Cost Approach For 2055 Exterior Only Form

[Ross (CO)]

Greg......are you the co-pilot in the second car, with his arm draped over the side ?

Barry,....I appreciate your formality, but no "Mr." is needed with my first name. You can just call me Ross. You'll note from above.....the new 2055 is a non-starter for me too.

 

[Ruben Ramon]

Appraisers tend to be the most paranoid people out there. This new 2055 is not intended to be a "suicide mission." The scope of work specifies that we are to do enough work that produces credible for the client. If your peers are doing it (which they are), and it meets clients expectations (which it does) you are going to be ok. If you are not ok with it, then go be a greeter at Wal Mart. A lot of peope here, it seems, are afraid of the 2055, and as a result, insult those who do it. I have noticed on this board, a lot of misconceptions are valiantly pushed as gospel truth. One of them is the unbelief in the 2055. If lenders rely on an AVM, they will be able to rely on the 2055.

No, the secondary market will not allow extraordinary assumptions. But they will allow hypothetical assumptions. They wont allow extraordinary assumptions because those are assumptions that we KNOW are false, such as appraising a property that has environmental contamination and appraising it as if it doesn't. In fact, USPAP only allows extraordinary assumptions under four conditions:

it is required to properly develop credible opinions and conclusions;

the appraiser has a reasonable basis for the extraordinary assumption;

use of the extraordinary assumption results in a credible analysis; and

the appraiser complies with the disclosure requirements set forth in USPAP for extraordinary assumptions.


Actually the real question is, can the cost approach be produced with credible results, as opposed to results reliable enough for the client, for the client?

The answer is, and the answer to the original question is, no the cost approach cannot be done with credible assignment results due to the nature of the inspection orginally ordered by the client.

I may be a, "newbie," but dont think I am not experienced in the field of appraising.

I would be interested in seeing responses to my post.

 

[Ruben Ramon]

Originally posted by Barry M. Dayton@Jan 28 2006, 12:27 PM
Mr. Poon,

You are obviously not up on the latest. ... There are so few situations where anyone other than a crazy person would ever use the new 2055

You either need to read up on the liability you are taking or your really desparate for work....

See what I mean?? Comments like this are not appropriate for this forum. You are not helping anyone out by using language like this.

Are you saying that I'm crazy??

Are you saying that I'm desperate for worK??

Please.....I am neither.

I would hope the language on this forum gets better...we are all here to improve our profession. That starts out by us being a team, not fighting amongst ourselves.

Looking back on my previous post, maybe some of my comments are also pushing the boundary, but I am not specifically insulting someone, and I am pretty upset at the language some people use on this forum. I don't want anyone to be insulted by me, but only a productive discussion be made. Remember, a lot of non appraisers use this site. USPAP was made to instill a good public perception of the appraisal industry. Lets all get along!!!

 

[Pat Butler]

The cert pages for the 2055 included language where the appraiser is affirming that he or she has adequate information about the physical characteristics of the subject property. The appraiser affirms elsewhere that he or she has reported physical deficiencies that could affect the livability, soundness, or structural integrity of the subject. Furthermore, the appraiser has to verify all of this data from a disinterested party if obtained from someone who has an interest in the subject property.

If the homeowner tells you that their roof leaks, then who else are you going to get to verify that information? Are you willing to take a wild guess about the physical data of the subject property even though you've likely not seen the interior? Are you willing to agree that there are NO deficiencies that would affect the subject property? How do you know without being able to see through walls?

Insofar as assumptions go, an assumption is what you would typically use in this sort of situation, not a hypothetical. So the refusal of Fannie to allow us to use assumptions forces appraisers to really go out on a limb and stand behind information that they could only be guessing about.

Your question about the cost approach is interesting. If you are otherwise doing appraisals on this form then you've already certified to the fact that you have enough information in order to complete the appraisal. So you should already have enough information to also complete the cost approach. But the fact that you question whether or not the cost approach is applicable shows that you are finding it difficult to complete a cost approach on a property that you've not seen the interior of. Sounds to me like you don't have enough information to have completed the sales comparison approach either. Thereine lies the problem with this form.