Complete or Limited Report

[liznindy]

Ok all you USPAP guru's out there...Here is a question for you!

I am performing an appraisal on a new construction (presently under construction). Client requests a 2055 Interior and gives me plans and specifications. OK, I will report the appraisal on the 2055 if that is requested. However, I am going to develop the Cost Approach (as typical appraisal practice for new construction), BUT, I am not going to report the Cost Approach in the 2055 given to the client.

I have made a comment on the USPAP/Report Identification page of the report that the Cost Approach was developed and considered (retained in appraiser's workfile) but is not reported per client's request for a limited report.

However, I am thinking it is not a limited appraisal (though it may be a limited report) since I am developing and considering the Cost Approach.


There, that should get your brains smokin'

 

[Joker]

Why are you developing the Cost Approach? Because it is applicable? Most likely. Generally, in new construction of single family residences, the Cost Approach is applicable. To use USPAP terms, it is applicable and necessary. You should, then consider and develop it. The 2055 does not have space for this approach and cannot serve as a summary report without an addendum to summarize the Cost Approach. If you need to attach an addendum, you may as well use the URAR form. What you are considering is a restricted use report. The 2055 form may be sufficient as a restricted use report, but my guess is your client cannot accept a restricted use report. This type of report is not to be relied on or used by any third third party. Generally speaking, the borrower gets a copy of the report. Additionally, bank examiners may be reading the report. Knowing all of this information precludes you from submitting a restricted use report. The burden of proof is on you. My advice is contact your client, explain the potential violations of USPAP, and inform them that a URAR is required (if by nothing else, required by you). Most lenders will understand.

 

[Ray Ohler]

FNMA guide lines post by Frederick R. Ruffell.

 

[Wally Jones]

----> NOT a USPAP guru ! ! <----

Sounds like you're on the right track and Doug may be right about developing and reporting the Cost Approach. Seems like if you talked to your client, they may reconsider and have you go ahead use the URAR. Or include it as an addendum to the 2055. Either way, I think you're right about it not being a limited report.

As I recall, USPAP doesn't dictate a particular form, just our good FNMA friends. For USPAP, it's the stuff we write into our reports which needs to comply with the published standards, regardless of which form we use.

Of course, for this animal I'm sure you're charging your normal full fee since I know the lender wouldn't be trying to get a cheap report from ya! :lol:

Good luck.

 

[Wally Jones]

Okay. I admit it. I'm slow.

I just went to the thread Ray pointed out and read all of the posts there. Forget what I said above and go read all that and all will be clear.........uhhhhhh........sorta.

(I tole ya I wasn't no gooroo. 8) )

 

[Fred]

"Limted" report, "complete" report - no such critters in USPAP

 

[Farm Gal]

Liz,

I think you are being asked to do a Restricted use Summary report. You need to clarify with your client that this is really what they want and explain why they may be limited in use of the report if the cost approach is not included.... I respectfully disagree with Doug as to the fact that only the borrower can use a restricted use report. I regularly get requests from lenders who knowingly ask for Limited reports written in a Restricted Use Format. (There really is no such thing as a limited use report: see page 152 lines 11-34 for the 6 appraisal & report combinations)

I think you can do this assignment in full compliance with USPAP, but you
would have to
1.reference the cost approach as being in your file and limit the use of the report to the named client (advising them in advance that such would be the case)
OR
2. place the cost approach in the report as an addendum OR
3. ask the client to accept the URAR format.

Obviously door # 3 is the easiest for you... but they probably don't want to pay for it right AND it may not be convenient for them because of thier underwting system!:roll:

Take a look at pages 146 to 155 of the 2002 USPAP. Particularly page 154 line 10-19 (which summarizes the USPAP references for a situation like yours) and the gobbldegook at the bottom of that same page

Many professional appraisers and state appraiser regulators have expressed uncertainty as to whether evaluations of real property collateral comply with USPAP. Appraisers are concerned with the potential consequences of a violation of USPAP

and the italicized junk on the page following whic seems to me to say exactly what your client is asking for : an evaluation/appraisal :?: ... which in the manner they request would not be complaint with USPAP IF written in summary format excluding the cost approach on a 2055 form :!:

I'm no guru, but I do not see where what you are being asked to do should involve a knockdown drag-out with the client... With due sympathy for their needs (not much but some :evil: ) The underwriter plugs in a bunch of numbers and the computer spits out the kind of report required and if you give them more than they ask for (URAR) they and their precious computer don't know what to do! Ah the age of automation and efficiency :roll: Don't yah LOVE self employment: sell sell sell your services and educate the world as to what the rules really are?? (knowing full well that your competition don't NEED no stinking Rules!?!?!? :wink:
Good Luck!

 

[Fred]

"Restricted use Summary report" No such critter in USPAP

 

[Paul Ness MAI]

You never cease to amaze me Steve. Check the first page of 2002 USPAP Definitions.

"For the purpose of these Standards, the following definitions apply:...... Complete Appraisal: the act or process of developing an opinion of value or an opinion of value developed without invoking the DEPARTURE PROVISION.....Limited Appraisal: the act or process of developing an opinion of value or an opinion of value developed under and resulting from invoking the DEPARTURE PROVISION."

If you don't believe me, check the following web page...

http://www.appraisalfoundation.org/html/US...DEFINITIONS.htm

You also might want to check SR2-2, SMT-7, AO-3, AO-11, AO-12, AO-13, AO-15, AO-18, and AO-19.

Ok, I'll bite, what is your spin on this one?

 

[Fred]

Paul,
I don't have any spin, but I do have all the USPAP's.

My copies USPAP beginning with 1994 Mid-Year Supplement running through the 2002 edition include :
Two types of APPRAISALS - Limited and Complete
Three REPORT options - Self-Contained, Summary and Restricuted Use (formerly Restricted)

There is no such critter as a Limited Report, a Complete Report or a Restruicted Use Summary Report

Still amazed?