfro: :rainfro: :rofl: :rofl:

Now Otis, him I'm still trying to figure out.

Kim - The amount charged should not, and doesn't in my office, depend upon the overall manner in which the

procedure for developing the opinion of value

is undertaken. Hence, I believe, Doug's statement, which, BTW, is the same as mine.

The manner of reporting has little to do with the development, research and methods of implementation of the reporting of the opinion.

Now Raimo - Hmmmmmmm - That's a different perspective. :rainfro: :rainfro: :rainfro: :rainfro: :rainfro:

 

[Pat Butler]

The scope of work is ultimately the appraiser's decision but that decision is made with input and consideration of the the client's needs! Read AO-22 to see the various factors that go into a scope of work decision. The client's use, the users, the client's purpose, etc. So how can you make a scope of work decision without their input? You can't. I'd say I'm complying with the scope of work decision by considering the amount of detail they want in the report according to their purpose, their use, etc.

Misleading? Tell me, do you inspect the subject's furnace, plumbing, electrical, roof, etc for every appraisal? Of course not. What if something is found to be wrong with any of those systems that you were not aware of? Have you not then provided a misleading report to the client if you did not tell them of those problems? You certainly would using your logic. I could argue that you should have inspected those items. You'd say that that wasn't part of the scope of work that was required.

How many of you do FHA appraisals? The inspection process is certainly more in depth than a non FHA appraisal. But why don't you also inspect every property the same way that you would as an FHA appraisal if you already have those skills? Simple- the scope of work for a non FHA appraisal doesn't require it. That still doesn't mean that the subject property might have problems that might otherwise have been discovered with a more in depth inspection. Doesn't matter- the client for a non FHA appraisal is not instructing you to require the inspections that would have been required with an FHA appraisal. So the scope of work is different between the two appraisals despite the fact that the subject property might have physical problems.

I could replace countertops with inexpensive post-formed units for $2-$300. I'd argue that you are probably missing other items of curable physical obsolesence in the house that would easily exceed that cost. So why don't you also inspect the subject more thoroughly and report on all of those problems too? Because the client doesn't require that level of inspection! You can't have it both ways.

How do you do drive by appraisals? Certainly you can make a mistake with respect to the interior condition of the property. But USPAP allows for doing drive bys by allowing you to fully explain the scope of work with respect to the level of inspection that was required. The client understands the limitations of that sort of appraisal and you've complied with USPAP by reporting the scope of work along with the appropriate assumptions.

I took a scope of work class from the AI last month. The quoted something in their manual that summarizes this subject-- "With an appropriate disclosure (S.O.W.), the client and intended users will not be misled about the reliance they can place on the appraisal." So when they order a 2055 that limits the scope of work to a very minimal inspection then they are put on notice that other minor items will not be considred. The client has considered their own needs and agreed to a scope of work that very well may result in not supplying them with superfluous data that they didn't ask for.