• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

How to perform a legal comp search

Status
Not open for further replies.

Mark to market

Thread Starter
Junior Member
Joined
Nov 14, 2004
Professional Status
Certified Residential Appraiser
State
New Mexico
All of us market something. Some of us use experience, some quality, some use higher values and some use family connections to pull in business. Some chose to add value to their reports with graphs, some chose to add value by performing legal comp searches.

This post is to help people understand what is required for doing a legal comp search. Any comments on how to improve it will be welcome. Those of you who wish to deride the concept please save your posts for any of the many anti comp search threads on the forum. This thread is meant to be just about how to do comp searches legally with a Restricted Use Appraisal.

The following is an example of a Restricted Use Appraisal which may be modified a bit in substance and quite a bit in format to suit your particular needs and still comply with USPAP. Please note that the following statement is a requirement.

‘This Report is limited to Client use only. This report may not be fully understood without additional information in the appraiser’s work file.’

Also note that the following statement is highly recommended.

‘Value obtained for this report may not be similar to value obtained for a report with a different scope of work.’


One item I am have questions on is the definition of value. In the following report the type of value is stated and the definition is quoted. From my reading of USPAP all that is required is to state the type of value and cite the source, which to my understanding means that the definition does not need to be quoted which would save a paragraph (any thoughts?). Others have mentioned that marketability does not need to be included and some have mentioned that using the Fannie definition for value would be better. Please note that standard record keeping procedures apply.






Restricted Use Appraisal Report
This Report is limited to Client use only.
This report may not be fully understood without additional information in the appraiser’s work file.

Client: ____________________________________________________________________________
Intended Use: To assist client in making a lending decision. May not be used to apply for loan.

Subject property address and/or legal description: ___________________________________________________

Range of market value: Between $______________________________and $______________________________

Value obtained for this report may not be similar to value obtained for a report with a different scope of work.

Effective date of appraisal and report: _____________________________________________________________

Additional notes: _____________________________________________________________________________


Property interest appraised: Fee simple

Marketability: At this time property values appear _________, demand in ________ and marketing time approx. ______ months.

Type of value is market value.
Definition of market value (from FIRREA): The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1) buyer and seller are typically motivated; 2) both parties are well informed or well advised and acting in what they consider their own best interests; 3) a reasonable time is allowed for exposure in the open market: 4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; 5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions created by anyone associated with the sale.

Scope of work: This scope is defined by the reporting requirements of this appraisal report form, including definition of market value, expanded scope and certifications. The appraiser or appraisal office at a minimum; 1) Researched the Multiple Listing Service for a description of the subject. If no listing was found, information from the lender and/or reliable source was used. 2) Researched MLS for properties that were similar in size, quality, location and other attributes relevant to this assignment. 3) Looked at a map to verify subject location. 4) Entered analysis in report.
Please note: No physical inspection of the subject or comparable properties was performed and no verification of sales data or financial terms was performed.

State all extraordinary assumptions and hypothetical conditions: The extraordinary assumption is made that the subject and recent comparable sales are in similar and typical condition for the neighborhood and that no condition exists that would affect the opinion of market value. If this assumption is found to be false it could affect the market value. We reserve the right to amend the report over disparities. No hypothetical conditions were used.

Reconciliation: Using primarily qualitative methods a sales comparison approach to value was applied, which is considered for this analysis the only applicable approach to value. The cost and income approaches are considered irrelevant to this report and were not used.

Appraiser’s certification: I certify that to the best of my knowledge and belief: The statements of fact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions and conclusions. I have no (or the specified) present or prospective interest in the property that is the subject of this report and no (or the specified) personal interest with respect to the parties involved. I have no bias with respect to the property that is the subject of this report or the parties involved with this assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. My analyses opinions, and conclusions were developed, and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice. I have not made a personal inspection of the property that is the subject of this report. No one provided significant real property appraisal assistance to the person signing this certification unless otherwise stated in this report.

Signature: Name: Date of signature and report:

State and Certification#: Expiration date of certification:
 

AnonApprsr

Elite Member
Joined
Jan 21, 2008
Professional Status
Certified Residential Appraiser
State
Massachusetts
I wish no one every did comp checks, to be honest. And at the very least, not free ones.
 

JSmith43

Elite Member
Joined
May 5, 2003
Professional Status
Certified General Appraiser
State
California
Mark, I think a legitimate purpose of the assignment would be to decide most probable financing scenarios to consider by the LO. What you have there may be contrary to T11, since restricted use reports and general lending purposes may not go hand in hand. Not sure, just a suspicion.

The other side of this discussion will no doubt think the purpose is to find the most probably compliant appraiser:shrug:

There are legitimate and BS uses for such a product.

With that out of the way, let's talk more about legitimate uses. My reverse mortgage associates use zillow, etc to help form working assumptions needed to illustrate the plusses and minuses of a RM product for owners 62+.

$350-$450+/- is lots of money for most RM candidates. Appraisers might want to consider the fact that RM specialists really do want to be careful with the sparse assets of the typical 62+ applicant. The applicants themselves, would be greatly appreciative of a screening product better than a LO with no appraisal training running zillow. Lots of people consider RM's and then pass. Many would be well served by a minimal scope appraisal product.

I am proud of the appraisers who step up to meet the obvious needs, for they shall take the arrows of some of their flesh eating peers.

Mark, George Hatch and others have contributed mightily (and mostly without due appreciation) to this debate in the past. I think the search function would be productive.
 

Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
Restricted use appraisals are well defined in USPAP. Sometimes they are the most appropriate way to do an appraisal.

If we start with the premise that every comp check (regardless of how you define it) is an appraisal and every appraisal must comply with USPAP then the rest will follow.

In any appraisal assignment one would need to decide which type of appraisal and/or appraisal report is most credible for the intended use. If that happens to be a restricted use appraisal, OK.

Regarding your example, I think you may need to give some attention to your stated intended use.

If, in a particular case, the intended use is for a loan officer to use your opinion of value in making a decision of whether or not to continue to develop his loan package, then you should say that very clearly. And the loan officer would be the client.

Regardless, the client, intended user, and intended use must be carefully identified at the time of the assignment.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Why not just use the "desktop appraisal form"?
 

JSmith43

Elite Member
Joined
May 5, 2003
Professional Status
Certified General Appraiser
State
California
Why not just use the "desktop appraisal form"?

I think a template should be created in a word processing format so that it is easily customized since the purpose of the report will likely change from client to client. Flexibility is good:)
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
First, "ditto" Marcia's post.

For those what want to go to the source for the best information (re: Restricted Use Appraisal Report), see the USPAP, Std. Rule 2-2 (c).
 

Rich Heyn

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Michigan
Not to be picky, but there is no such thing as a restricted use appraisal, nor are there different types of appraisals. The intended use is the primary driver of the scope of work decision, which governs the development of the assignment. The intended user is the primary element for the appraiser to consider when making the decision as to the reporting option and, following that, determining the reporting format.

This thread seems to be dancing on the edge of "what form (format) do I appraise it on?" When the issue would be better approached as:
Development
Choice of reporting option (self-contained, summary, restricted use)
Choice of reporting format (form or format)
 

Kevin Mc

Elite Member
Joined
Jun 7, 2004
Professional Status
Certified Residential Appraiser
State
New York
Not to be picky, but there is no such thing as a restricted use appraisal, nor are there different types of appraisals. The intended use is the primary driver of the scope of work decision, which governs the development of the assignment.


Amen......
 

Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
Good point, Rich,

I was somewhat careless in my terminology.

Regardless of the reporting option, the development must also comply with the minimums of USPAP.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks