extraordinary assumption

[Fred]

Pat,
Thanks for bolding a lot of text, but don't all assumptions affect results?

Almost all appraisals assume no hidden toxic substances. If the appraiser knew an assumed clean property was, in truth, contaminated; wouldn't that information affect or "impact" the reported value?

 

[Webbed Feet]

That would be an ordinary extraordinary assumption. All to commonly used in the lending world.

Caveman says: "What ?"

Webbed.

 

[Webbed Feet]

Pat,
Thanks for bolding a lot of text, but don't all assumptions affect results?

Almost all appraisals assume no hidden toxic substances. If the appraiser knew an assumed clean property was, in truth, contaminated; wouldn't that information affect or "impact" the reported value?

Mr. Santora,

Why don't you work half as hard at coming up with good suggested solutions to the unanswered USPAP dilemmas as you do multiplying the complexities by so constantly suggesting they can't be solved?

I guess I'll have to try an answer here so you can creatively find ways to make every solution I come up with impossible. That way others may have a solution and you'll have your fun too.

Webbed.

 

[Financially Feasible]

Mr. Santora,

Why don't you work half as hard at coming up with good suggested solutions to the unanswered USPAP dilemmas as you do multiplying the complexities by so constantly suggesting they can't be solved?

I guess I'll have to try an answer here so you can creatively find ways to make every solution I come up with impossible. That way others may have a solution and you'll have your fun too.

Webbed.

 

[Webbed Feet]

Ordinary Assumptions are assumptions that you make that do not impact value.

Extraordinary Assumptions are assumptions that you make - that if found not to be true - will impact the final estimate of value.

Mr. Murphy,

What page of USPAP is the definition of "Ordinary Assumption" on? Is that anywhere near the definition of a "Full" appraisal?



Webbed.

 

[c w d]

Mr. Murphy,

What page of USPAP is the definition of "Ordinary Assumption" on? Is that anywhere near the definition of a "Full" appraisal?



Webbed.

Have you looked in the United Standards of Professional Appraisal Practice, as one of the appraisers here in town puts in everyone of her reports? I'm sure Full Appraisal is defined there....gotta be.

 

[Webbed Feet]

To All,

First, I have to say I am rather disappointed in this thread getting parsed into a purely USPAP viewpoint so rapidly, when it probably should have, or could have, been parsed into answers concerning Fannie's 03/2005 SOW and preprinted language on her forms instead. But then the forum continues to have darn near every original poster with an appraisal license post as if none of them have ever read the SOW Rule. Therefore, they fail to tell us vital SOW information needed to properly answer them darn near 99% of all threads that get started. So in a insanity sort of way, this thread going off on “assumptions” is almost perfect really, considering most responders never bother to get a SOW clarified before tossing answers around.


Wil in Norcal,

You never bothered to tell any of us if your SOW required a Fannie bound piece of work demanding reporting on a 03/2005 form, or was not and the SOW was for something else. I have not read that anyone asked, so nobody clarified. So in my opinion, this resulted in the majority of the answers making sweeping extraordinary assumption(s) as to what the SOW was. Meaning, again in my opinion, most the answers may, or may not, be correct.

Without knowing the complete SOW, this means there are two directions answers can take. Most all answers here took the pure USPAP direction that assumes no extremely prohibitive preprinted language on a demanded form exists. So I'll take the other. I'll assume your SOW was indeed for a 03/2005 form with very prohibitive preprinted language on it. So here are my answers and opinions for that specific case.

Your first post. After all this time (years) to research and understand the problems with the 03/2005 2055 form requirements in the SOW demanded on it, that chief appraiser is somewhere between an idiot and a butthole. You can't make EA's with that form unless you plan on using CB4 and requiring an inspection so you can bring in such EA's into play. Something that is sorta stupid as the idea is not to have an on site inspection. No, you were not overly critical. No, you should not have accepted assignment conditions like those.

Your second post. No, you cannot EA the condition or EA about “expected maintenance.” Given you were not confident in the data, and given the prohibitive preprinted language. So you could not proceed.

Perform a forum search regarding the 03/2055 form. I am not going to detail all the reasons all over again. In short, what was proposed to you is not allowed by Fannie. You'd end up with no confirmation by any unbiased third party regarding the information that would correctly be related to your effective date. Your client supplied information probably must be considered biased if this is a sale or a refinance. A matter I did not read anybody ask about, or you state. Everyone certainly made a bunch of assumptions over it I guess. The only clue about that is you don't “think” the owner knows what is going on. But with that statement it seems you are not even sure about that. So maybe this IS for a REO and the old 9/96 2055 is allowed. Then, in that case, all the answers change. But why bother to tell any of us that in order to get back meaningful answers? .. Right?

Webbed.

P.S. The other "beauty of USPAP" is apparently the ability of USPAP instructors to not bother to 100% clarify a SOW in an example before they start supplying possibly inaccurate answers for questions that lacked vital information for answering them.

 

[Webbed Feet]

To All,

“ASSUMPTION: that which is taken to be true.”


“EXTRAORDINARY ASSUMPTION: an assumption directly related to a specific assignment, which, if found to be false, could alter the appraiser's opinions or conclusions.”

Are the two definitions confusing or can they be confusing? .. Yes. Do most residential forms use the word “assumption” when examples can be made that some of these uses should be labeled “extraordinary assumptions?” ... Probably. Does beating that to death help any of us? .. No.

My opinion? The first element that should be used to differentiate between the two are the words “specific assignment” in the second definition. So if you and your peers would have a list of assumptions you would all use for an assignment “type” repeatedly over and over again, across different “specific” assignments, then those probably should be considered to not be “extraordinary.”

There is not much escaping the fact that we must ask if any particular assumption would be unusual to be used by our peers for any specific situation. If it would be, all of us would be very well served to be seriously asking ourselves if it should fall under the definition of “extraordinary.” Because the use of such an assumption might be considered by all our peers to indeed be "extraordinary."

Another good measure of the lack of an “extraordinary” situation would be if it is not a known fact the assumption being incorrect would alter the appraiser's opinions. An example might be county information showing a four bedroom house. The appraiser involved uses methods that do not adjust for bedroom count under the stand any bedroom count is carried in the GLA adjustment. Therefore, later finding out the house is really a three or a five bedroom would not alter the appraiser's opinion of value.

So we now have three determining aspects, or tests. The first being is it “specific” to only the assignment at hand? The second is to ask what would the actions of our peers be regarding this? The third being can it be reasonably expected that even if incorrect it will not alter the appraiser's opinions? Apply these tests, then use your best judgement. I personally don't see how any prudent appraiser doing so would fail to correctly identify an “assumption” versus an “extraordinary assumption” using the above. Preprinted language in industry forms excluded, those just are what they are. Preprinted assumptions are included if we like it or not, and not to worry because our peers are all stuck with the same Donkey Kong in that regard. It is what we add to that on our own that we have to worry about.

Webbed.

Mr. Santora, tear it up... enjoy!.... :new_smile-l:

 

[Michigan CG]

From The Dictionary of Real Estate Appraisal Forth Edition CD:

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 condtions or trends; or about the integrity of data used in an analysis. An extraordinary assumption may be used in an assignment only if:
o It is required to properly develop credible opinions and conclusions;
o The appraiser has a reasonable basis for the extraordinary assumption;
o Use of the extraordinary assumption results in a credible analysis; and
o The appraiser complies with the disclosure requirements set forth in USPAP for extraordinary assumptions.
(USPAP, 2002 ed.)

assumption
That which is taken to be true. (USPAP, 2002 ed.) See also extraordinary assumption; general assumption.

general assumption
A typical assumption of an appraisal. A statement of general assumptions and limiting conditions is often included in the discussion of the premises of the appraisal in an appraisal report for the appraiser's protection as well as the information and protection of the client and others using the report. See also limiting condition.

 

[Louis Pompeo]

Tick tock tickickick tockockock tickickickickickick, etc.

Gee.....you guys have a lot of time on your hands.....