Bad advice from Fannie--"Multiple Parcels" from Dec. 2019 'Appraiser Update'

[Lee Lansford]

Blow hard? Ever catch the mystery man? Ever care to elaborate on your assertion on immediate? I guess I hit a nerve that you couldn't carry DW's or Santora's jock strap. I never implied that I could. You damn sure have implied that you are among the elite, while exhibiting why you are not. Blow on big man. I look forward to taking your USPAP update course. I'll sit in the front row. Are you going to pay my airfare when the sheet hits the fan and you have to eat crow?

Again, you were wise to use a pseudonym in your postings here. I can understand why you chose to do that.

 

[George Hatch]

Umm, he was reasonable and not stuck on himself or his personal opinions. No I do not speak for him, but I damn well wish he was still here to put you in your place. That I am reasonably sure of. Be ready for your next USPAP update courses. It may turn your delicate stomach....

You're supposed to click your heels 3 times when you say things like that.

There's no place like home
There's no place like home
There's no place like home

How would the ASB even go about dorking USPAP to favor this one warped perspective without creating problems for every other appraisal discipline - including the FRTs? It won't happen because it can't happen. Fannie might try to half-*** it again like they did with C#23, but in the end they're still just another user. For all we know they may end up retiring their GSE status in order to become just another "E"; and then where will your dreams of FannieWorld be?

 

[Mr Rex]

Come on Lee. Is that all you have? Want me to post my name? You could find me in a Chicago minute if you made the least effort. You continue to embarrass yourself and your formally well deserved reputation that you continue to diminish.

If my identity is so important as public info why don't you reveal the IL Appraisal Board master mind mystery man? FWIW, its not me.

Blow hard, pompous arse. Tit for tat, except you keep repeating yourself and have not advanced your opinion beyond "Off my yard" since the original post.

 

[George Hatch]

A few random thoughts about H&BU and recent changes to USPAP. One person at one point supposed that it was the "immediate" use that was implied in one of the 4 H&BU tests, although it is not mentioned in USPAP. I guess you could use the rationale that as of the effective date of the appraisal that the H&BU of the 2nd lot had H&BU as sold separately, but given recent changes to exploring and analysis of exposure, another test is added. Would the 2nd lot sell at the presumed H&BU higher value as separate in an equivalent of less exposure time than as combined? When USPAP H&BU requires maximally productive, is it assuming as of the effective date or is it intended to reflect a seller acting in their best interest when it may be to hold the property given the definition of market value etc? I'm simple and I guess I don't get that as an appraiser I dictate the market rather than reflect its market participants. People are such idiots. I'm glad I'm an appraiser and above the idiots out there buying and selling, lending or insuring real estate mortgages.

Why do you persist on suggesting that appraisers ignore the actions of the market? That's a response to an argument nobody has made. Least of all me.

HBU analysis *includes* the analysis of the market under "economically feasible"; it doesn't ignore the market or any aspect of the market.

HBU is integral to the market, not isolated from it.


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To your other point

If the exposure time for the SFR is 30 days and the exposure time of the land is 6 months than might affect how some sellers would choose to handle it. But the only way we could identify which alternative was most probable for the group would be to look for that group in the market. Which you are not doing when you skip that analysis in favor of the client-directed conclusion.

And that's how I think I'm going to refer to Fannie's directive from here on out; as a user-directed conclusion.

 

[Mr Rex]

You're supposed to click your heels 3 times when you say things like that.

There's no place like home
There's no place like home
There's no place like home

How would the ASB even go about dorking USPAP to favor this one warped perspective without creating problems for every other appraisal discipline - including the FRTs? It won't happen because it can't happen. Fannie might try to half-*** it again like they did with C#23, but in the end they're still just another user. For all we know they may end up retiring their GSE status in order to become just another "E"; and then where will your dreams of FannieWorld be?

Again, the definition of Market Value has evolved. Can not the "strict" definition of H&BU evolve? H&BU as is does not address exposure despite Lee's "immediate" commentary. Maximally productive as well does not directly address future potential increases in value. Surely it's easy enough to fall back on the "effective date" Fannie edict, but that is Fannie, not USPAP. Market participants are not bound to USPAP, but Appraisers are supposed to reflect market participants reactions to market data. Why would USPAP evolve? It does every 2 years. Some folks say its just to sell books. This time around they have some meat and taters to discuss for at least 30 minutes of the required 7 hours. The strict interpretation of H&BU is akin to the 19th amendment. Women were part of the overall market, but they were excluded from participating in the process due to some arcane rules, although they were a large part of the market sample.

 

[George Hatch]

If exposure time is a function of supply/demand (and it is), which in turn is an element of "economically feasible" (which that also is ) then no adjustments are necessary. It's already covered. Don't forget - the final step is to compare the alternatives that survived the first 3 filters of physical, legal, feasible to see which is most profitable. On the conceptual level that includes consideration of any holding costs or lost opportunities resulting from an extended marketing time.

You know that outside of SFR-Island the HBU analysis occurs after and in consideration of all the other discussion of all the other property attributes, including the attributes of the geographic neighborhood, the site and the improvements, right? Fannie's form does it on the same line as the zoning but that doesn't comprise the entirety of the analysis. Not by a long shot.

 

[George Hatch]

What's striking about the progression of this thread is how it has gone the way these gunfights always go. We start out with a premise that is flawed in some way from the outset then after the long drawn-out hostage situation we dismantle each of the arguments based on reading USPAP for what it actually says instead of what we might think it says; and then after all those are exhausted we finally get to the point where the opposition says it's USPAP that's incorrect and the definition that needs to be changed. Which of course won't happen.

That's why it's critical to start out using appraiser-speak and stick to using appraiser-speak and to never indulge in client-speak. The only reason an appraiser indulges in client-speak is because they understand on some level that what is being proposed sounds really dumb when translated into appraiser-speak.
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And stop complaining about USPAP Revisions because most of those changes are made for the purpose of clarifying the previously existing intent, not to change the intent to mean something different than before. The only significant change in the current edition is allowing more than one party to rely on a Restricted Appraisal Report (gotta name them by name, though; not by type). They added some new definitions but most of the other changes amounted to moving comments into the SRs themselves, which is kind of a pointless exercise in that it doesn't change their applicability anyway.

 

[Mr Rex]

If there is existing or proposed Real Estate and/or Improvements then a competent appraiser can opine a value. The fact that some appraisers can't see beyond the FNMA form or USPAPs strict interpretations of H&BU is baffling. The FNMA announcement did not change or hinder this in any, contrary to many knee jerk reactions. It said what it said, and an announcement is forthcoming. Would a public acknowledgement that the following could be modified or that checking the "No" H&BU box be surprising or perhaps unacceptable to USPAP purists?



This appraisal report is subject to the following scope of work, intended use, intended user, definition of market value, statement of assumptions and limiting conditions, and certifications. Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted. The appraiser may expand the scope of work to include any additional research or analysis necessary based on the complexity of this appraisal assignment. Modifications or deletions to the certifications are also not permitted. However, additional certifications that do not constitute material alterations to this appraisal report, such as those required by law or those related to the appraiser’s continuing education or membership in an appraisal organization, are permitted.

 

[George Hatch]

If there is existing or proposed Real Estate and/or Improvements then a competent appraiser can opine a value. The fact that some appraisers can't see beyond the FNMA form or USPAPs strict interpretations of H&BU is baffling. The FNMA announcement did not change or hinder this in any, contrary to many knee jerk reactions. It said what it said, and an announcement is forthcoming. Would a public acknowledgement that the following could be modified or that checking the "No" H&BU box be surprising or perhaps unacceptable to USPAP purists?



This appraisal report is subject to the following scope of work, intended use, intended user, definition of market value, statement of assumptions and limiting conditions, and certifications. Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted. The appraiser may expand the scope of work to include any additional research or analysis necessary based on the complexity of this appraisal assignment. Modifications or deletions to the certifications are also not permitted. However, additional certifications that do not constitute material alterations to this appraisal report, such as those required by law or those related to the appraiser’s continuing education or membership in an appraisal organization, are permitted.

The form, the form, the form.......

HBU analysis works for the appraiser. We actively use it to decide how to appraise the property. It's not some optional accessory to be added or discarded upon request. If you rolled up on an SFR on a 1-ac parcel and all the surrounding parcels are built out with 8-20 unit apartment buildings I would hope you would be smart enough to recognize that - regardless what the pinheads at the lender ordered - that property might be worth more as land than as improved and on that basis proceed accordingly. If you rolled up on the house+extra I would hope you would be smart enough to at least consider the possibility that the MV for the components might be more - or less, or equal to - the value of the assemblage. It's asking the question and coming to a conclusion that matters most, not which conclusion you came to.


I don't really have an opinion on the checkbox because it was only intended to refer to "the parcel" with the house on it; not to the house plus (for example) 5 additional lots. Just like the form isn't really set up to report the value of an assemblage. Or a 2-4 even though some lenders use it for those, too.

The form works for the appraiser, not the other way around. That means I care whether the appraiser summarizes their analysis in support of their HBU conclusion somewhere in their report and then proceeds from there. I have *often* expressed multiple value conclusions under the cover of a single report and by the time I get done explaining what I'm doing I never have a problem with my clients. I'm sorry your clients are apparently not as savvy.

 

[Mr Rex]

You and Lee are over whelmed by the form. Me not so much. I've often laughed at the fact that Alamode's E&O checker flags the H&BU section if you check yes but include the USPAP required summary of H&BU. I won't lose much sleep over it, Fannie will update and USPAP will bend over backwards to accommodate the big girls edict. You and Lee will be required to teach it during the next update cycle if you are still teaching, no matter how the bitter taste. You want to wager? My offer is still on the table. You name the amount.