Extraordinary assumption notation in report...

[robertwells]

Just remember if that bad boy has serious foundation issues a borrower could make a claim that your value was off and that he-she was not fully aware of the situation. Even many appraisers have a hard time differentiating between extraordinary from hypotheticals. Personally i would check the repair-inspection box and recommend the lender obtain an- inspection from a licensed contractor in engineer.

Hi Glenn...thanks for the input...I, of course, would explicitly note that by employing the extraordinary assumption value/assignments results may be affected if subsequent inspection by experts revealed significant deficiencies...

 

[robertwells]

How bad in your observation and opinion is the settlement?

is the AMC going to sign on the report along with you ..we know answer is no, meaning they will have zero liability, all on you

If settling is significant enough that you think it is cause for concern, then make appraisal subject to inspection for settlement by licensed engineer or contractor. If you think settlement is minor/typical for older homes , then describe it as that is what was visually observed and recommend an inspection

Appraisers can not add an EA on a URAR report, ( the certification page instructs no EA or other changes to pre printed assumptions )

Hi J...thanks for the input, however, I am confused on your comment on that EA cannot be used in a URAR...I re-read FAQ #215 in USPAP, and no where did I see that use of EA were disallowed...it tells you how/when to use. Could you let me know where it is shown that the use of these are prohibited? Bob

 

[robertwells]

We can not ADD an EA or HC to the URAR, we can only use the URAR pre printed HC or EA on the form (which have requirements such as an inspection or completion tacked on to them )

The fourth checkbox is an EA made SUBJECT TO REQUIRED INSPECTIOn

which is different than appraiser adding their own EA...(if that is what OP is thinking of doing )

Dont you state a hypothetical condition is employed in new construction on a URAR? Bob

 

[J Grant]

Hi J...thanks for the input, however, I am confused on your comment on that EA cannot be used in a URAR...I re-read FAQ #215 in USPAP, and no where did I see that use of EA were disallowed...it tells you how/when to use. Could you let me know where it is shown that the use of these are prohibited? Bob

In the URAR itself, on the limiting conditions top of page

This appraisal report is subject to the following scope of work, intended use, intended user, definition of market value, statement of assumptions and limiting conditions, and certifications. Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted. The appraiser may expand the scope of work to include any additional research or analysis necessary based on the complexity of this appraisal assignment. Modifications or deletions to the certifications are also not permitted. However, additional certifications that do not constitute material alterations to this appraisal report, such as those required by law or those related to the appraiser’s continuing education or membership in an appraisal organization, are permitted.

RE, we can only use one of the URAR's own EA or HC ( the four check boxes to choose from, and they come with inspection or completion )

 

[J Grant]

Dont you state a hypothetical condition is employed in new construction on a URAR? Bob

Yes but it is made subject to completion/inspection ( it is one of the four check boxes already in the URAR

 

[robertwells]

We can make all the EA's we need to make. But EA's have to be subject to verification that our assumption (that no changes are needed) is true. Hence the CB4.

To do otherwise in these form reports would be misleading.

Hi CAN...what is "CB4"...I do not note that the EA "has" to be verified, but do clearly state that by employing it value/assignments results may be affected if subsequent tests of inspections revealed significant deficiencies. In that event, the assumption would be subject to review and revision...

 

[robertwells]

Yes but it is made subject to completion/inspection ( it is one of the four check boxes already in the URAR

Ahh, yes...

 

[robertwells]

In the URAR itself, on the limiting conditions top of page

This appraisal report is subject to the following scope of work, intended use, intended user, definition of market value, statement of assumptions and limiting conditions, and certifications. Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted. The appraiser may expand the scope of work to include any additional research or analysis necessary based on the complexity of this appraisal assignment. Modifications or deletions to the certifications are also not permitted. However, additional certifications that do not constitute material alterations to this appraisal report, such as those required by law or those related to the appraiser’s continuing education or membership in an appraisal organization, are permitted.

RE, we can only use one of the URAR's own EA or HC ( the four check boxes to choose from, and they come with inspection or completion )

Perhaps that is why they would be "extraordinary" assumptions.

 

[CANative]

Hi CAN...what is "CB4"...I do not note that the EA "has" to be verified, but do clearly state that by employing it value/assignments results may be affected if subsequent tests of inspections revealed significant deficiencies. In that event, the assumption would be subject to review and revision...

"CB4" is Check Box 4 - for the EA. You cannot check the CB1 (as is box) if you are relying upon an extraordinary assumption in lender bound appraisal reports.

 

[CANative]

My personal choice is to reiterate the EA in a comment addendum (usually the large comment section on Page 3). For example:


"I noted that there was possible evidence of foundation settlement or structural damage as there were sagging floors in the living room area. I have no specialized expertise in these matters and could not determine the nature or severity of the issue. This condition did not visually appear to be serious but I cannot be certain. Based on the extraordinary assumption that the damage is minor or that there is no ongoing settlement of the foundation, no repairs or changes are needed to preserve the structural integrity of the subject property's improvements. The appraisal is completed subject to an inspection and confirmation by a home inspection company or other trades professional."

EXTRAORDINARY ASSUMPTION: an assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.