Complete or Limited Report

[Paul Ness MAI]

I took the bait and you set the hook! Very well done!

 

[Fred]

Paul,
No bait intended for anyone. Had no idea you were in this thread.

 

[Stephen J. Vertin MAI]

Steve:

You are absolutely correct. Furthermore, it has been that way since 1994. At the risk of over simplification the "type of report" deals with approach(es) used, while "reporting options" deal with conveyance of information to the reader. The former is the analysis while the later is the delivery.

Steve Vertin

 

[Ben Vukicevich SRA]

Limited Appraisal-Invoke Departure Provision

Summary Report format

No Cost Approach considered.

Ben

 

[David C. Johnson]

<span style='color:darkblue'>Steven Santora:

"Three REPORT options - Self-Contained, Summary and Restricuted Use (formerly Restricted)"

You never cease to amaze me either. You forgot about one:

Resuscitated Use (formally Letter Update on Someone Else's 15-Year Old Report).

You may have all the USPAP editions back to 1963 or whatever it was you said, but it's plain to see you don't have your mid-year 2006 Special Update edition yet.

dcj, President Prescience, Inc.</span>

 

[Pamela Crowley (Florida)]

Just did one like that. I added the M&S Form 1007 and then it's a Complete Appraisal - Summary Report.

I charge the same for URAR and 2055. Why discount when the due diligence is the same and the liability may be higher?

 

[Fred]

David,
The issue of re-sccotash will be put to rest in 2003, not 2006. The ASB will opine (as if it is not obvious already) that update, backdate, your data, not your data, CoStar data = same, same. You sign it? You own it!

It is coming to me from a sealed envelope that the ASB will "clarify" this issue in AO-3 and SMT-7.

Signed,
The "Amazing" Karnak

PS: Now, if you really want to be amazed, you should ask why leaving off the cost approach makes the appraisal "limited."

 

[Anonymous]

I guess my spin on this is why? I am not going to do a 2055 anyway, but if asked to for new construction, I would simply tell the lender that the form 2055 was not designed to accomodate a cost approach nor (if i recall correctly) plans and specs appraisals. Therefore, the cost of amending the report to comply with USPAP would exceed the cost of doing the report on a form that is considered plans and specs friendly.

If the purpose of the 2055 request is to reduce your fee and you are suffering the cruel pinch of want and will be willing to do so, then I suggest you rethink your marketing strategy.

Yes, I agree that you could use a restricted format, i.e.- Restricted Use Appraisal Report.

And, Std. 2 - 2 c(ii) explicitly states the INTENDED USE of the appraisal must be consistent with the limitations on use of the RUAR (not URAR, but Restricted Use Appraisal Report) option (i.e.-, client use only)." - their words not mine...

Likewise, if this is being sold or going to secondary market lenders, how can the client [lender] be the sole user? If an underwriter can call you, then it went to more than just the lender.

Since mortgage lending involves a report which can be obtained by the borrower, the question is are they an intended or unintended user? No problem unless the borrower feels like the appraisal queered his deal, and the client points at the appraiser on why the loan fell through, and maybe you took the pay at the door.....I don't care what SMT 9 says about borrowers not being intended users, the courts do not have to honor the intent of USPAP.

Maybe you would like to face that in court, I wouldn't. I would not like my odds. So, again. Why charge a subpar fee for a report with above average risk? Do a complete appraisal in a summary format. Forget the restricted nonsense. Restricted reports "fly" only because no one complains. I don't want to bet the ranch on my wordsmithing to circumvent the full reporting options, when in fact, the resulting report likely will take as long or longer than a conventional URAR.

Ter

 

[Ben Vukicevich SRA]

FNMA explains it pretty clearly but most still want to bang their heads against the wall.

They don't want a Cost Approach on the 20xx series. They will not accept a loan with a value based solely on the Cost Approach, no matter which appraisal form is used. So why do a Cost Approach? Notice the wording "valid," "proper" and "accurate." Think they are trying to tell us we're not qualified to do Cost Approaches??? Hmm....that it is a job for professionals such as Architects who could be considered USPAP Competent to complete such reproduction estimates?

Cost Approach to Value (06/30/02)

The cost approach to value assumes that a potential purchaser will consider building a substitute residence that has the same use as the property that is being appraised. This approach, then, measures value as a cost of production. The reliability of the cost approach depends on valid reproduction cost estimates, proper depreciation estimates, and accurate site values. We will not accept appraisals that rely solely on the cost approach as an indicator of market value.


The last sentence says it all.

Let us depart and be glad......it's gone. Hopefully, forever...

Ben

 

[Fred]

Ben,
It doesn't sound to me like FNMA thinks that leaving out the Cost Approach "limits" the reliability of the appraisal. So maybe leaving it out does not make the appraisal "limited." And also, don't you need to get the client's prior agreement to do a limited appraisal?

Terry,
You raise a good point. An appraiser cannot legally "restrict" the use of the appraisal to the client only. Plenty of cases where the court has held appraiser liable to unintended users. (No "privity"). The "restricted use" report is only an illusion of safety.