I may be wrong since USPAP is a "living" document and has been changed to catch loopholes and cover the ASB's rear like every other ...nevermind. Anyway, it was my understanding that appraising subject to a "hypothetical condition" is fine AS LONG AS THE HYPOTHETICAL CONDITION is LEGAL AND REASONABLY ATTAINABLE (lots of room there to CYA). If the appraiser has knowledge that the condition is pure conjecture or instructed to ignore the fact that it could not be attained, then the appraisal can be considered "misleading" and I would assume that the appraiser can be held liable for producing a misleading report. As a ridiculous example, say I am apprasing a detached single family dwelling surrounded by 800 single family dwellings. However, "hypothetically" I see conversion of the site to office buildings in the future (WAY in the future). I build a "hypothetical" 40 story office building and label the report "HYPOTHETICAL". I think THAT could be considered "misleading".
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Dumber than a box of rocks
- Thread starter Ted Martin
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Farm Gal
Elite Member
- Joined
- Jan 14, 2002
- Professional Status
- Licensed Appraiser
- State
- Nebraska
ummm Ray:
I believe the point is that the split is NOT legally permissable...
I seem to remember words drummed into my head in Appraisal 101 that went something VERY like: a hypothetical condition must based on three criteria: "Probable, financially feasable and legally permissable"
Putting this one to that test it fails on two of the three... :evil: and is in any case poor appraisal practice...
Granted that it takes time and effort to educate the client, but if the client is uneducable, I think I don't want that client: lest I be dragged into a cat fight many many years down line for exactly this sort of idiocy!
And USPOOP alone will not be enough to wipe ME up after a courtcase... too much water and fire flung around in there.............
I believe the point is that the split is NOT legally permissable...
I seem to remember words drummed into my head in Appraisal 101 that went something VERY like: a hypothetical condition must based on three criteria: "Probable, financially feasable and legally permissable"
Putting this one to that test it fails on two of the three... :evil: and is in any case poor appraisal practice...
Granted that it takes time and effort to educate the client, but if the client is uneducable, I think I don't want that client: lest I be dragged into a cat fight many many years down line for exactly this sort of idiocy!
And USPOOP alone will not be enough to wipe ME up after a courtcase... too much water and fire flung around in there.............
Larry Lyke
Senior Member
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- Feb 2, 2002
Hey, ks --
You're one tough ombre --
Inviting yourself into a bad situation which'll only get worse because you provided services. Enron could use such lessons.
Going with a hypothetical legal description on a given parcel is heresy. No matter how you fudge or finesse it. You could get denutted for doing something like that.
Certainly you will become entangled when some lawyer is hired to try to straighten the mess out and finds -- 'Oh, here's a guy that just might have some E&O.'
I had to surrender a long-time client last year after 3 similar incidents: In each case I wrote a fax explaing why I couldn't perform the appraisal as requested. I'm watching those properties, too. They all have new loans on them. For a measly $350 fee/each, I am not going to start my business over [bold]--EVEN IF THE STATE WOULD ALLOW ME TOO![/bold]
Without a appraiser's license, my qualifications are -- this is assuming that I still have a [bold]driver's[/bold] license -- gardener, chauffeur or sex toy for a really rich person (gender to be selected after seeing a CPA certified financial statement done by anybody except Arthur Anderson)!
You're one tough ombre --
Inviting yourself into a bad situation which'll only get worse because you provided services. Enron could use such lessons.
Going with a hypothetical legal description on a given parcel is heresy. No matter how you fudge or finesse it. You could get denutted for doing something like that.
Certainly you will become entangled when some lawyer is hired to try to straighten the mess out and finds -- 'Oh, here's a guy that just might have some E&O.'
I had to surrender a long-time client last year after 3 similar incidents: In each case I wrote a fax explaing why I couldn't perform the appraisal as requested. I'm watching those properties, too. They all have new loans on them. For a measly $350 fee/each, I am not going to start my business over [bold]--EVEN IF THE STATE WOULD ALLOW ME TOO![/bold]
Without a appraiser's license, my qualifications are -- this is assuming that I still have a [bold]driver's[/bold] license -- gardener, chauffeur or sex toy for a really rich person (gender to be selected after seeing a CPA certified financial statement done by anybody except Arthur Anderson)!
Farm Gal
Elite Member
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- Jan 14, 2002
- Professional Status
- Licensed Appraiser
- State
- Nebraska
Hey what happened to the quote thingies???
Larry, I have done some deals with a carefully worded hypothetical running something like , having X feet road frontage on Y rd, with the described improvements being located at approximately the midpoint of said frontage with perimeter dimentisions of approximately blah blah by blah... to include all utilities, existing improvements and the gravel/blacktop cement driveway..."
Having no nuts to lose 8O I think I am safe 8)
Larry you could get in trouble from the sextiquette police on this forum for such a statement, 'bi' may be kool with the kids but some folks :roll: on this forum will hang you for being a switchhitter! :?
Larry, I have done some deals with a carefully worded hypothetical running something like , having X feet road frontage on Y rd, with the described improvements being located at approximately the midpoint of said frontage with perimeter dimentisions of approximately blah blah by blah... to include all utilities, existing improvements and the gravel/blacktop cement driveway..."
Having no nuts to lose 8O I think I am safe 8)
:lol: :lol: :lol:Larry Lyke [MN] said:
Larry you could get in trouble from the sextiquette police on this forum for such a statement, 'bi' may be kool with the kids but some folks :roll: on this forum will hang you for being a switchhitter! :?
JM2187
Junior Member
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- Jan 30, 2002
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- Appraisal Management Company
- State
- Pennsylvania
Larry,
You indicated: "Going with a hypothetical legal description on a given parcel is heresy."
However, per the Appraisal Foundation FAQ on this question: "A Hyphothetical Condition is defined in USPAP as: that which is contrary to what exists, but is supposedly for the purpose of analysis. Comment: Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property or about conditions external to the property, such as market conditions or trends, or the integrity of data used in an analysis.
An example of a hyphothetical condition included with the answer includes:
"Appraising a site as if the zoning were changed."
Where is the "heresy?"
Joe
You indicated: "Going with a hypothetical legal description on a given parcel is heresy."
However, per the Appraisal Foundation FAQ on this question: "A Hyphothetical Condition is defined in USPAP as: that which is contrary to what exists, but is supposedly for the purpose of analysis. Comment: Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property or about conditions external to the property, such as market conditions or trends, or the integrity of data used in an analysis.
An example of a hyphothetical condition included with the answer includes:
"Appraising a site as if the zoning were changed."
Where is the "heresy?"
Joe
LeeAnn: I am not sure if you are mixing up H&B Use with a "hypothetical condition".
General Forum: Appraising anything for what is is not is a "hypothetical condition". MAY be perfectly above board and doesn't have to meet the criteria for H&B Use. However, your "hypothetical condition" has to be, and this is a VERY vague term, REASONABLE. CAN be, like I said, perfectly "appropriate" and full disclosure has to be made. However, it becomes a really gray area when the appraiser is AWARE (keyword) that a subdivided site is not in any way, shape or form "reasonable" (which could lead to further problems). I am sure if you sat down and wrote two pages of jibberish, some underwriter would just rubber stamp it and send it on its way. However, if a problem develops down the road, the lender, or FIVE lenders later will spot it and HANG you with it. You just have to be careful with how you treat the condition.
The above is just MY opinion, others may have their own but I THINK the above should present my take on the matter.
General Forum: Appraising anything for what is is not is a "hypothetical condition". MAY be perfectly above board and doesn't have to meet the criteria for H&B Use. However, your "hypothetical condition" has to be, and this is a VERY vague term, REASONABLE. CAN be, like I said, perfectly "appropriate" and full disclosure has to be made. However, it becomes a really gray area when the appraiser is AWARE (keyword) that a subdivided site is not in any way, shape or form "reasonable" (which could lead to further problems). I am sure if you sat down and wrote two pages of jibberish, some underwriter would just rubber stamp it and send it on its way. However, if a problem develops down the road, the lender, or FIVE lenders later will spot it and HANG you with it. You just have to be careful with how you treat the condition.
The above is just MY opinion, others may have their own but I THINK the above should present my take on the matter.
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