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Extrordinary Assumption on subject's condition

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Riick

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Elite Member
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Aug 14, 2007
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Certified Residential Appraiser
State
Delaware
I'm doing a field review on a ReFi where I happen to be personally familiar with the property,
though I haven't been in it since about 1995. Nice 2-unit Row.
Property was sold in 2000, and again in 2003.
Condition in 2003 noted in MLS as "Fully Renovated" - with some detail on upgrades made.
The appraisal is worse than trash; calling it misleading is a gross understatement, but that's neither here nor there.
Interestingly, appraisal notes that the property is in "Average" condition.
I can't imagine that it could go from fully renovated to average in 5 years.
(( It's not that kind of neighborhood, nor that type of tenant ))
I would ordinarily make the standard "extraordinary assumption" that the report is correct as to the property condition.
But...... ????
.
 

Otis Key

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May 15, 2004
Professional Status
Certified Residential Appraiser
State
New Mexico
And the question is?????

You left it open Riick.
 

Fred

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Jan 15, 2002
Professional Status
Retired Appraiser
State
Virgin Islands
I suppose the answer is going to include the phrase, "the form," but I'll ask anyway. Why would you assume the conditions ratings are "correct?" What would make that necessary? It seems more logical to disclose that since interior inspection were outside the scope of review, that you have no basis to form an opinion about the reasonableness of the appraisal's condition rating.
 

timd354

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Professional Status
Certified Residential Appraiser
State
Maryland
I'm doing a field review on a ReFi where I happen to be personally familiar with the property,
though I haven't been in it since about 1995. Nice 2-unit Row.
If you have not been in the property in 13 years, you are not really familiar with the interior condition of the property.

Property was sold in 2000, and again in 2003.
Condition in 2003 noted in MLS as "Fully Renovated" - with some detail on upgrades made.
The appraisal is worse than trash; calling it misleading is a gross understatement, but that's neither here nor there.
I have no doubt that the appraisal is worse than trash....this would hardly be unusual in the present climate.
Interestingly, appraisal notes that the property is in "Average" condition.
I can't imagine that it could go from fully renovated to average in 5 years.
(( It's not that kind of neighborhood, nor that type of tenant ))
You seem to be allowing your personal bias affect your judgment here. I have seen properties in the best neighborhoods which have gotten severly trashed by the tenants. It only takes one bad tenant to trash a property, or may be that only happens in "other" neighborhoods......be very careful of making assumptions based on your perception of certain types of neighborhoods and certain groups of people...that is a mine field which you really don't want to enter, lest you may be accused of discrimination.
I would ordinarily make the standard "extraordinary assumption" that the report is correct as to the property condition.
But...... ????
.
But...... what? Without any actual knowlege regarding the condition of the interior of the property how can you credibly state that the appraisal that you are reviewing is incorrect regarding the condition of the property? If you do so with no reasonable basis, that would be a clear violation of USPAP.

If you suspect that the appraisal is incorrect regarding this issue, maybe you can interview the present tenants or see if you can gain access to the interior of the property.

Perform the review based upon the "facts" as you know them and follow USPAP and the applicable supplemental standards....stay away from allowing any personal biases enter into the review. This will make your work product much more professional and credible and more likely to be USPAP compliant.
 

timd354

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Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
I suppose the answer is going to include the phrase, "the form," but I'll ask anyway. Why would you assume the conditions ratings are "correct?" What would make that necessary? It seems more logical to disclose that since interior inspection were outside the scope of review, that you have no basis to form an opinion about the reasonableness of the appraisal's condition rating.

Mr. Santora,

As often is the case, your answer is reasonable and correct.
 
Last edited:

athome77

Member
Joined
Apr 1, 2008
Professional Status
Certified Residential Appraiser
State
Illinois
I must have missed something here. Appraisal being reviewed indicates the property is in "average" condition. Your familiarity with the property, 13 years ago, has no bearing on the assignment. Is there a basis, within the scope of the assignnment, to consider the condition rating of "average" as accurate or inaccurate? As the owner or rental property, I can assure you that condition ratings can drop in a matter of months, not years. Extraordinary assumptions are fine, but not in lieu of common sense.
 

Rufus

Junior Member
Joined
Apr 3, 2008
Professional Status
Licensed Appraiser
State
Indiana
<snip> ... 2-unit Row. ... <snip>

I assume you are using form 2000A. If so, then read item 4 on page 4.

4. The review appraiser must assume that the condition of the property reported in the appraisal report is accurate, unless there is evidence to the contrary.

This begs the question; What evidence would you cite as being contrary?
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
When you disagree with value and have to provide new sales and come up with a different value is when the extraordinary assumption about condition has to be made, just like a driveby but where you have a report to work from, which is supposed to make us feel a bit more confident.

Under the improvement section, asking whether the interior is reported correctly, I would state "Per the MLS the subject was fully renovated in 2003 but the appraisal does not provide comment on updating". (If MLS lists some of them you can too.)

Then under extraordinary assumption on page two I'd once again reiterate there is a higher probability that the subject condition is incorrectly reported in the appraisal because of updating noted in the MLS but that you are making the extraordinary assumption on the grid that the subject is correctly reported as in "average" condition subject to an inspection by the review appraiser.
 

CURT VAN HOOSER

Senior Member
Joined
Nov 3, 2003
Professional Status
Licensed Appraiser
State
California
What exactly do YOU consider average and why is it not possible? Have you pulled previous listings of the comparables as well to see if they have been renovated? Is the subject above average for it's neighborhood? It sounds like an extraordinary assumption whether you assume the appraisers condition rating or your own.
 
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Riick

Thread Starter
Elite Member
Joined
Aug 14, 2007
Professional Status
Certified Residential Appraiser
State
Delaware
Thank you gentlemen.
I'm going to go with the "standard" extraordinary assumption
--- That the appraisal was accurate in assessing current condition.
 
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