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Commercial Review

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Geoff Hatcher

Junior Member
Joined
Jan 23, 2002
Professional Status
Certified General Appraiser
State
Ohio
Doing a review of a commercial appraisal that was completed March 14, 1999, therefore USPAP 1998 is applicable. I was also engaged by the same client to appraise the properties involved with a retrospective date of valuation of March 14, 1999.

The purpose of the review and appraisal is for pending legal actions against the prior appraiser in which I will be testifying as an expert witness.

The prior appraisal is presented as a "Valuation Memorandum" and is seriously inadequate and misleading for it's intended purpose, and in my opinion one of the worst appraisals I have seen.

Anyway, I am looking for an opinion on how my review is to be compliant with USPAP Standard 3-1 © Form an opinion as to the completeness of the report under review in light of the requirements of these standards (within the context of the reporting requirements for the type of report submitted for review:Self-Contained, Summary or Restricted) when the report in question is not presented as a valid reporting option? This is a binding requirement and departure is not permitted
 

airphoto

Senior Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Pennsylvania
Geoff ..

Think your final sentences stands all by themselves ..
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Geoff,

USPAP 1998 still included definitions for "Intended Use" and "Intended User". Although "Scope of Work" as such was not included in the Definitions section, there were still requirements for the appraiser to "consider the purpose and intended use of the appraisal" (SR1-2a), and to adhere to SR-2. The definitions for "Appraisal", "Appraisal Practice" and "Report" were still binding requirements from which Departure was not allowed. Effectively, all of the elements for "Scope of Work" were still required in the former versions of the USPAP.

You didn't say what type of client the original appraiser had or what the purpose and intended use of the appraisal was. So I reckon that once you are able to define those elements you'll be able to determine what inadequacies there are, if any. All you have to do after that is go down the line using the 1998 version of the USPAP and tick off the inadequacies. I'd stay away from quoting the Advisory Opinions, per se, and just stick to the Standards and Statements on Standards, as well as the Definitions. These seem to be where the original appraisal's violations are anyway.


George Hatch
 

David C. Johnson

Senior Member
Joined
Jan 15, 2002
<span style='color:darkblue'>Geoff,

A little off the subject, but I thought I would comment about your sentence to follow:

"Doing a review of a commercial appraisal that
was completed March 14, 1999, therefore
USPAP 1998 is applicable."

Interesting. I have just completed STD-3 reviews for several related reports involved in potential / likely litigation in federal court. About half were done at the end of one year, and the other half at the beginning of the next, so therefore all were subject to the same version of USPAP, whereby had I been asked, I might have responded that two versions of USPAP were applicable. But as you point-out, no so.

As it turned out for this work of mine, this was not of material interest, but I am glad you reminded me that the year of the report under review is not, on its own, indicative of the year of USPAP applicable to that work.

Thanks.

dcj</span>
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
It looks like a discussion of the "Ethics" section of USPAP should be included in the review.

Roger
 

Steve Owen

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Missouri
To answer your specific question, it seems like you need to determine which report format the appraisal fits under (most likely summary) and then dtermine its adequacy under that format. If you cannot determine which format the appraiser intended, say so and analyze its adequacy (or lack thereof) under each of the possible formats. IMHO.
 

Joker

Elite Member
Joined
May 28, 2002
Professional Status
Certified General Appraiser
State
Ohio
Hi Geoff!

Is it possible that the report under review complies with the minimum reporting option of a restricted report? Is it possible that the report complies with a summary report? Is it possible that the report complies with the requirements of a self contained report? You know what the reporting options were supposed to be, per USPAP, you just are not sure which one the "appraiser" used. In your review, you are to form an opinion as to the completeness of the report under review in light of the requirements of reporting options, it just so happens that the inept "appraiser" didn't specify the type of report. If it complies with a summary report, I would consider it as that and be sure to point out the deficiency of not specifing the type of report.

Since this is for litigation, I would suggest analyzing the report according to each of the three reporting options. This will take a little more time but would provide your client (attorney) with the best information for court. If under questioning, the appraiser says (s)he intended it to be a restricted report and your review was based on a self contained, (s)he may have an out, based on your report and testimony. If you have done a review considering each of the three reporting options, the "appraiser" will have no effective argument on that point.
BTW-If this is one of the worst reports you have seen, you apparently haven't seen some of the reports I have reviewed. I have seen some where the "appraiser" couldn't spell "Memorandum", much less use it in a report.
 
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