hastalavista
Elite Member
- Joined
- May 16, 2005
- Professional Status
- Certified General Appraiser
- State
- California
Let's walk this one through...
1. First, the client is ordering an exterior drive-by. The presumption (we all agree) is that the client knows the appraiser is not going to view the interior.
2. The appraiser should check what data sources are available and typically considered by his/her peers in the normal course of business. In my market, that would be MLS and a review to see if the jurisdiction where the subject is located has its permit history on-line. In my case, many do have their permits on-line.
3. The appraiser cites the sources he/she used to research the subject property and then drives by the property.
4. The appraiser notes, based on what is visible from the street, how the exterior of the subject appears.
So, the above is effectively the condition-verification process, right?
What is a reasonable condition determination based on what that data indicates?
It depends.. if there were permits for an interior remodel, does the appraiser have the ability to state that the interior has been remodeled?
I'd say so. However, an appraiser might want to stop the assignment and tell the client, "you know, based on my research, this property has recently been remodeled, but you cannot tell that from the street. Given that the level of finish and quality of materials can be significant, I recommend we upgrade the assignment to an interior inspection."
That would be reasonable, no? (that's what I'd do if this was for new credit, an extension of credit, or a renewal of credit)
What if the home looks typical for the area (and typical equates to C4), and there is nothing to contradict this in the research?
Then, citing the steps taken and the rating concluded sounds reasonable to me, no?
What if the home looks bad on the outside?
The simplest of all situations: given what is observed, an exterior inspection is not appropriate and a request for it to be upgraded to an interior inspection should be made.
Credible results are based on the clients intended use and it presumes that the SOW developed is sufficient to achieve credible results.
The client has ordered an exterior drive-by: so from the get-go they know the interior is not going to be inspected.
If the appraiser discovers something which may lead him or her to believe that the interior condition's visual inspection is necessary to conclude credible results... in other words, something was discovered that changes reliability of an exterior drive-by from "presumed reliable based on due diligence research" to "not reliable based on what we've discovered or observed"... then stop the assignment. The drive-by SOW isn't consistent (reliable) given the intended use and the limtied scope based on what has been discovered.
But in the absence of any contradiction, as long as sufficient due diligence is done, then rate the property based on what the research and observation confirm, cite the steps taken to research the condition, conclude the condition rating, and move on.
What is obvious from my advice is this: Not all properties are going to meet Dens' exterior-only inspection criteria. That's fine.
It is those properties that I think I may need an EA that are the ones that don't meet the exterior-criteria only.
And that would pretty much be my working rule: If I think I need to use an EA for a condition-rating on a drive-by, then I shouldn't be doing this assignment as a drive-by.
:new_smile-l:
By the way, I differentiate the reasonableness of drive-bys based on intended use: origination, extension, or renewal of credit has a higher threshold (for me) than a pre-foreclosure or asset valuation assignment; in those cases, interior access may not be possible, but the client has a legitimate need for a value.
1. First, the client is ordering an exterior drive-by. The presumption (we all agree) is that the client knows the appraiser is not going to view the interior.
2. The appraiser should check what data sources are available and typically considered by his/her peers in the normal course of business. In my market, that would be MLS and a review to see if the jurisdiction where the subject is located has its permit history on-line. In my case, many do have their permits on-line.
3. The appraiser cites the sources he/she used to research the subject property and then drives by the property.
4. The appraiser notes, based on what is visible from the street, how the exterior of the subject appears.
So, the above is effectively the condition-verification process, right?
What is a reasonable condition determination based on what that data indicates?
It depends.. if there were permits for an interior remodel, does the appraiser have the ability to state that the interior has been remodeled?
I'd say so. However, an appraiser might want to stop the assignment and tell the client, "you know, based on my research, this property has recently been remodeled, but you cannot tell that from the street. Given that the level of finish and quality of materials can be significant, I recommend we upgrade the assignment to an interior inspection."
That would be reasonable, no? (that's what I'd do if this was for new credit, an extension of credit, or a renewal of credit)
What if the home looks typical for the area (and typical equates to C4), and there is nothing to contradict this in the research?
Then, citing the steps taken and the rating concluded sounds reasonable to me, no?
What if the home looks bad on the outside?
The simplest of all situations: given what is observed, an exterior inspection is not appropriate and a request for it to be upgraded to an interior inspection should be made.
Credible results are based on the clients intended use and it presumes that the SOW developed is sufficient to achieve credible results.
The client has ordered an exterior drive-by: so from the get-go they know the interior is not going to be inspected.
If the appraiser discovers something which may lead him or her to believe that the interior condition's visual inspection is necessary to conclude credible results... in other words, something was discovered that changes reliability of an exterior drive-by from "presumed reliable based on due diligence research" to "not reliable based on what we've discovered or observed"... then stop the assignment. The drive-by SOW isn't consistent (reliable) given the intended use and the limtied scope based on what has been discovered.
But in the absence of any contradiction, as long as sufficient due diligence is done, then rate the property based on what the research and observation confirm, cite the steps taken to research the condition, conclude the condition rating, and move on.
What is obvious from my advice is this: Not all properties are going to meet Dens' exterior-only inspection criteria. That's fine.
It is those properties that I think I may need an EA that are the ones that don't meet the exterior-criteria only.
And that would pretty much be my working rule: If I think I need to use an EA for a condition-rating on a drive-by, then I shouldn't be doing this assignment as a drive-by.
:new_smile-l:
By the way, I differentiate the reasonableness of drive-bys based on intended use: origination, extension, or renewal of credit has a higher threshold (for me) than a pre-foreclosure or asset valuation assignment; in those cases, interior access may not be possible, but the client has a legitimate need for a value.
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