2055 Question.

[Phil Rice]

I am going to challenge the comments above that imply that if you don't measure you might wind up in hot water. For a 2055 drive by, especially if there is no interior inspection, it is hard for me to imagine any appriaser being punished because he did not measure. For those who are worried about the USPAP police, disclose in your report that you did not measure.

I can easily see any appraiser getting into trouble when the value is wrong, and the report makes it look like they measured, when they clearly did not measure or made a mess of it.

 

[Wally Jones]

Phil,

I agree with you that in some cases you shouldn't measure on a request for a drive by with exterior only inspection. The property may be pre-foreclosure or the object of a divorce proceeding or for some other reason that would make it not prudent to measure the improvements. (I still have a particularly nasty image of a snarling, foaming-at-the-mouth German Shepherd in my head ........)

In such cases, disclose you didn't measure at the request of the client and explain your assumptions about the public records being correct, etc.

However, the original question had to do with a request for a 2055 with exterior and interior inspection. In those cases, I advocate measuring, since the client undoubtedly wants a sketch anyhow. Besides, it should help the overall report to be more accurate and that seems like a good idea.

 

[Phil Rice]

Once again I am going to express a disenting point of view.

Wally says:

the client undoubtedly wants a sketch anyhow. Besides, it should help the overall report to be more accurate and that seems like a good idea

I have always assumed that the client does not want a sketch. Different clients (and different areas) have their own way of doing things, but I do not agree with the word "undoubtedly" in the above quote.

I submit that the whole point of ordering a 2055 driveby with interior/exterior (as opposed to full appraisal) is to lower the fee and improve turn around time. I agree that "more accurate" is a good thing, but it is entirely possible that by focusing on "more accurate" the appraiser is taking his eye off the ball and losing sight of the intened purpose of the drive by concept. For those who are unclear about what scope of work the client is requesting, it seems like a good idea to discuss it with the client, and then try to meet the expectations of the client.

I do not agree that the appraiser should assume that the client wants a sketch (my experience is that they do not), and I do not agree that there is somehow a greater risk of losing your license if you don't measure.

 

[Wally Jones]

Phil,

I stand corrected. I did that "assume" thing and applied my own personal experience to the broader view. I shall slap myself silly with an old USPAP volume as punishment!

Our firm has never received a request for a 2055 exterior with interior inspection which has not included a request for a sketch. If I have an opportunity to inspect the interior of a property which I've accepted an assignment to appraise, then I'll definitely measure it. Why wouldn't I? Time? If I don't measure it, I run the risk of being asked to revisit the property. Effort? I (again, this is just my personal feeling) don't mind making the effort to measure the property while I'm there. Not specifically required? As discussed above, there are many things not specifically required by USPAP, but which have become accepted methods of performing an appraisal.

As far as clients feeling it's a way of saving money, in our practice, we charge full fee for any report requiring an interior inspection. Our turn around time is the same as for a URAR. We are also about to increase our fee for exterior only (true drive by) in an effort to discourage the practice. It's been over a year since we've had one of those anyhow. I personally think we'll see them fade away soon. (Good riddance!)

I still say, if I end up in front of the appraisal board or a judge, and I'm asked why I didn't measure the property (unless directed by the client not to), I just can't see it being acceptable to say "Cause I didn't have to". Even more importantly, I feel it's my job to do so. By being "more accurate" I don't agree that I'll lose sight of anything and the overall result will be that my report will be.......well........more accurate!

 

[Jo Ann Meyer Stratton]

If I can get on the property and inside the structures-I will measure and made a detailed sketch on 10 graph paper, showing interior walls, door ways, plumbing fixtures, closets. etc regardless of the order. If the order is for a 2055 interior, the client gets a sketch of the exterior walls. If the order is a URAR or REO the client gets a sketch with all the interior details. Regardless, I now have a detailed sketch in my file to remind me of the home, information on the home, etc, etc. So the detailed sketch completed in the field is mainly for my benefit. The length of time to do only an exterior versus a detailed interior is about the time it takes to find my car keys or get lost looking for a property, etc--so at the end of the day I have spent the same amount of time regardless--and I have lots of information for my own use. So I still say--measure every chance you get, get as much information as you possibly can and now with the digital camera I take photos right and left, again for my own benefit.

 

[Phil Rice]

If the question is: Why didn't you measure?

The correct answer is -- it was a scope of work decision that was requested by and/or agreed to by the client. If the client specifically stated that they wanted a sketch, then it would be appropriate to measure and provide the sketch. I have never received an order (of any kind) where the client has asked me to provide a sketch. The appraiser can (and should?) explain what he did and did not do in the report.

I understand that just because a client requests something (lower fee and less work) does not automatically mean that the appraiser should agree to do it. If the goal is to receive fewer drive-by orders, charging full fee is a good way to acomplish that goal. If that does not work, try charging more than full fee?

There are times when a legit client wants to pay a reduced fee, prolly a low risk loan. I advocate that the appraiser consider what the client wants, and then make an informed decision about accepting the assignment, scope of work, and fee to charge.

I always measure and provide a sketch on a full appraisal, and I never have provided a sketch on a drive-by. I estimate that I save 30-60 minutes by not measuring and not doing the sketch. I am willing to pass some of this saving to the client in the form of a reduced fee.

I do not penalize clients who know what they want by charging more in case they change their mind. If they later change their mind and ask me to do a full appraisal, I charge for the second trip, and I charge enough to make it worth my while.

 

[Charlotte Dixon]

Originally posted by Phil Rice@Jun 5 2003, 05:43 PM
For a 2055 drive by, especially if there is no interior inspection, it is hard for me to imagine any appriaser being punished because he did not measure.

NOT punished for failing to meaure the subject dwelling when performing a 2055 exterior....but being QUESTIONED about your sfla under oath and saying either:

1) I didn't measure the house because it's not required
2) The 2055 exterior was ordered to save time, as per the lender, so I didn't measure the house.

versus

1) I performed a 2055 exterior report and I measured the house for my own level of comfort, even though it's not required. The house has 1560 sf.

At the hearings, some attorneys don't know what a 2055 is, nor a URAR, let alone a 2055 exterior or 2055 interior. The question posed is "how did you arrive at your sfla?" In fact, the last expert witness that came to a hearing didn't know what a 2055 was. That witness was a Certified General and does only commercial work. Don't ask me why they consulted that one, but they did.

We all have choices in this matter, and of course, we all do what each of us is comfortable with.

I do agree, for a foreclosure....dogs in the yard....dangerous looking neighborhood, I don't measure. And, I don't measure if It's in a subdivision I've worked many times in where there are 3-4 standard models that I'm very familiar with.

 

[Bob Ipock]

This topic got turned about six different ways.

DRIVE-BY 2055 with no interior inspection. I don't measure, so stated and would call for an interior inspection upgrade I for any reson I thought it was needed.

I turn down 60-75 % of driveby orders OR tel them it will need to have to be an interior inspection. Not enough data....could be misleading.....I gotta go inside.

I NEVER do a 2055 Interior, If I am going inside I am doing a FULL URAR, I may not get paid for it...but once I have access I feel like I need to do a more complete appraisal and report. Whatever I see, I must report and It is easier, quicker and safer to put it all in a URAR instead of the 2055.

I measure for EVERY URAR appraisal. Don't care if it is required or not, I am gonna measure it.

Different folks may do it it a different way and that is fine with me. I know that the limiting conditions for a URAR call for a sketch and measurements and if I am the one doing the appraisal, inspection I fully belive that it is implied if not expected tht I do it my self.

Here again, some folks may feel comfortable using a sketch from another source, I don't and I won't. That does not make me right or them wrong but it makes me feel better about the integrity of my work.

It is THE APPRAISER who must decide what scope of work is appropriate and needed for each assignment....not the lender.

 

[Tim The Enchanter]

My late to the party $0.02.

Exterior driveby - no measuring or getting out of the car. If I see the interior, that blows away my usual assumptions that the interior is average etc!

Interior - I measure and do ext and int photos and notes.

2055- It does not have to be a "limited" appraisal anymore.
I started a staff job at a large lender recently. Everything (so far) is on the 2055. SFR or condo or PUD. The top of the form now says more or less, "Summary Appraisal Report of a Complete Analysis."

According to the 7 Hr USPAP course I just took, this is correct. It is no longer necessarily a "limited appraisal" on the 2055, if it ever was. The cost and income approaches are not used because typical market participants / buyers, do not use these approaches to value in their decision making process. Just the market approach. I'm only talking condos and SFRs here.

More changes in UsePoop coming next year.

 

[Phil Rice]

I do not always agree with what others say, but I am always gald to know about how others view a topic. Thanks to all who have shared their opinion.

It is THE APPRAISER who must decide what scope of work is appropriate and needed for each assignment....not the lender.

I agree that it is the appraiser who makes the final decision about the scope of work. I do not want to be all things to all people, I have to say no sometimes. To me, a drive by request means the client wishes a less expensive (and faster) option, and they are willing to accept a more limited scope of work. I do a walk thru inspection in about 10 minutes, and a full inspection (including measure and sketch) in about an hour (maybe a little more if I count the time it takes to generate the sketch on my computer). It is not a big time (or money) saving, and it does not come up very often.

My conclusion is that not all appraisers agree on this issue. The key learning for me is to discuss and clarify with the client if not sure what they want, and clearly disclose in the report my scope of work.