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Drive By Or "windshield" Appraisals
- Thread starter Ed
- Start date
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Farm Gal
Elite Member
- Joined
- Jan 14, 2002
- Professional Status
- Licensed Appraiser
- State
- Nebraska
Greg:
~sigh~
Welcome to the forum, now duck!
Your first paragraph is great.. but after that... forgive please my rambling I am just plain tired of this one:
We have it on good authority that the 2055 does NOT have to be considered a limited appraisal: a limited appraisal is defined as one in which you made (named) departure for one or more standards from which departure is permissible.
Here is an excellent post on the subejct of Limited versus Complete
You do NOT have to develop a cost approach unless it would be required by 'a jury of your peers'. One of the reasons I and others are attempting to kill off that particular myth that you MUST complete an maintain a cost paproach on a 2055! .... Among other things would you not have to make soo many Extraordinary Assumptions as to render the results meaningless?
If you don't HAVE to develop it in order to generate a credible opinion of value, then it ain't departure :blink: . SHOW ME where in USPAP <_< ...as opposed to here-say in classes... it says you HAVE to develop a cost approach.
Do you REALLY develop Income approaches for homes that you perform drive bys on in areas where there is no investor motivation to purchase for rental purposes???
why?!?!? Don't you lack information on the interior appeal, and REAL transactions purchased for that purpose?
Particularly if the scope of an assignment does not require an income or a cost approach (do go and read the limiting conditions and certification on that 2055 form) and you do not believe one is necessary to form a credible opinion of value... you DO NOT HAVE TO DEVELOP OR MAINTAIN A COST APPROACH! I am not saying it isn't a good idea to do so, it can help catch boo-boos before they hurt you... but you do not HAVE to in many cases because the argument is circular: you get the depreciation from THE MARKET which means you are using the market approach in the cost approach and why bother
Which means you can consider in very brief form if the cost approach and/or income approach are necessary and then perform a credible job of appraising a property without doing one or both of those approaches.
You CAN do an appraisal without doing a Market approach also but that is a whole nother argument.
Point being oh heck I will let all the USPAP gurus referr you to some of the past arguments on this subject... anyone wanna find a best of George or Santora or Red or other guru type and post it in the FAQ's???
~sigh~
Welcome to the forum, now duck!
Your first paragraph is great.. but after that... forgive please my rambling I am just plain tired of this one:
We have it on good authority that the 2055 does NOT have to be considered a limited appraisal: a limited appraisal is defined as one in which you made (named) departure for one or more standards from which departure is permissible.
Here is an excellent post on the subejct of Limited versus Complete
You do NOT have to develop a cost approach unless it would be required by 'a jury of your peers'. One of the reasons I and others are attempting to kill off that particular myth that you MUST complete an maintain a cost paproach on a 2055! .... Among other things would you not have to make soo many Extraordinary Assumptions as to render the results meaningless?
If you don't HAVE to develop it in order to generate a credible opinion of value, then it ain't departure :blink: . SHOW ME where in USPAP <_< ...as opposed to here-say in classes... it says you HAVE to develop a cost approach.
Do you REALLY develop Income approaches for homes that you perform drive bys on in areas where there is no investor motivation to purchase for rental purposes???
why?!?!? Don't you lack information on the interior appeal, and REAL transactions purchased for that purpose?Particularly if the scope of an assignment does not require an income or a cost approach (do go and read the limiting conditions and certification on that 2055 form) and you do not believe one is necessary to form a credible opinion of value... you DO NOT HAVE TO DEVELOP OR MAINTAIN A COST APPROACH! I am not saying it isn't a good idea to do so, it can help catch boo-boos before they hurt you... but you do not HAVE to in many cases because the argument is circular: you get the depreciation from THE MARKET which means you are using the market approach in the cost approach and why bother
Which means you can consider in very brief form if the cost approach and/or income approach are necessary and then perform a credible job of appraising a property without doing one or both of those approaches.
You CAN do an appraisal without doing a Market approach also but that is a whole nother argument.
Point being oh heck I will let all the USPAP gurus referr you to some of the past arguments on this subject... anyone wanna find a best of George or Santora or Red or other guru type and post it in the FAQ's???
Jeff Horton
Senior Member
- Joined
- Jan 15, 2002
- Professional Status
- Certified Residential Appraiser
- State
- Alabama
But you appraised it on the assumption of what they were GOING to do. You did the Appraisal before its started so you had to make an assumption that it would be built to plans and specs.
Thats no different than assuming the inside of a house is in average (or what ever) condition on a drive by. So if you can appraise appraise a proposed construction you can appraise a house by a drive-by. You can argue that you get to watch what they actually build, but you still had to make assumptions to start with.
I respect your opinion but I just have to disagree that it is not possible.
CANative
Elite Member
- Joined
- Jun 18, 2003
- Professional Status
- Retired Appraiser
- State
- California
Lee Ann, Thanks for the welcome.
Having posted on Guitar.com (a forum for (mostly) younger guitar players I've had to duck a lot.
The subject of cost approach is still a little hazy for me at this point. Standards Rule 1-4(B) (i) - (iii) states what is involved in an analysis of cost when a cost approach is applicable. When is it appliable in a residential appraisal? prior to construction, new, 1 year, 5 yrs, 100 years?
Are you just assuming that it is not applicable or do you analyze the specific situation? The text on the 2055 states, in part... I further certify that I have considered the cost and income approach but through mutual agreement with the client did not develop them unless otherwise stated.
Just because we and our clients mutually agree not to develop these approaches to value does not necessarily mean they were not appliable. If they were applicable and we did not include them then we have a departure. Right? When do you think a cost approach is applicable and when do you think it is not? Guess I need a little help or advise.
I usually do a informal and brief cost approach on a scrap of paper or note pad and stick it in the file. It helps me to make sure I'm in the ballpark.
Thanks again.
Having posted on Guitar.com (a forum for (mostly) younger guitar players I've had to duck a lot.
The subject of cost approach is still a little hazy for me at this point. Standards Rule 1-4(B) (i) - (iii) states what is involved in an analysis of cost when a cost approach is applicable. When is it appliable in a residential appraisal? prior to construction, new, 1 year, 5 yrs, 100 years?
Are you just assuming that it is not applicable or do you analyze the specific situation? The text on the 2055 states, in part... I further certify that I have considered the cost and income approach but through mutual agreement with the client did not develop them unless otherwise stated.
Just because we and our clients mutually agree not to develop these approaches to value does not necessarily mean they were not appliable. If they were applicable and we did not include them then we have a departure. Right? When do you think a cost approach is applicable and when do you think it is not? Guess I need a little help or advise.
I usually do a informal and brief cost approach on a scrap of paper or note pad and stick it in the file. It helps me to make sure I'm in the ballpark.
Thanks again.
Mountain Man
Elite Member
- Joined
- Jan 15, 2002
- Professional Status
- Certified General Appraiser
- State
- Georgia
One thing I definitely agree on is:
Drive by/interior... all the same Benjamin’s. :mrgreen:
Stone
Elite Member
- Joined
- Feb 1, 2002
- Professional Status
- Certified General Appraiser
- State
- Wisconsin
Vargasteve - you hit it right on the head. While I think this is a good discussion point, it doesn't seem to me that Ed had any desire to actually learn why or how one does a drive-by. Otherwise, so many of Ed's responses wouldn't have basically ended by saying HOW CAN YOU APPRAISE SOMETHING YOU HAVEN'T SEEN. YOU CAN'T END OF STORY, or similar statements.
I don't think anyone here would say that the level of accuracy is exactly the same for a drive by as it is for an interior full appraisal. Point is, they are not asking for that accuracy level. You are not delivering a full appraisal and they are not requesting one. If they choose to treat the value as being the same for a drive-by as for a full appraisal, that is not the appraiser's fault. They ask for a limited scope. You deliver a report with a limited scope. You describe the limited scope. The appraisal has no use for anything other than that lending decision. If, after the fact, someone wants a full appraisal, and it isn't on par with the drive-by, so what? They were not asking for a full appraisal.
Again, I do very few of these things, and charge as much, or slightly less as for a regular interior appraisal. I don't think I am any more likely to be high on these than on a full interior. The opposite is probably true, as I am likely to be more conservative about any interior features than I am if I go through the house.
And Ed, If the only new construction homes you appraise are far enough along to verify the quality level, I am envious. Unfortunately, most new construction houses I appraise haven't been dug, or at the most aren't past the foundation yet. To me, there are way more unknowns in many new construction appraisals than in a drive-by where you can at least see the exterior.
I don't think anyone here would say that the level of accuracy is exactly the same for a drive by as it is for an interior full appraisal. Point is, they are not asking for that accuracy level. You are not delivering a full appraisal and they are not requesting one. If they choose to treat the value as being the same for a drive-by as for a full appraisal, that is not the appraiser's fault. They ask for a limited scope. You deliver a report with a limited scope. You describe the limited scope. The appraisal has no use for anything other than that lending decision. If, after the fact, someone wants a full appraisal, and it isn't on par with the drive-by, so what? They were not asking for a full appraisal.
Again, I do very few of these things, and charge as much, or slightly less as for a regular interior appraisal. I don't think I am any more likely to be high on these than on a full interior. The opposite is probably true, as I am likely to be more conservative about any interior features than I am if I go through the house.
And Ed, If the only new construction homes you appraise are far enough along to verify the quality level, I am envious. Unfortunately, most new construction houses I appraise haven't been dug, or at the most aren't past the foundation yet. To me, there are way more unknowns in many new construction appraisals than in a drive-by where you can at least see the exterior.
vargasteve
Junior Member
- Joined
- Jan 21, 2002
- Professional Status
- Certified Residential Appraiser
- State
- California
Actually, in his particular area (as in many portions of my area), a drive by is not appropriate and should not be considered. So actually, this is no doubt the case. A drive by can streamline the process by a few days, and can cost slightly less - that's why it's a card in the deck.
Who's to say that a home owner in who originally purchased a house some years ago for $200K, now worth $450K+- ALL DAY LONG with a $185K (37% loan to value) on it should have no alternative what so ever than the full enchalada. I have some tract areas in our county where there are 1,000 homes 4 or 5 models, you may have 20+ comparables with less than 3 months in historic age. Or large condominum / townhome projects where the same is true.
On the same token as mentioned there are many areas that these approaches are out of bounds. Perhaps Ed's area is such an area. So I can see his perspective but I believe that in his 1,300 hours of experience he may not have been exposed to different areas where this approach is appropriate.
Just think a few years ago 2055's had but just a small portion of the market. Now AVM products, and 2055's are conquesting a portion of the total work flow, and in some cases appropriatly so. However, those who know how to complete complex full assignments will always have work but, the degree of difficulty on the typical full assignment will continue to grow on a percentage basis.
Who's to say that a home owner in who originally purchased a house some years ago for $200K, now worth $450K+- ALL DAY LONG with a $185K (37% loan to value) on it should have no alternative what so ever than the full enchalada. I have some tract areas in our county where there are 1,000 homes 4 or 5 models, you may have 20+ comparables with less than 3 months in historic age. Or large condominum / townhome projects where the same is true.
On the same token as mentioned there are many areas that these approaches are out of bounds. Perhaps Ed's area is such an area. So I can see his perspective but I believe that in his 1,300 hours of experience he may not have been exposed to different areas where this approach is appropriate.
Just think a few years ago 2055's had but just a small portion of the market. Now AVM products, and 2055's are conquesting a portion of the total work flow, and in some cases appropriatly so. However, those who know how to complete complex full assignments will always have work but, the degree of difficulty on the typical full assignment will continue to grow on a percentage basis.
Chris Colston
Elite Member
- Joined
- Jul 24, 2003
- Professional Status
- Certified Residential Appraiser
- State
- Florida
Do you do appraisals on PROPOSED construction?? You haven't seen THAT either, just a bunch of lines on paper that have dimensions on them.
The original intent of the EXTERIOR drive-by appraisal was that the lender already had a full appraisal on the subject that was used for another loan with that lender. This is what DESKTOP UNDERWRITING intended. The lender was supposed to provide the appraiser with at least the first page of that appraisal. You, as the appraiser, were to make the EXTRAORDINARY ASSUMPTION that the interior was still in the same or better condition as presented in the original appraisal report. If you don't have the first page, you might find on old MLS listing.
The lenders put all of their loan packages through DESKTOP UNDERWRITING first. This process spits out the MINIMUM requirement for an appraisal, based on the criteria entered at application. Could be a "in your pajamas, never the leave the office" DESKTOP APPRAISAL, could be a 2075, or a MARKETABILITY REPORT (is the subject still there?), might be an EXTERIOR ONLY DRIVE-BY. Remember the computer looked at the borrower's information and came up with the MINIMUM needed by FANNIE/FREDDIE to make the loan work.
You can ask the client if they have a copy of an old appraisal and would they send it to you. If not, make the request to upgrade to an interior inspection.
Your client has a customer that they are trying to serve in the most economical way possible. We have an obligation to give them a report that is not misleading and serves their purpose. If you are uncomfortable doing an EXTERIOR drive-by, don't do them. It's my opinion that you are leaving money on the table. I always try to serve the client who is only trying to serve their customer.
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