How short can a report be and still be USPAP compliant?

[masmia]

Webbed,

Since when does a client have the right to an appraisal work file?

 

[PropertyEconomics]

Webbed,

Since when does a client have the right to an appraisal work file?

Ever since they have been able to file a complaint against you and have your state board request it. The work file MUST support the restricted report sufficiently to show that you have a SUMMARY of all the data and analysis you used to present your restricted conclusions.

 

[The Warrior Monk]

Depending on the specific clients needs I sometimes provide a restricted use appraisal report in letter format which basically consists of the letter of transmittal followed by the certification and statement of limiting conditions. Is this about as short as I can get while still being USPAP compliant? Thanks for your input.

The restricted use format requirements are included in 2-2(c):

http://commerce.appraisalfoundation.org/html/USPAP2008/USPAP_folder/standards/Standards_Rule_2_2.htm

 

[The Warrior Monk]

We are doing more and more restricted reports, usually for "non-traditional" valuation assignment for non-lending clients. Those are the people who don't want an appraisal, but want to know what the property is worth,

PL pretty much covered it...we work off the restricted use format in certain situations. The common one is clients interested in buying/selling homes. They're interested in the sales/listings/pending sales we used to come to the value conclusion, but little else.

 

[Michigan CG]

Masmia,

And tell me, what are you going to do the day one of those clients demands a 100% complete copy of every little thing in your work file?

Webbed.

If the client wants a summary of every single little thing in my work file he gets a summary report vs. the restricted report and a larger bill. Many appraisals are just the letter of transmittal and certification and limiting conditions.

 

[masmia]

Ever since they have been able to file a complaint against you and have your state board request it. The work file MUST support the restricted report sufficiently to show that you have a SUMMARY of all the data and analysis you used to present your restricted conclusions.

This is the case with every appraisal regardless of format. The comment by Webbed seems to indicate they have a right to the file just by asking. I am aware the workfile requirements and the reporting requirments. I guess I can just make the report as short as possible as long as possible as long as I fulfill the reporting requirments.

 

[Joker]

I've got it to about 7 pages.

However, just follow Std. 2 and cruise. You may be able to do it in 3.

 

[Webbed Feet]

This is the case with every appraisal regardless of format. The comment by Webbed seems to indicate they have a right to the file just by asking. I am aware the workfile requirements and the reporting requirments. I guess I can just make the report as short as possible as long as possible as long as I fulfill the reporting requirments.

Masmia,

And everyone else.........................

The file must be available for inspection by the client (or the clients representatives, such as those engaged to complete an appraisal review), state enforcement agencies, such third parties as may be authorized by due process of law, and a duly authorized professional peer review committee except when such disclosure to a committee would violate applicable law or regulation.

I bolded the word "must" for all of you. It will be a good excercise to allow everyone the privilege of finding this in your own USPAP manual. Now then, if I am not mistaken, only the "Restricted Use" reporting type carries with it a requirement that you hand the client your entire work file at their request, or the request of any representative of the client.

Stop and think all of you, of the costs involved with that. If the client, or their representative, tells you to put it where the sun doesn't shine if you want to charge a fee for having to duplicate an entire file at their demand, you are screwed. You must hand them at least a 100% true copy of your work file information. You have no choice or you are in violation of USPAP. Just how profitable did that nice, cheap, "Restricted Use" formatted appraisal report you gave them just become? At best you might be able to define "inspection" to mean at your office, and no copy is allowed. But you sure as hell better have that in the engagement contract as to what defines "inspection" regarding their access to your work file.

Webbed.

 

[masmia]

Webbed,

That is very interesting. The net result however is positive considereing the number of clients that need this type of report and the low probability that they will ever ask you for an entire copy of the workfile. Even if they do ask for it how difficult is it to photo copy the file and hand it over, that is assuming the workfile is maintained in a compliant fashion.

 

[Webbed Feet]

Masmia,

How about when they ask you for it two years later and you can't remember your thought processes you used to arrive at your opinions because you did not document them in writing to that degree? One unprepared possible trip to court, on just one, and you can cross all the profits you made on those "Restricted Use" reports right off your accounting for possibly several years back.

I don't view it as worth it. I have to document my development in writing, if just for myself, so I can review it years later in case of a problem. Not come back years later and find I can't understand why I did what I did. Given that, I might was well create a summary report for the client in the process. There is no cost savings on my end using the restricted use reporting option, only an illusion of it by saving the client some paper upon printing the report out.

Webbed.

P.S. What you really are doing is accepting less money for the exact same liability as any appraisal using any reporting type. Only fooling yourself into believing nothing will ever happen and failing to prepare yourself in case something does happen years later. All under the belief you are offering a better priced product that saves your client money and only shows them what they want to see and not what they are not interested in. I can do the exact same thing in a summary report and be prepared to defend myself later at the same time. I have to type up how I got to where I got, for myself, for reference years later anyway.