FNMA guide lines

[Farm Gal]

Read...

: ... if the cost and income approaches to value are not applicable because the omission of these approaches for the particular type of appraisal assignment is not a departure from the Uniform Standards, the appraisal will be considered to be a complete appraisal (and the appraiser must so specify in the appraisal report).

Italics mine... given the govenment and quasi-government agency love of double negatives: I unscramble this to indicate that IF it IS applicable (and we are back to what would JD errr, my peers do?) I better do it too.... I don't have to give it to 'em, but I better have it available :roll: In reality I do it for my own purposes as a CMA (that ain't no competitive marketing analysis :wink: )

I just follow blindly............

take off those dark glasses, and turn on a light :idea:

Lee Ann

Ben

 

[jtrotta]

Just a few thoughts fer ya'll to ponder 8)

USPAP - 2002 Edition;

"Limited Appraisal" - the act or process of developing an opinion of value or an opinion of value developed under and resulting from invoking the DEPARTURE RULE.


"Complete Appraisal" - the act or process of developing an opinion of value or an opinion of value developed without invoking the DEPARTURE RULE.

Now we assume we all strive for the same end result; Value - correct :?:

USPAP - 2002 Edition;
VALUE-the monetary relationship between properties and those who Buy; Sell; or use those properties.
Comment: Value, expresses an economic concept. As such, it is never a fact but always an opinion of the worth of a property at a given time in accordance with a specific definition of value. In appraisal practice, value must always be qualified for example, market value, liquidation value or investment value.

WORKFILE: documentation necessary to support an appraiser's analysis, opinions, and conclusions.

Lee Ann - I'll keep my shades on honey and oh yeh the lights are always on in the snowglobe, just in case the winds pick up 8)

 

[Frederick R. Ruffell]

Thanks all for reinforcing what I already knew. It is just so hard to get it into the head of the client who does not know the difference between a limited and complete appraisal and/or narrative, summary, and restricted reports. If I have to use the cost approach (and on this one I do) it will go into the report (so as to not be misleading) and I want to get paid for a complete appraisal, regardless of the format.

 

[Ben Vukicevich SRA]

Ahh, Reverend J,,,

Some one who understands FNMA from inside the snow globe whilst the others with a clear view are muddled.

The want a limited but if it becomes a complete ( on an older home where the Cost Approach is not really applicable) by following their request, so be it and so mark it.


Ben

 

[bradellis]

OK folks,

You are all going to be surprised when you take the new USPAP (2003) national course.

What you will hear is that departure is essentially a minor item. First, you and your client are going to agree on the scope of work they need. That will include intended use, intended users, and standard of value (market value or other standard). Then you will deal with the effective date, and then the assignment conditions, and the relevant characteristcis of the subject property.

Only when you know the cost approach is required will you have to do a cost approach. Only under those circumstances would not including this approach be departure.

So, departure will occur only when the scope of work demands an approach that you do not complete, and only that tells you if a report is complete or limited.

I am not saying that the cost approach is irrelevant. I am a great believer in it and generally do one even if the client does not want it. I keep it in my file. And, unless the physical improvements are historical in nature, I do it on every home. I could care less if it is 110 years old. It still can be done and it is not hard- if you understand that depreciation (including effective age) is actually determined by the market and not by the inane assumptions you read in appraisal texts that say it is "subjective".

Have fun.

Brad Ellis, IFA,RAA

 

[jtrotta]

Bradman

it appears you've already taken uspoop 2003 - simply amazing how things change every year, isn't it. So what was - isn't :?:

we should just go back to the days of yore; eliminate our liability; eliminate 90% of the URAR - do a one page brief and due the fees at $175 - which is what it appears their aiming for. This way we could do 4- a day and make a living equal to a garage mechanic; plumber; carpenter; taxi driver; or gas pump attendant. We would still have to plan our own retirement program; pay for our own vacation time (and lose money-while away); pay our own medical & dental; and Oops, guess we still couldn't keep up with any of the other Professions after all. Ho hum

8)

 

[Ray Ohler]

should be an "enlightening" experience. Like jtrotta said, every year, year after year, they change the rules. No wonder there is so much "misinterpretation" going on. So, from what you are saying, the "Scope of Work" is now negotiable between the Client and Appraiser? I thought the "Scope of Work" was a decision reached by the appraiser to produce or develop credible opinions and conclusions. Only if the Cost Approach is required? Required by what or who? The Client I suppose. Sorry, its all beginning ...

 

[Farm Gal]

the cost approach.....(deleted text)....
still can be done and it is not hard- if you understand that depreciation (including effective age) is actually determined by the market and not by the inane assumptions you read in appraisal texts that say it is "subjective".

Thanks Brad, I really did need to clean the screen and coffee does put a certain shine on it!

Tht is the single best definition of the dodging of the interrelatedness of depreciation and resultant circular reasoning involved in textbook cost approach development I have seen yet!

I have been guilty of stating that the "effective age is subjective based on the apraiser's observations and knowlege of the market" but I may rephrase even that sentence to sound a tad more professional. The few the proud the REAL appraisers :roll:

 

[Ben Vukicevich SRA]

Finally, appraisers are realizing the truth. See, USPAP was designed to make us appear important. Now it's not working. We're supposed to tell clients/consumers what they need???? Wrong. USPAP is a failure. The client/consumer tells you what they want. That's the way it's supposed to be. That's what you tell your mechanic when he works on your car. Realize that we are a trade not a profession.

Don't think so hard. Just fill-out the form in front of you. The client designed it, spent millions doing so, and is happy with it. Let it rip. USPAP finally understands the capitalistic business system. Wow. I'm impressed.

J, sharpen those #2 pencils, we'll be filling them out right in the car like we used to. Comp photos, who took comp photos in the early 1970's-not on FNMAs.

Back to the 70's. Hooray!!!!! I still got my first LCD calculator-ready to go.
Trotta, you probably still have one of those Victor mechanical jobs like my father had-used to make all those funny number crunching sounds. Wish I still had one for my kids to listen to......


Ben

 

[bradellis]

LeeAnn and Ben,

Love it. Here's a real life example I use in my classes- often, anyway:

Chicago brick bungalow 85 years old. Replacement cost $90/SF. Sells for $140,000. Land sales indicate land at $60,000 (my data is DATED but the theory survives). 1000 SF.

So, I take away the lot at $60K and am left with the depreciated value of improvements= $80,000. Replacement cost new is $90K, meaing that there is a total of $10K in depreciation. For our example, it is all physical.

$10K divided by $90K=11.1% depreciation. Assuming a 75 year total economic life (yep- an asumption, but I'm as smart as Marshall & Swift- and you are, too) that means that the portion used up is 8.33 years, which is the effective age recognized by the market.

Yes, Mr. Underwriter, the effective age is REALLY 8-9 years.

Ben, searching for old calculators. In 1970 I was living in Australia and selling the first calculator- remember it? A Craig 4 function with the red LCD screen- 8 digits, rechargeable. Sold them to dealeers for $500!

Only a few years later, you could buy one that fit in your wallet that had more features, ran off solar power and cost a buck. How's that for the principle of change? Uh oh- dating myself!

Brad