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2055 Interior vs 1004 (Full)

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John Hassler

Senior Member
Joined
Jul 23, 2002
Professional Status
Certified Residential Appraiser
State
California
Is just me or does a 2055 Interior only save maybe 30-60 minutes in the whole process. Still have to set an appointment, measure, take the same notes and search/drive the same comps. I charge $50 less than a full and abbreviate my comp comments. I really don't see the point of the LO ordering a 2055 Interior when so many end up turning into 1004s with an extra charge much more than the $50 difference. Currently, when I receive anything less than a 1004 I have my assistant call the LO and verify the report type and tell them if they upgrade to a 1004 it is "x" amount more (a lot more tha $50) than ordering a full from the get go.

John Hassler
 

Dave Smith

Senior Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Wisconsin
John:

I charge the same for a 1004 as I do for a 2005 interior. I charge $25.00 less for a 2055 exterior although I do extremely few 2055 exterior appraisals.

I bill based on the cost of doing business, not by the hour or how long it takes me do do a report... unless its a complex report, in which case the fee goes up to reflect the additional time needed to complete the report.

Essentially a 2055 interior takes almost as long to prepare as a 1004. A 2055 exterior takes only a few minutes less. The overhead for all three is the same: E&O and businnes insurance, office mortgage, office equipment, office supplies, car expenses, communications expenses, Realtor and MLS dues, continuing education expenses, health insurance, ... you get the picture. In addition, the liability is the same for every report you ever do.

I like to see a little bit of profit at the end of the year too. :D
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
John;

I am in agreement with you. I do exactly the same data gathering on a house for a 2055 as for a 1004. My charge for a 2055 Interior is $50 less simply because of no documented Cost Approach. One usually gets done in the analysis process however but it goes in the work file.

We have raised our fee for a 2055 Exterior, regardless if comp photos are required or not, to the same as a 2055 Interior. Getting the interior data usually takes more time and effort than just going inside and documenting it. There is no time or effort saved in doing a 2055 Exterior only.

We are getting more and more 2055's. Your estimate of 30 to 60 minutes per report is just about right. Based on my burden rate of $60/hour, a $50 reduction appears reasonable.

One of the things I like about the 2055's is that since there is usually a large equity position, rarely do we get the LO coming back and needing an extra $1000 added to value so the deal will close. Not being $1000 smart, I find that kind of requests just plain time consuming.
 

Steve Owen

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Missouri
I agree with Dave on this one, and less so, with Richard.

Here's my take on it. I charge $50 less anytime I don't have to measure and draw. Otherwise, it's the same fee for any residential appraisal on a typical property - extraordinary properties get extra fee depending on just how wierd they are. I charge extra to go outside my immdeiate city and contiguous area and also tack on an additional fee to go outside the MSA (two-county area) and a large additional fee to go to an area where my MLS does not operate. These extra charges for travel are designed to discourage that kind of business and I rearely do appraisals outside of my MSA. Probably 90 percent of my residential work is in Joplin or surrounding communities and most of the rest is in nearby Carthage.

One of my largest clients started ordering more 2055's and then we had this discussion:

Me: "I charge the same for a 2055 interior as for a 1004 (reasoning)."

Him: "Then we'll just automatically upgrade every 2055 interior to 1004."

The amount of work to do a 2055 is really just about the same. The main thing you gain is if you can use someone else's idea of size and not have to measure and draw. The Cost Approach takes me about five minutes on a typical property (partly because I have a good base of experience with depreciation) so there is no discount for not doing one. In fact, I have been slowly coming to the opinion that 2055's without a cost approach are actually more difficult an assignment than a complete appraisal.

My discussions with clients on this topic now usually revolve around scope of work.

Me: "I don't discount the fee for a limited appraisal just because there is no cost or income approach. If you tell me not to include a drawing, photos of the comps, maps, etc., then there might be some reduction in the fee for not doing that work."

Them: (Usually) "Well, we need those things, so go ahead and do a complete appraisal."
 

Frederick R. Ruffell

Senior Member
Joined
Jan 21, 2002
Professional Status
Certified General Appraiser
State
California
2055, 1004, 1025, etc.. are all jut report forms, I still have to perform an appraisal, the more complex the greater the fee. No discount for a verbal, as i would still need to document my analysis, extra charge for a narritive as it requires more time to prepare the report.
 

Frederick R. Ruffell

Senior Member
Joined
Jan 21, 2002
Professional Status
Certified General Appraiser
State
California
Bill, please forgive me for questioning you, but it is my understanding that "1004, 2055 " are not "summary appraisals" but rather summary reports. There is no such thing as a "summary appraisal" only complete or limited appraisals. There are however restricted, summary, and narritive reports. Do I have this right?
 

TDK

Freshman Member
Joined
Jan 30, 2002
Remember folks: Better get used to the 2055 since FNMA will soon be adopting it as its "official" reporting form, and will be phasing out the 1004 altogether. Huge discussions abound out there as to the saliency of a cost approach (for those of us in the tract-home trenches) and whether omitting the cost approach is actually departing from USPAP, thereby constituting a "limited" appraisal. At least 3/4 of my work goes out on 2055's (99% of those being interior), and fees are pretty close to the same as the 1004. The 2055 actually asks for more current market data (how many listings and sales of similar properties you searched and in what price range did they occur?) than the 1004, but the amount of research and record keeping and analysis, like everyone has said, is the same.

However, it is true. Don't expect to see any more 1004's in the near future.

Cheers,
Teresa in Las Vegas, NV
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
2055 is a report form ...it can be considered limited. You still do a complete appraisal (thought process) Charge what you feel comfortable with....in my case slightly less than than a URAR if an iterior inspection is required.

I really beg to differ with TDK....the URAR or 1004 is not on the way out. Fannie Mae says..."use the 2055, or 2065, or 2075, or 2070 in some cases" However, ask them what form they want for their "in house" appraisal assignments and its the 1004 all the way. As foreclosures continue to increase see more and more full fee complete appraisal report requirements.
 

TC

Elite Member
Gold Supporting Member
Joined
Jan 31, 2002
Professional Status
Certified Residential Appraiser
State
Pennsylvania
I tend to be on the side of the 1004 being phased out. Received 6 requests today, 4 are 2055, 1 is a 2070, and only one a 1004.

TC
 
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