Condo Cost approach

[Webbed Feet]

Mr. Santora,

I think you misspoke in your second sentence after "Original intent," that is bolded. I suspect you meant the last two words to be "report date."

SMT-3 is easily clarified by the addition of "engagement date," and the retiring of SMT-3 is a mistake in that it is needed to prevent and clarify the differences between (wink, wink, wink) mysteriously similar appraisals with different client names on them and a real new assignment that is Retrospective. An unintended use I know, but a valid one just the same.

I will always agree the drafters did a very poor job communicating the pendulum swing of the market(s) was the differentiating trigger between a "current" analysis and a "retrospective" one. I could read that as their goal, many others did not. So my stand is still one of we should just make it simple for everyone else, toss in engagement date as the determining factor and make it simple. Your examples of what sound like poorly managed appraisal boards are not reasons to strike out entire sections of USPAP. Such examples could be used to suggest striking out all of USPAP and all appraisal boards. One case, in one State, is a poor flag to wave when discussing any statement in USPAP. The document has a bit more meaning than to be disparaged by the actions of one appraisal board.

Your grammar point is well taken. But only in as much as USPAP persists in failing to require the actual use of the words with defined meanings and suggests grammar instead as if that patches everything up. Just like many recent threads involving the use of Hypothetical Conditions and those people in the threads proposing not using the defined words just because USPAP does not say they must be used. My reaction? Stupid! It is easy to just use the darned words! So why not? Oh yes! I remember! The reason is I should treat all intended users like they are morons, and the expectation is all appraisers are too stupid to provide the definition in their reports along with the words. All instead of USPAP just saying to use the darned words, provide the definitions.

I like quite a bit of your rationalizations and points. But I really feel if you fail to address this idiotic "Client Name Change" issue in the process, in order to provide a clear and positive stop to this (wink, wink, wink) mysteriously identical cloned report using a prior effective date nonsense, then you are contributing to problems versus removing them. I still see SMT-3, once cleaned up and improved, as the separator between a USPAP violating client name change that is masquerading under guise of use of a prior effective date, and using a prior effective date as part of a new Retrospective assignment.

Webbed.

 

[Webbed Feet]

<snip>
FWIW, I don't see any clear way to fix those errors. Do you?

Mr. Santora,

In a way we agree on something again. I have posted for a very long time that the attempt to make USPAP an eat everything document to appraising was a mistake. Long ago I suggested a USPAP(C) for commercial and a USPAP(R) for residential. Yes, the concepts intermix, but as you point out the specifics of the practices often do not. We ended up with something too broad, too difficult to follow. Just like several of the FAQs. But then I am completely against the "one license eats all" concept of the "General Certified" license as well.

So perhaps you have a point. Let's retire 80% of USPAP and at the same time retire the tiered licensing system. Go to a one type license system, grandfather in everyone, make all trainees "registered" and not "licensed," and require that ALL real estate appraisers have four year college degrees in the future. Not just GCs. Versus promoting, creating, and enforcing a caste system, with loopholes, that is to the detriment of the entire trade.

Webbed.

 

[Fred]

examples of what sound like poorly managed appraisal boards are not reasons to strike out entire sections of USPAP.

I disagree. Bad rules harm good appraisers. The worst offenders usually end up forfeiting the licenses without a fight. I listed other sanctions that misuse SR 1-4; and argue that they are common. Getting rid of the small rules not only justified because they add nothing to the standards, often contain errors, and feed what I call a culture of small-rule gotcha that pervades the profession. As part of changing the cultture of small rule gotcha, I favor changing SR 1-1 b “series of errors” to “series of discrepancies.” I believe USPAP classes should emphasize that trying to question credibility by accumulation of small errors is the most difficult and least desirable way to do it, and it should be clear in the standards, that trying to prove accumulation and missing is serious review mistake. Somehow “substantial error” that has a “significant affect” is disappearing into too many gray pages filled with unneeded and badly conceived minor rules.

I like quite a bit of your rationalizations and points. But I really feel if you fail to address this idiotic "Client Name Change" issue in the process,

SMT-3 has nothing to do with it. I objected to AO-26 when it was exposed and it has created all the confusion that I predicted it would, and all to solve a problem that didn’t exist.

I touched on that while responding to several of their questions, first about USPAP and public trust. I think the AO-26 is making the mortgage industry distrust appraisers and with good reason. They don’t see why you can’t resell the same appraisal after getting a clearance from the first client on confidentiality, and neither do I. If you lender B how you have to re-inspect, they think it’s an excuse to pad the bill. On the other hand, you can comply with USPAP minimums by making the second appraisal a desktop (and apparently somehow creating a new opinion by agreeing with your own former opinion). And this option leads to what looks even more like a readdressed report than the other option – the whole time telling them they can’t have a readdressed report.

I would be in favor of nothing that makes that thicket any thicker.

There is really nothing to fear from shedding the bottom rung of performance standards. USPAP has a ethical provisions that are fairly strong. The performance standards are already weak - "minimums." Results have to be credible and credible is relative to the intended use. Relative credibilty sounds like and is double-talk. Isn't the idea that the ones who determine what is necessary in any assignment everyone except the ASB: what peers do, what regular clients expect to see?

 

[JFulmer]

Quote:
Here is the verbage that LIA asked that my Mentor add to all reports:
Yes, but that was for when the insurance is not the intended use. The LIA also included instructions for what the appraiser ought to do when insurance is the intended use. So, in effect, you snipped the wrong part of the instructions.

Except for the fact that 95% of the lenders want it for that, and only that. The lender says their guidelines require it, but most will tell you that all they want it for is insurance. If I develop it and put any weight on it I change how the text reads. But that still does not change the fact that the client is the lender and the intended use is for lending purposes only. My report should not be set to the insurance agent for any reason so they can data mine info like AMC's do.

Sorry if I brought this thread back near the OP's post. Continue on!

-J

 

[CANative]

The half dozen "chief appraisers" employed by major lenders that I have heard from really believe in the CA and want to see it. They seem to have a jaundiced view of appraisal reports without the CA. Is it really insurance value they're after?

 

[JFulmer]

The half dozen "chief appraisers" employed by major lenders that I have heard from really believe in the CA and want to see it. They seem to have a jaundiced view of appraisal reports without the CA. Is it really insurance value they're after?

Then they must love our reports. I can't remember the last time a client of mine asked for it because the lender wanted to see it for anything other than new construction which is about 5% of our work currently. Heck, I would venture to believe that some of the LO's think some insurance agent paid Fannie to add it on there for them! Maybe I will put all my weight on the cost approach on my next report and see how far down the line it goes.

 

[Fred]

The half dozen "chief appraisers" employed by major lenders that I have heard from really believe in the CA and want to see it. They seem to have a jaundiced view of appraisal reports without the CA. Is it really insurance value they're after?

They may be after both insurable and market value from the same approach. However, there is key element in your post that shouldn't be overlooked, assuming you wrote exactly what you meant.

Parts of the profession has been trying to sell the CA for market value to the public for a long time, but the public isn't buying. And who can blame them? The key point is, it is really just a certain percentage of appraisers who have drunk the Kool Aid on the cost approach. So, it makes sense to me that they wold be chief "appraisers." To me, it really raises an issue of lack of objectivity on the part of those individuals.

I think, given who the clients are, professional lenders, their decision to insure RCN is not something they can blame anyone for as long as the RCN is reasonably accurate. They get to pick the benchmarks of their own financial decisions: market value, land market value, replacement cost, etc.

 

[c w d]

The half dozen "chief appraisers" employed by major lenders that I have heard from really believe in the CA and want to see it. They seem to have a jaundiced view of appraisal reports without the CA. Is it really insurance value they're after?

90% of the time we're told outright it is for insurance value.

 

[Kevin Mc]

This is great.

:new_popcornsmiley: :new_popcornsmiley: :new_popcornsmiley:

 

[CANative]

I'm starting to think they feel "naked" as in increased exposure with appraisal reports that don't have a CA. The CA, even if poorly executed by the appraiser, can show ratios of land to improvements, depreciation, functionality issues, and reasonableness of the SA. They have huge data bases of appraisal information in competing areas which can be used to detect deficient appraisal reports using (I assume) proprietary software.

Just a theory. Probably a stupid one.