"desktop Appraisals" & Scope Of Work

[Pamela Crowley (Florida)]

I believe that it takes a very-well experienced and competent (including geographic competent) appraiser to produce a credible DeskTop Appraisal.

BINGO!

Can a 'desktop' be done? Sure. Is it credible? It depends. Can it comply with USPAP? Yes. Would everyone (especially State Regulators) agree? You must be dreaming.

:shocked:

Maybe my statement could have been more clear by being "ALL State Regulators." My statement is based upon discussions with and knowledge of the opnions of regulators from several states.

Would their opinion prevail? Another good question. I'm sure we'll see some sad tales posted.

I do believe SOME state regulators would find SOMETHING that could be construed as non-compliant. I'm also sure we will see some stories regarding desktop appraisals and state sanctions - and tests of those sanctions.

I have not ever been asked to do one.... yet. From the fees I've seen for them so far, I will not be accepting any. IF they were to offer a reasonable fee that would cover the due diligence that I would be comfortable with plus it was in an area of cookie cutters, I would consider it.... with lots of carefully worded EOs.

And, yes, I suspect that there are appraisers who produce garbage under the title of "DeskTop Appraisal", but I see "garbage" masquerading as an appraisal quite often in many of the appraisals that I review that are not DeskTop Appraisals.

Tooooo true. :twisted: :twisted:

 

[Fred]

I have injected into many threads that there is an important distinction. On one side, there is the reasonable, even admirable, attempt to gain greater understanding of the USPAP version of minimum standards. On the other side, there is the equally intriguing, but completely unrelated, issue that state boards may be populated by arbitrary, incompetent or irrational people who are in a position to think that USPAP says whatever they want it to say.

So Pam, what do you really want to know: how elastic USPAP is or how far USPAP "credibility" stretches beyond the bounds of credibility (by the non-ASB definition).

If it helps, I once heard of a circumstance in which an ASB chair was called in to give testimony to a state board as to what USPAP stated and meant on a certain point and the board went ahead and ruled the other way.

Lee,
I have a question. Is there a difference between 1) geographical competence and 2) the geographical competence necessary given the intended use?

Pam,
I think it is USPAP-sufficient to respond with numbers to a client's request for the value of property on the moon without inspection.

 

[Carnivore]

Steven,

As I understand the scope of work issue, it is more about how well you explained what you did to arrive at your opinion than anything else. The adequacy of the scope then defines the reliability of the opinion.

My problem is not with Scope of Work, but rather with the definition of 'Credible'.

How credible is a report, IMHO, is not dependent within the context of the scope of work. The report is credible if I do the appraisal, regardless of scope. It is not credible if a skippy does the appraisal.

Desktops are the least reliable assuming a static model. Can a desktop be more reliable than a drive by? Not on the same subject! Are both scope of work credible? Certainly if conducted by the same appraiser.

 

[Lee Lansford]

Andrew--re: your last post...

How right you are!

I infer from some posts in this string, and from related strings during the past several weeks, that there may be some misunderstanding as to exactly what is meant by the phrase "USPAP compliant". USPAP compliancy is not at all meant to be taken as some "technically" compliant appraisal that is otherwise misleading. OF COURSE there is a higher degree of reliability (given an appraisal that is USPAP compliant) as to the value estimate given the degree of awareness that the appraiser has regarding the subject property.


Steven--re: your last post...

Just as a "rose is a rose is a rose", "competent is competent is competent" as such applies to developing and reporting an appraisal (IMHO).


--Lee Lansford, IFA

 

[moh malekpour]

The fact is that the lender needs a quick and cheap appraisal. It is appraiser’s responsibility to recognize that the available data to him or her are appropriate, accurate and complete for the assignment and equally it is appraiser’s responsibility to decide whether or not he or she is familiar with neighborhood where the assignment is located. If I have 100% accurate and complete data and I am familiar with the neighborhood and the subject, I would take the assignment but this happens in 1 out of 1000 assignments.

Problem is that when desktop appraisal becomes popular within lenders, it would be times in near future that there would be no assignments but desktop assignments. If that happened, many appraisers who are under financial pressure, may compromise the accuracy of the data and familiarity with the neighborhood just because they want to make a living and see other appraisers are doing so as the USPAP has provided them with an ambiguous tool (assumption and extraordinary assumption). When majority of appraisers accepted that kind of assignments, it becomes norm and acceptable procedure of doing appraisal. (That is what the peer is doing).

I have access to public records and MLS. I know and I have seen that some of their data are inaccurate and incomplete. I cannot say which one just by looking at them but randomly they are 25% inaccurate. Both public records and MLS have disclaimers about the accuracy of their data that they might be inaccurate. As a desktop appraiser, I don’t think I can make an assumption and disclose in the scope of work that those data are accurate as the data is the only thing available to me to do the appraisal. I don’t know anyone who can be assured 100% that data from public records and MLS are accurate and complete.

I don’t blame regulators for being skeptical about desktop appraisal as it leaves the door wide open for thieves where there are a lots of burglary going on.

 

[George Hatch]

don’t blame regulators for being skeptical about desktop appraisal as it leaves the door wide open for thieves where there are a lots of burglary going on.

Maybe so, but it really does depend on what these things are being used for. The burglary occurs only to the extent that there is something to lose - not every assignment involves that level of risk. Minimalist workproducts are obviously not appropriate for a really intensive use like a high LTV loan or any assignment where the decision to be made can be directly and significantly compromised by any more than a slight error or variation.

The thing we all need to keep in mind is that not all uses are created equal, and they do not all require the same workproduct. Appraisals are not now nor have they ever all been created equal. Recognizing and allowing for these different types of workproducts does not detract from our professional ethics. If anything, being a little realistic about it only serves to enhance the applicability of our ethics by removing or reducing some of these disconnects between our professed ethics and our applications of those ethics. Thus, I can confidently disagree with someone when they say there's no such thing as a USPAP compliant workproduct, because I believe that USPAP outlines a very attainable standard and I can show how those standards are both reasonable and usable in the market.

 

[Lee Lansford]

GEORGE--

Very well stated!

I've found myself in these forums being a "defender" of the Desktop Appraisal and it's certainly not because--as you have expressed your own awareness--of the "fact" that such an appraisal might be applicable for all, or most, appraisal assignments. Nothing is further from the truth.

There appear to be appraisers who continue to believe that "one size fits all".

I recall similar concerns were raised when the "exterior-only" appraisal concept was new to appraisers. The outcry was, more or less, "how can this be!" and how such was going to be the ruination of appraisers. Well it did not happen then and it will not happen now.

You report a quote in your last posting: "don't blame regulators for being skeptical about desktop appraisal as it leaves the door wide open for thieves where there alot of burgulary going on." Will someone please inform me as to how the work product is the CAUSE of appraiser malfeasance???? I'll wait for THAT answer.
"Scope of work" does not appear to be a limiting factor to those intent on doing evil.

THE PROBLEM is not at all with the scope under which we develop and report our appraisals. Rather, THE PROBLEM lies with appraisers who are, to varying degrees, unethetical and/or incompetent but nevertheless offer their "services" in the market. It is easier, I surmise, to focus attention on the "product" being offered that it is to deal with the real problem.

Quoting Pogo: "We have met the enemy and they is us!"

 

[CANative]

So are appraisers responsible for determining whether our work product is appropriate to their intended use?

And if so, how do we interpret all of their needs based on the minmal amount of communication contained in generic order forms?

Or do we just do as we're told?

Do we have to do an LTV calculation to ensure that our workproduct truly matches the intended use? And that marginal neighborhoods or areas which lack good data would lend themselves to a minimalist approach based on a borrower with good credit?

Not being sarcastic, but I am getting kind of confused.

 

[Lee Lansford]

Greg...no problem, I understand the quandry.

By the time most appraisals are assigned to appraisers for use in the residential loan decision making process, the lender (not the mortgage broker) has made a decision based, in at least part, on what they know about the prospective borrower as to which form they require for their intended use.

Let's say that the mortgage broker comes to you and requests an appraisal to be reported on the form 2055 as an exterior-only. Your search of the public records indicates that the improvements were built earlier this year on the borrower's owned site. Further, public record information is sketchy, at best, as to the improvements. The result: you request an interior inspection or decline the assignment.

Or, an assignment given to you a 2055 Interior turns out to be a really complex assignment and you conclude that a more detail-intensive form (as a starting point) is more appropriate for this assignment; thus, you request that assignment be completed on the URAR form.

Or, that appraisal request that you just received as a 2055 Exterior is a 4-unit residential income property and you conclude that the income approach is critical and that your reporting of the appraisal would be compromised by completing the assignment as given. Thus, you request that the assignment be competed on the 4-page small residential income property form.

Or, you receive a request from the lender to perform a DeskTop Appraisal on a residence. Due to insufficient data available to you regarding the subject property, you decline and request, at a minimum, that the scope of the work include at least a viewing of the subject.

Or, in conversation with an investor who owns a number of SFR detached in the area, all of which you appraised for refinance purposes three years ago, you determine that the investor just wants to obtain a general idea of the market value of these properties. No other reason...he just wants to have an approximation of the market value of those properties for his own peace of mind. You discuss the various appraisal options in some detail. The investor concludes that a DeskTop Appraisal, completed as a limited appraisal in restricted use format, for each property will meet his needs and you concur, knowing that you have on-line access to good (MLS) market data as well as public record data.

Greg, you have probably been involved with situations similar to these in the past.

The credit worthiness of the prospective borrower (and other factors, i.e., LTV) does certainly drive what the lender may require and if the client's needs coincide with me being able to produce a credible appraisal, then I will accept the assignment.