Analyze this statement.

[T.J.]

"The appraiser used an active listing as an additional sale in this appraisal report. According to USPAP, an active listing is considered a comparable sale and can be used as such. USPAP only requires the appraiser to have 2 valid sales in the appraisal report that establishes market value for the subject property. The appraiser used 3 valid sales in this report with an active listing to show that the market is stable for this area."

I came across this in a review and was dumbfounded. One where can I prove this not to be true. But after looking though USPAP it does not say that you have to have three sales. BUT I do know it doesn't say you only have to have two. So where do I start to dismantle this statement with crazy big words? Any ideas?

Addendum added after client/poster request
Dismantle is a bad word. Bad bad bad. Never again will I use that word or imply that I like to dismantle other peoples work. Shoot, did I say it again?

 

[The Warrior Monk]

"The appraiser used an active listing as an additional sale in this appraisal report.

An active listing is not an additional sale, it is an active listing. I view it as part of the market data used to develop my value conclusion.

According to USPAP, an active listing is considered a comparable sale and can be used as such. USPAP only requires the appraiser to have 2 valid sales in the appraisal report that establishes market value for the subject property. The appraiser used 3 valid sales in this report with an active listing to show that the market is stable for this area."

According to my knowledge of USPAP, this appraiser has never read USPAP. USPAP only very superficially touches on methodology, and the use of a minimum number of sales is not one of them.

 

[Mike Kennedy]

Appraisal report cites the utilization of three closed sales and one actively listed property inaccurately identifed as a "Sale" as further support in the Sales Comparison Approach to Value. Review of the current USPAP indicates no such requirement. In the Reviewers' opinion the comments made appear to be concocted "filler", have no basis in reality, but, have no negative impact on the credibility of the Value Opinion rendered.

Further, the cited requirement for three closed sales, if available, appears to be based upon Fannie Mae Guidelines which


* are [ or are not] not applicable to the assignment.


** (depending on whether the assignment required reporting on a fannie form and whether the report was actually reported on same)


Review of the Comparables, including the Active Listing, indicates they support { **or do not support] the Value Opinion rendered for the following reasons: [ fill in with your analysis ].

 

[hastalavista]

So where do I start to dismantle this statement with crazy big words? Any ideas?

To help answer your question, I would ask why you need to "dismantle" the statement? :new_smile-l:

 

[Mike Garrett RAA]

Why not start with Standard 1, USPAP 2008, page U15, Line 458. Follow that with Standard 2.

Too many appraisers confuse client requirements or supplemental standards with USPAP. To make it simple, start with three rules...ethics, competency, and scope of work. Expand your research to Standard 1 and Standard 2.

Once you have a firm grasp on those five parts, you will pretty much know what the Uniform Standard say and call for in the development of an appraisal of real property.

I think you will find the Uniform Standards don't require a specific number of comparables, use of closed sales as comparables, or including listings in an appraisal.

 

[Lawrence R.]

I do think that I would challenge those USPAP assertions as false. Now, what does it appear the appraiser was up to? Is he trying to indicate a stable market when all signs point elsewhere?


I would leave the other stuff alone, unless you think it misleads the reader of the report.

 

[T.J.]

I think you will find the Uniform Standards don't require a specific number of comparables, use of closed sales as comparables, or including listings in an appraisal.

I'm fully aware that there are no set number of anything you need. USPAP basically states what you need to provide a credible report. However as in the case of this statement, credible report doesn't mean the the same to everyone. To say that a comparable listing is considered a sale and can be used as such, as well as that USPAP states that you need only two valid sales shows me that some people are not reading the same USPAP that the rest of us are and quite frankly it's irritating.

 

[T.J.]

To help answer your question, I would ask why you need to "dismantle" the statement? :new_smile-l:

I apologize. Maybe that wasn't the best way to express my request. Consider me humbled.

 

[hastalavista]

Too many appraisers confuse client requirements or supplemental standards with USPAP. To make it simple, start with three rules...ethics, competency, and scope of work. Expand your research to Standard 1 and Standard 2.

Mike-

Can I ask you a question in your capacity as a USPAP instructor (slightly, but not fully, off tangent to this thread)?

Are we still encouraged to use the term "Supplemental Standards" to describe something the client requires? It seems to me that this can create some confusion in that SS is no longer a USPAP rule?

Or, is it preferred to continue to use the term but to do so one must recognize that it has no special meaning as far as USPAP is concerned? That what it was meant to do (the SS Rule) is now is acknowledged as being redundant as it has become part of the engagement and client expectations process & SOW (where the client needs no special standing such as a GSE)?


The topic of this thread gives some support to my question: we have one appraiser citing USPAP as the basis for including "two"comps. Therefore, clarity in terms and what USPAP requires appears to be wanting by many practicing appraisers!

Thanks! :new_smile-l:

 

[PropertyEconomics]

I apologize. Maybe that wasn't the best way to express my request. Consider me humbled.

Why is a trainee doing a review anyway? Do you have expertise in review? :Eyecrazy:

The idea of destroying this report, and that is apparently what you are trying to do, leads me to conclude you have bias and you should turn down the assignment. Its not your job to "dismantle" its your job to do an adequate review. Not sure how you do that being a trainee.