Change in GLA from Plans & Specs

[cathy0405]

I was requested to do a final inspection with a recertifiction on a plans & specs appraisal report I completed in 01/2008. Only one additional more recent comparable sale was required for the recert. Upon my inspection, the 900 SF unfinished attic as identified in the original report was a finished u/s level with 2 bedrooms, den and bathroom. Also there was a 20 x 30 workshop in the back yard not noted in the original report. I called the lender to inform her of the change in GLA and workshop and was told to base the final and recert. on the original appraisal report since no additional value was necessary for loan purposes. I told her I should perform a new assignment since the GLA changed significantly (from 3100 SF to 4000 SF) and will have an impact on market value. She stated that other appraisers in the past would just base the final and recert. on the original report and that as long as the plans and specs were followed as outlined in the original report anything "far and beyond" what was stated in the report does not have to be taken into consideration (not in her exact words). I told her I would have to at least disclose the upstairs finished area and make a statement "For the purpose of this appraisal report and at the request of the lender, no value will be given to the 900 SF finished upstairs area which was listed as an unfinished attic in the original appraisal report". She was hesitant about the statement but told me to do what was necessary. Is statement acceptable or does a new report need to be conducted since GLA changed significantly? Any advise would be greatly appreciated.

 

[Jalexi]

I would think a new report is in order due to the fact the Subject is now 29% larger. I wouldn't feel comfortable giving "no value" to 900 feet of HLA.

 

[PropertyEconomics]

I think your recertification would be that the home, as completed, is not worth less than your original appraisal report indication. In my opinion, a new report is not needed, you are simply recertifying that the value as complete is not less than that you indicated prior.
Note the changes including the additional square footage, the detached garage, etc and say that these are IN ADDITION to the improvements considered within your original appraisal report. You are not saying the additional square footage and improvements have no value ... you are simply stating the value as complete is not less than $X.

I hope others will chime in also.

(Thank God the home isnt 900 square feet less ... that would be a real problem. Your situation is not a problem at all.)

 

[Don Clark]

I think your recertification would be that the home, as completed, is not worth less than your original appraisal report indication. In my opinion, a new report is not needed, you are simply recertifying that the value as complete is not less than that you indicated prior.
Note the changes including the additional square footage, the detached garage, etc and say that these are IN ADDITION to the improvements considered within your original appraisal report. You are not saying the additional square footage and improvements have no value ... you are simply stating the value as complete is not less than $X.

I hope others will chime in also.

(Thank God the home isnt 900 square feet less ... that would be a real problem. Your situation is not a problem at all.)

PE, I agree....up to a point. I would also include a statement that the client indicated that they did not want a new appraisal, based on current and actual conditions. Before I would put that in the report I would want a statement to that effect in writing or at least an e-mail.

 

[RSW]

I have problems with both of your answers. Here's why: The OP is asked to do a final inspection to see if it was built per plans and specifications. Evidently, it was not. It appears to have been upgraded which may effect the value in several different ways. Is the house overimproved for the area by means of the workshop? Is the size of the GLA overimproved for the area? Is it legal to have the attic finished and used as living area? There are a lot of questions that come into play. The only way to really know is to do a new appraisal report. I would not do a recert. on the original appraisal since the improvements were not done according to the plans and specifications provided in the original SOW.

 

[timd354]

Due to present market conditions, I will not do any "recerts" or "appraisal updates". If someone want to know the present value of a property, they are just going to have to pay for a new appraisal...no exceptions.

 

[PropertyEconomics]

PE, I agree....up to a point. I would also include a statement that the client indicated that they did not want a new appraisal, based on current and actual conditions. Before I would put that in the report I would want a statement to that effect in writing or at least an e-mail.

Don .. I think that is very sound advice and not something I have ever thought of. I will be doing that from now on ... not like any new construction is occurring anyway ... but perhaps in another life when it returns ..... :blush:

 

[cathy0405]

I think your recertification would be that the home, as completed, is not worth less than your original appraisal report indication. In my opinion, a new report is not needed, you are simply recertifying that the value as complete is not less than that you indicated prior.
Note the changes including the additional square footage, the detached garage, etc and say that these are IN ADDITION to the improvements considered within your original appraisal report. You are not saying the additional square footage and improvements have no value ... you are simply stating the value as complete is not less than $X.

I hope others will chime in also.

(Thank God the home isnt 900 square feet less ... that would be a real problem. Your situation is not a problem at all.)

What would be the proper form(s) to use? The satisfactory completion with recertification form states "Itemized below are substantial changes from the data in the appraisal report and these change do (do not) adversely affect any property ratings or final estimate of value in the report". I would mark "do" and itemize the additional improvements. Right? Then under the "Recertification of Value" section I would state "I hereby recertify that the value of the subject property is no less than zzz as of reinspection date. Is that correct?

 

[Mike Kennedy]

"accurately describe the physical characteristics of the subject". The Subject is no longer the subject described in the prior appraisal report.

Recertification ???????????

AO-3. "Clients sometimes label such requests as “updates,” “reappraisals,” or “recertifications.” Does USPAP address these and how can an appraiser comply with USPAP for such assignments?"

ADVICE FROM THE ASB ON THE ISSUE:

NEW appraisal.

http://commerce.appraisalfoundation.org/html/USPAP2008/AOs/ao_03_new_assignment_.htm

 

[David Dietz]

RSW and Mike K. are right IMO.

I have had this problem myself, the final was submitted as being not complete per plans and specs and an NEW AS IS value report was completed. As for the rescert as mike said there is no such thing. It is a value opinion and a new assignment requiring it's own work file and supportable documentation (appraisal) for your workfile. I hope you are charging a full fee because you are on the hook for a full appraisal by doing the so called recert of value.