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Drive By Scope-Opinions? Input?

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Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
Doing a drive by for REO purposes for a big TV advertising lender. I have used this scope before but they had a couple of special requests in their order. No REO sales, no cash sales and included information on the property they wanted to me use. SQ FT, room count etc. So I changed the scope to suit this assignment. (as I always do)

Since so many people seemed to be concerned about the changes in USPAP and Scope I thought I would post this one. Sort of bone to chew on for a out of the ordinary appraisal.

BTW this is not my final draft. Will most likely change it a bit as I get further into the appraisal. But thought it might be a good one to discuss. I dont claim it's perfect!!

Also I probably got at least some of this scope from someone on the board? If so I don't remember who?
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Scope of Appraisal The accompanying report is based on an inspection of improvements from a public street, investigation of the subject neighborhood area of influence, and review of sales data for similar properties. This appraisal has been made with particular attention paid to applicable value-influencing economic conditions and has been processed in accordance with nationally recognized appraisal guidelines.

Per the client, Big TV Lender's request I have not attempted to contact the owner. The client specifically requested that I used the following information in the appraisal. The home is 3 bedroom, 2 bath, no basement. Total number of rooms are 6. The square footage is 1880. Lots size is 1 acre and the house is 9 years old. The appraisal is based on this information and assumed to be accurate.

Client also requested properties that were cash sales and REO properties not be considered as comparable sales unless no other sales existed. These requirements may have an effect on the final value and cause it to be less accurate.

The enclosed reports are the results of a Limited Appraisal Analysis according to Standard Rule 1 of the Uniform Standards of Appraisal Practice and the Appraisal is reported to you as a Summary Appraisal Report, in accordance with Standard Rule 2-2b. The Cost and Income Approaches were not utilized in this assignment. In compliance with the Departure Rule of USPAP, the appraisal process has not been limited by the lack of the application of these two approaches and the result of this assignment is credible. The client has agreed to these limitations with the request for this report form.

The value conclusions stated herein are as of the effective date as stated in the body of the appraisal, and contingent upon the certification and limiting conditions attached.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Jeff,
After 25 years I have a few rules. One of them is
only do regular assignments. It seems to me your
doing an unusual assignment and USPAP, bless its
soul, allows you to do them with proper magical wording.
But, here's the problem, if it all goes wacky, they'll
still nail you. As long as you've done a REPORT and
if anyone relies on it, the fingers will be pointed at you.

I've had Realtors roll on me. I once did an FHA and
required a pest and (dry)rot report. When the
new owner found rot, they went to the Realtor and
he suggested they file a complaint against the
appraiser. The rot issue was out of my hands, but
it was still a waste of time.

How much are you getting to paid to do this risky
kind of work? Is it really worth it?

elliott
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
As long as you've done a REPORT and
if anyone relies on it, the fingers will be pointed at you.

You said it almost perfect. You just let out one thing. It doesn't matter if is it an odd ball or a no-brainer if they want to sue they will.

So, anyone got any comments on writting the Scope?
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
This works for this situation. But that's the problem with the Scope. It can vary for each assignment. So, while the blanket default in the USPAP addendum may well work for standard appraisals that we do every day, we need to remember that oddball appraisals require oddball Scopes

Roger
 

rtubbs

Junior Member
Joined
Jan 15, 2002
Jeff, I can't seem to locate the last issue of "The Appraiser Bulletin" published by the AREAB. However, I do believe they addressed "drive bys" and gave some guidance on the subject. will keep looking.
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Oddball properties will be more-and-more of the types of property our future assignments will involve. Being certain how we describe the client's request, stating the methods of our analysis and sources of the data we used, or did not use, and why, is going to challenge us to draft the very thorough "scopes" which will be required. Cookie-cutter scopes will certainly make up our template page in the report, but then we go in and tweak that if another report requires more. I have been doing more of the well known drive-by's lately and for sure I do not shrink away from them....unless the preliminary data absolutely requires me to upgrade to "full" or to simply decline. Some clients will upgrade upon your suggestion, but I feel most of the staffers with whom we might speak are flat-out in fear of suggesting such up their line of command. I have about 4 or 5 key places in the drive-by report where the reader clearly sees what was asked for by client, and how I have maximized my data and analysis according to the client's requests. If we adhere closely to a tighter display of User, Use, Scope, etc. in this new year I feel we can reduce the hassles that often come back to "bug" us. --- I am about 1/4 of the way through the 2003 USPAP book, and shall strive to grind it out before New Year's Eve. Heh, at least my intentions are good !
 

Pine Tree

Junior Member
Joined
Aug 19, 2002
Professional Status
Certified Residential Appraiser
State
Maine
This scope is far more complete than most of the appraisals I review! You have been very clear about what the assignment is and what the restrictions are. In addition. You have been clear about the source of the information that you have been requested to use and what effect that may have on value. It looks complete to me. Having said that, I agree that if things go south it's always the appraisers fault. I say, recongnize this as a fact of doing business and do the best you can on each assigment. Peace, Wendy
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Jeff:
On a fast read it looks good to me in that it covers MOST of the bases... I would however interject a comment to the effect that 'interior conditions are assumed to be typical of the nighborhood, the subject interior and portions of the exterior not viewable from a public street area assumed to be in 'average' condition"

and (though I know that folks may hammer me here): I personally would make it a Restricted Use report: limiting the use to the named client for the purpose of (whatever they told you they were gonna do with it) since the terms of the assinment are atypical to the work you would normally perform in performing a driveby appraisal for the specified purpose 8O .

you have my permission to lift any or all of this in it's entirety! :p
 

rtubbs

Junior Member
Joined
Jan 15, 2002
Jeff, just call me a pessimist. I'm always smelling rats. If the assignment you have is for REO purposes, why are they dictating what sales to use and not use? Smells big time.

I'm just completing an REO appraisal for Rural Development. Their instructions are: as-is; assume property has extensive abuse and deferred maintenance; consider the interior of the dwelling in poor condition, etc. Makes sense to use similar foreclosed properties for comps; also makes sense to use cash sales over other forms of financed sales.

If we are the ones to form an opinion of market value, why are we letting lenders dictate the scope. My suggestion would be to proceed with extreme caution; I'm not sure that a weasel-worded scope would stand the test when we may know to do something different.

Still looking for the bulletin.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Ron:

Some lenders are doing a 'cash for keys' repo system. The lender contacts the homeowner to see if they are interested in either refinancing or moving out peacably- with a cash payment to permit entre' into a rental home and leaving their credit fairly intact. The lender finds it to their benefit to pay the losing homeowner to leave the buidling 'in good order'.

The lender assumption is that if the homeowner doesn't take the toilet and kitchen sink, and trash the place on their way out the door, that the lender comes out far ahead when trying to unload the property.

Some assignments of the sort Jeff describes specifically want to 'assume' average or decent condition' instead of 'fire sale derelict'. Which IS reasonable given that they need to be able to make some decisions as to what to offer (or not) to the soon to be non-homeowner.

Sort of a win-win situation, and I am seeing more and more of them.
 
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