Drive-by question

[Craig Roberts]

Is it possible to do a drive-by on a single-family residence with the intended use being to assisting the client in determining the market value of the subject?

This assignment would not be mortgage related so using the 2055 drive-by form wouldn’t be an option. Could you put it on the old 1004 URAR and make comments that the interior wasn’t inspected? Or is the old URAR pretty much obsolete?

 

[Lobo Fan]

I would use the old 2055 form and make it very clear that you did not see the interior or rear of the subject. Your assignment is OK other than that, You could do a desk top appraisal and not even leave your desk chair.

 

[xm72mhd]

In my opinion, a drive by appraisal should be reported on Kleenex so it is ready for disposal upon completion. However, that is probably not the option you are looking for.

Yes, you may be able to arrive at a market value by completing only a drive by. I can't get there comfortably yet, but other appraiser seem to be able to do it routinely.

I think Chuck gave you good advice about a form. Just be sure to include a SOW that clearly sets out how little work, data and analysis about the subject went into the report.

 

[CANative]

I don't think the PURPOSE of the appaisal is as important as the INTENDED USE. What is the expection of your client? How reliable do the conclusions have to be? How good is the data in the market area? Do non-lender type clients understand the difference between credibility and reliability?

 

[Webbed Feet]

Is it possible to do a drive-by on a single-family residence with the intended use being to assisting the client in determining the market value of the subject?

This assignment would not be mortgage related so using the 2055 drive-by form wouldn’t be an option. Could you put it on the old 1004 URAR and make comments that the interior wasn’t inspected? Or is the old URAR pretty much obsolete?

Mr. Roberts,

Please disclose your location, license type, and level of experience. I could not even tell if you are an appraiser or not by your post. I had to search your past posts to tell you are some level of trainee or something.

To really help you it is important we understand why your client wants this appraisal. Divorce? Advice on an anticpated for sale by owner? Tax challenge? Estate? These can radically change what is needed as opposed to what the client thinks they need or cheap price they want to pay.

Your first question: General answer is "Yes" But your question is so broad that doesn't mean much.

Your second question: The answer is "Yes", you could. But why would you want to? Why not use the old 2055?

Your third question: The answer is "No" The old URAR is a pretty good form. Frankly, I think a better form than the new 03/2005 URAR.

Barry Dayton

 

[Rich Heyn]

Is it possible to do a drive-by on a single-family residence with the intended use being to assisting the client in determining the market value of the subject?

"assisting the client in determining the market value of the subject" does not identify the intended use to a degree that would comply with USPAP, let alone allow one to develop a proper answer to your question.

Why is the client engaging you? What are the client's reasons for ordering an appraisal? Why does the client need to know the market value? That's intended use.

If intended use is to contest a highway department taking then an exterior-only inspection is likely inadequate. If the intended use is to determine whether to spend money on a broader-scope appraisal, then exterior-only may be acceptable.

Your assignment results must be credible within the context of the intended use. Identify the problem that needs to be solved by going through the assignment elements, the six steps to happiness:

Assignment elements:

1) Client and intended users

2) Indended use

3) Type and definition of value

4) Effective date

5) Relevant property characteristics

6) Assignment conditions

Once you have analyzed the steps above, you can make your scope of work decision. What you need to do and what you don't need to do. Your question most directly bears on #5, Relevant property conditions. What degree of familiarity with the physical characteristics of the property is needed to solve your client's problem?

So, Craig, what is the intended use?

 

[KenRossman]

Yes, you can do a drive-by for whatever intended use on whatever form you deem appropriate. You need to provide full disclosure of what you are doing and why...

The new EIO 2055 form is somewhat clunky for non-lender work and would need lots of disclaimers. I am mostly using the old (11/97) 2055 form for now, but am working on a template for the new AI 100.01 form report.

I use the following as a base comment for all drive-by's, edited as needed for the specific assignment -

"This appraisal was made with only a "drive-by" exterior inspection, from the street, in accordance with instructions from the client. The client's stated explanation for the use of a drive-by/exterior only inspection is as follows: .

Several extraordinary assumptions were made:

1. That the condition and degree of modernization of the subject's interior is consistent with the observed condition and degree of modernization of it's exterior. If the interior condition and/or degree of modernization of the subject's interior is inferior, the value would be lower. If the interior condition and/or degree of modernization of the subject's interior is superior, the value would be higher.

2. An assumption was made, that the assessors records (when and where available) are reasonably accurate in regard to the size of improvement (GLA), the size of the lot and any significant amenities. Significant discrepancies in the assessors records regarding GLA, lot size and amenities, etc. could also result in a higher or lower valuation than would be appropriate in a complete interior and exterior inspection were made available to the appraiser."

 

[Craig Roberts]

I guess my question doesn’t really fall under the category of “urgent” help, (maybe just help) I was wondering if you could do an assignment like this, A friend did ask me about it but she didn’t send a letter of engagement to our office our anything. She was thinking about buying some investment properties and was looking for ballpark figures. I said I couldn’t provide any without doing an appraisal and that my supervisor would also have to review, approve, and sign the report. I was just asking for future reference.

I did look at the old 2055 form and it has a big header across the front that says this appraisal is for mortgage finance only, that’s why I thought it might be better to use the old 1004.

Thanks for the help everybody, didn’t mean to open up a can of worms.

 

[CANative]

It's not a can of worms. It is a good discussion and we can all learn something from each other.

 

[Rich Heyn]

Craig,

Greg is right, it's not a can of worms. It's a commonly misunderstood issue and your question is valid.

If the intended use is for the investor to make a provisional decision as to whether or not to persue investigating the potential purchase of the property, then a exterior-only property viewing may be appropriate. If the intended use is for the investor to decide whether to actually purchase the property, then it becomes debatable as to how appropriate an exterior-only might be. It all depends on the circumstances. If the investor has a high level of risk-tolerance or is planning on converting to an alternate use, perhaps they really don't care about the interior condition.

As an example, I just sold a multi-tenant commercial building to a bank that intends to demolish part of the building, gut the rest and convert it to a branch. They told me to help myself to anything I wanted from the inside prior to closing. If they had ordered an appraisal under those circumstances, I think exterior-only would have been just fine.