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Appraisal Update & USPAP Addendum

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NJ Valuator

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Joined
Feb 23, 2003
Professional Status
Certified Residential Appraiser
State
New Jersey
Do you recognize an Appraisal Update as an

Appraisal Report or a Restricted Appraisal Report?

Just taking a poll not looking for sarcastic quips.
 

Terrel L. Shields

Elite Member
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May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Whatever it was originally since you incorporate the prior report info into the new report, either by reference, attachment, etc.
 

hastalavista

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Professional Status
Certified General Appraiser
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California
Whatever it was originally since you incorporate the prior report info into the new report, either by reference, attachment, etc.

I disagree with this; here's why:

An update is an appraisal. So, the update portion along with the updated report (regardless if incorporated by reference or attachment), if a written communication, must comply with SR2 rule and be an "appraisal report" or a "restricted appraisal report".
I did my first appraisal 6-months ago and it complied with the appraisal report standard.
I do an update today: The market has changed and values have gone up. In my update, I "state" rather than summarize my conclusions (value today is $600k when it was $575k 6-months ago). I provide no summary of the analysis or market conditions. My "update" does not comply with the appraisal report ("summarize") requirements. While I have incorporated the old report and that may have summarized many of the necessary items to be compliant with the Appraisal Report standard, in total, my new report is not compliant with the Appraisal Report standard.

This is why I (like a broken record) advise, for GSE work especially, if one is going to do an update and if it is to meet the Appraisal Report standard, then the update must "summarize" whatever information that would be expected, if this was an origination report, in the update.
For most of our GSE work in regard to "updates", what kinds of changes have occurred that is materially different than 6-months ago?
1. The market (even it if's characterization hasn't changed (was stable then, is stable now), there is likely new data that needs to be considered to determine the condition. New sales that, for example, continue to show the trend is "stable". That data constitutes new analysis which is different from what was analyzed the first time around.
2. Why not always the case, it is likely that there are new sales that should be considered; or, in the case where there are no new sales but market conditions have changed, a new analysis of those same sales is necessary.

I argue that the market conditions of an update need to be current with the new effective date. A 1004MC, supplemented as necessary, would meet the requirement of #1.
I argue that new sales data that has been considered needs to be summarized. I do not think it necessarily needs to be summarized to the same degree as was done in the original report; I do think it needs to be summarized by identifying the data considered to make the conclusion. For me, that would be address, MLS#, COE, List Price, Sale Price, size/bed/bath count, lot size, and condition. I summarize that data and use it to support my benchmark conclusion. This would meet the expectation of most clients and be consistent with the Appraisal Report summary requirements. #2 is addressed.
For complicated properties, I'd put in a new grid. The nature of the subject and similarity of the comparables available for comparison likely warrant more than just a short narrative summary. Again, #2 is addressed.

Finally, since it is a new appraisal, a new signed certification need be included.

They GSE update form, if completed by simply checking the box, does not meet the Appraisal Report standards no matter how detailed, complete the attached appraisal it is updating may be.

At least, that is how I see it and argue it. :cool:
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
restricted appraisal report (unless appraiser wants to make it an appraisal report)
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
restricted appraisal report (unless appraiser wants to make it an appraisal report)

For non-GSE work, and assuming the restricted report format is consistent with the client's intended use and requirements, I agree that a restricted report is an option.

For GSE work using the 1004D form, I disagree.

upload_2017-1-7_9-54-54.png
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Good point, I agree with your distinction !
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
And, in anticipation of a question regarding "summary report":

upload_2017-1-7_10-0-52.png
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Finally, since it is a new appraisal, a new signed certification need be included.

I don't think AO3 states that as a requirement does it in cases of incorporation by reference (same appraiser/same client)?

Lines 66 through 75, 2016/2017. I did my first update of an appraisal last week using the 1004D. Didn't like it but too sick to argue with the client.

This is an Update to a Prior Appraisal Report. Reference 2016-2017 Edition of the Uniform Standards of Appraisal Prictice, Advisory Opinion 3. The appraiser is the original appraiser and the client is the original client. Standard 2 reporting requirements are satisfied by providing a new report that has incorporated by reference specific information/analysis from the prior report (Wxxxxx - Report Date 09/25/2016, effective date 08/31/2016.)

xx Bxxx Drive, Wxxx, CA 95xxx

xxxxx xxxxx xxxx Loans, xxxxxx xxxxx xx xxxxx

Intended use: The intended use of this appraisal update is for the lender/client to evaluate the property that is the subject of this report to determine if the property has declined in value since the date of the original appraisal for a mortgage finance transaction. This report may further be utilized to support underwriting requirements for a mortgage loan.

Appraiser: Greg Boyd, ARxxxxx

The effective date of value for this Appraisal Report (Upate) is: 12/13/2016

Date of report is: 01/03/2017

Interest appraised is: Fee Simple

See the pre-printed Scope of Work described in the main body of the 1004D Form (Form 442 for Freddie Mac.) The appraiser has executed this scope of work by: 1) Inspecting the property from the exterior (front) and portions of the interior; 2) I concur with the analysis and conclusions in the original appraisal report; 3) I have provided a new report (1004D) that incorporates by reference specified information/analysis from the prior report so that, in combination, the referenced portions and the new information/analysis added satisifies the applicable reporting requirements.

Conclusions: This market appears to have little or no measurable change between the effective date of the prior appraisal (8/31/2016) and the effective date of this Update of an Appraisal (12/28/2016). Therefore, my conclusion based on the assignment conditions for an Appraisal Update is the the market value stated as of 8/31/2016 has not declined.

Refer to the prior Appraisal Report for definition of market value.


Addenda includes a spreadsheet of sales and current listinghs between the two periods, photos of the subject front and street, and a set of charts showing market stats for the period in question and a graph of the months of supply.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Sounds like you more than met the criteria for supporting your conclusions!

It may be redundant, but a reminder to everyone, even if you did the original appraisal, state on the update that you performed a prior service on the subject property within the past three years.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
I don't think AO3 states that as a requirement does it in cases of incorporation by reference (same appraiser/same client)?
Since the easiest way for me to "update" something is merely to attach the entire report to the info added, I assume that as an incorporation, I find the semantics problematic to say I have an appraisal report embedded inside a restricted report...?
 
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