Allocation Formula

[alebrewer]

That would be perfectly acceptable, as there is no USPAP (or other) requirement that the appraiser use the SCA approach to estimating site value.

Even better though:
"The appraiser made an extensive search for vacant land sales relevant to this assignment and found none. As such, the appraiser employed extraction in estimating the subject's site value. Documentation is in the appraiser's work-file."

 

[George Hatch]

Perfect. If/when there actually aren't any land sales and where it would be impossible to appraise an SFR lot via sales comparison.

 

[alebrewer]

Doesn't matter if there are, or aren't, vacant land sales. Again, there is no USPAP requirement to use the SCA when estimating site value.

 

[George Hatch]

So then it shouldn't bother the appraiser to make the disclosure that they never even looked. Right?

Meanwhile there's a SOWR that applies to the appraisal of vacant land, which is what an appraiser is doing in a CA when they're developing that opinion of site value. Not to mention the user expectations which are noted on the form itself:

"Support for the opinion of site value (summary of comparable land sales or other methods for estimating site value)"​

 

[alebrewer]

Q1: Correct.
Q2: Scope of work is what is agreed between the appraiser and the client. If the appraiser agrees to complete the SCA when a land value is part of the assignment, then my opinion is that it's always better to do what you say you're doing. If, under such an agreement, the appraiser found insufficient site sales with which to develop a credible opinion, the appraiser would have to recuse him/her self from the assignment, or renegotiate the terms of the SOW.

 

[George Hatch]

Exactly. Say what you do and do what you say. Which TBH most appraisers are not actually doing in their CAs.

Coincidentally, I have an assignment I'm doing next week on an existing 8-un multi-family that includes a rare request for a CA including land sales. I will not be using extraction to get to those site values.

 

[alebrewer]

Exactly. Say what you do and do what you say. Which TBH most appraisers are not actually doing in their CAs.

I thought that was understood? So you agree, then, that SCA isn't a USPAP requirement for developing an opinion of site value?

 

[George Hatch]

It's not the only way to do it - (never said otherwise but thanks for the strawman). But it is commonly accepted to be the default for valuing land.

Again, what would you or your peers do if your assignment was limited to developing an opinion of site value? Not even look and go straight to extraction?

I strongly doubt these SFR lenders would accept as a reasonable explanation the appraisers REAL reasoning "I didn't do it because it was too time consuming and because I didn't get paid enough". The persistence of the don't ask/don't tell practices in these assignments is pervasive, of course. And in lieu of assignment instructions that specify an actual site sale analysis I'm not going to get emotionally torqued about it when I see an appraiser do the incompetent 10-sec CA. But I still know an untruth when I see one.

 

[alebrewer]

Again, what would you or your peers do if your assignment was limited to developing an opinion of site value?

If the appraiser agrees to complete the SCA when a land value is part of the assignment, then my opinion is that it's always better to do what you say you're doing. If, under such an agreement, the appraiser found insufficient site sales with which to develop a credible opinion, the appraiser would have to recuse him/her self from the assignment, or renegotiate the terms of the SOW.

 

[George Hatch]

Let me be more specific: What would you do if your assignment was for a vacant SFR lot in that particular town where you have alleged there are no site sales? Based on just a cursory glance at the Zillow situation my guess is that you wouldn't need to go to extraction, and that you wouldn't need to withdraw from the assignment.