Hybrid Appraisal Extraordinary Assumptions

[hastalavista]

I received a copy of a sample hybrid report. Below is part of the Assumptions and Limiting Conditions (I didn't reproduce it all; just those sections I thought were significant to the hybrid process).

The scope of work is specific as to what the appraiser did and didn't do (including not personally inspecting the property; relying on a 3rd party, etc.).

The intended use is for "financing transaction with a federally related transaction." (don't know about that wording, but that's what it says).

There is an argument about how reliable the 3rd party inspector is and to what level of the appraiser has to evaluate that inspector in order to rely on the data. I don't make that argument; from my reading, this appraisal is customized for a lender who, presumably, has the wherewithal to understand the SOW and the limitations of the analysis, etc. The assumptions (general and extraordinary), IMO, limits the appraiser's liability to the credibility of the analysis and not the reliability of the inspection.

Interestingly enough, I'm one that believes an EA isn't necessary; everything can be adequately covered in the SOW & General Assumptions. But this particular party has included EAs, which isn't necessarily a bad thing.

The appraiser has not made an exterior or interior inspection of the subject property. The appraiser makes the extraordinary assumption that there are no adverse conditions associated with the improvements or the subject's site.
Unless otherwise stated in the report, the appraiser has no knowledge of any hidden or apparent conditions of the property or adverse environmental conditions present in or around the improvements, on the site or in the immediate vicinity that would make the property more or less valuable, and has assumed that there are no such conditions.
The appraiser makes no guarantees or warranties, express or implied, regarding the condition of the property. This appraiser makes the extraordinary assumption that the subject is adequately maintained, livable, and marketable and assumes the subject has no adverse conditions or functional/exterior obsolescence that would impact the results of this assignment, unless otherwise noted in the report.
The appraiser will not be responsible for any such conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because the appraiser is not an expert in the field of construction, environmental hazards, sink-holes, soil, testing, surveys, plats, engineering, etc., the appraisal report may not be considered an environmental assessment or home inspection.

Unless otherwise noted in the appraisal report, the highest and best use of the subject as currently improved is its current residential use. It is assumed a typical buyer would a) keep using the improvements the way they currently exist; b) make no major modifications to the way the subject currently exists and c) would not demolish the existing improvements to obtain a vacant site. Although some alterations and updating is considered typical by market participants, the highest and best use analysis found no uses (physically possible, legally permissible, and financially feasible) that would bring a significantly higher economic return to the owner(s) of the rights to the land.

The appraiser based the information, estimates, and opinions that were expressed in the appraisal report on information developed from sources that he or she considers and assumes reliable and believes them to be true and correct. The appraiser does not assume responsibility for the accuracy of such items or data that were furnished by other parties. No sales contract was provided.

The value opinion of this report is after the inspection report effective date. An extraordinary assumption has been employed that the subject remains in the same condition as depicted in the exterior Inspection report
provided. If it is discovered that the subject's condition is no longer as observed or described in the inspection report provided, or the report if found to be false or otherwise inaccurate, the appraisal assignment results may be affected.

The Scope of Work identified in this report is a critical and material factor which influences the final market value opinion. The Appraiser assumes no responsibility for any use or to any user not identified in the report by the appraiser at the time of the acceptance of the assignment. A party receiving a copy of this appraisal report from the client as a consequence to disclosure requirements does not become an intended user of this appraisal report per USPAP, unless they were specifically identified at the time of the assignment as an
additional intended user.

This appraiser is making the extraordinary assumption that the data reports provided and generated were accurate at the time produced. If data is found to be false or otherwise inaccurate, the resulting opinions and conclusions of this report could be affected.

The value opinion of this report is as of the date the property was inspected. An extraordinary assumption has been employed that the subject remains in the same condition as depicted in the exterior inspection report provided. If it is discovered that the subjects condition is no longer as observed and described in the inspection report provided, or the report if found to be false or otherwise inaccurate, the appraisal assignment results may be affected.

 

[hastalavista]

Oh, by the way: The inspection was a drive-by.

 

[Terrel L. Shields]

So its all good, just caveat it all away...?

 

[Meandering]

I received a copy of a sample hybrid report. Below is part of the Assumptions and Limiting Conditions (I didn't reproduce it all; just those sections I thought were significant to the hybrid process).

The scope of work is specific as to what the appraiser did and didn't do (including not personally inspecting the property; relying on a 3rd party, etc.).

The intended use is for "financing transaction with a federally related transaction." (don't know about that wording, but that's what it says).

There is an argument about how reliable the 3rd party inspector is and to what level of the appraiser has to evaluate that inspector in order to rely on the data. I don't make that argument; from my reading, this appraisal is customized for a lender who, presumably, has the wherewithal to understand the SOW and the limitations of the analysis, etc. The assumptions (general and extraordinary), IMO, limits the appraiser's liability to the credibility of the analysis and not the reliability of the inspection.

Interestingly enough, I'm one that believes an EA isn't necessary; everything can be adequately covered in the SOW & General Assumptions. But this particular party has included EAs, which isn't necessarily a bad thing.

Why don’t you just do these yourself, and the rest of us can just ignore the stupidity.

No one cal tell you, what your assumptions are, and they never even met you.

So you go ahead and certify to assumptions someone else made for you. We’re just as happy to watch from the no liability side line.

.

 

[George Hatch]

If you agree with the content of a disclosure then it doesn't matter who wrote them. In fact, I'd go so far as to suggest that most appraisers would be better off using boilerplate that was written by someone who knows what they're talking about than trying to wing it on their own. I mean IRL SFR appraisers don't commonly do that sort or writing anyway.

 

[Meandering]

If you agree with the content of a disclosure then it doesn't matter who wrote them. In fact, I'd go so far as to suggest that most appraisers would be better off using boilerplate that was written by someone who knows what they're talking about than trying to wing it on their own. I mean IRL SFR appraisers don't commonly do that sort or writing anyway.

Why don’t you just inspect for Denis and then both of you can have all the hybrid work in the country, because you don’t seem to be very successful in creating new lemmings and frankly, it’s just getting ridiculous.

.

 

[Michigan CG]

The author of the certs can do a great job and cover the appraiser's butt with that small print but it comes down to a few things:

1. Fee and opportunity cost. Completing six of these for $75 is the same as completing one 1004. The thought that these can be completed in an hour is a joke.
2. Exposure. While the certs and limiting conditions may supposedly cover the butt of the appraiser there is six times the liability in these reports. How often does a borrower who files a complaint read the certs and limiting conditions of the 1004? None would most likely be an accurate answer.
3. Principal. I worked too hard to sign my name with an opinion of value for what fees they are offering
4. The product is misleading to the public. Yes, the intended user is the lender, but the borrower gets a copy and what they are seeing, as an uninformed consumer, is a supposed opinion of value of their home with limited information. The borrower is not told that a Realtor's teenager took some outside photos of their house; they are told "here is an appraisal of your home".
5. AMCs have been lying about these reports since day one. How much time it will take, the volume the appraiser will get, fees, etc. Once again the AMCs look slimy as they always do.

 

[DWiley]

Why don’t you just inspect for Denis and then both of you can have all the hybrid work in the country, because you don’t seem to be very successful in creating new lemmings and frankly, it’s just getting ridiculous.

.

The lemmings are those who worship at the "Church of the 1004" and think that is the only acceptable form of appraisal practice At least some are honest enough to admit that their primary concern is fee - not public trust

As for fees - just set the fee at the proper level. Problem solved. The buyer of the service is never in charge of the fee; it is just too bad that so many appraisers are such poor business people they cannot grasp that.

Anyone can well decide not to do this work. But making that decision will come with business consequences, especially for those relying on Fannie work. Fannie is going this way, and those who rely on Fannie work may face tough choices. It could be very interesting to check back in 3 years and see how many who say they won't do this work are doing it. Of course, you won't really be able to tell from the posts here. I see people who are on my panel who get on here and swear they don't do any AMC work. It is easy to be an Internet hero

 

[hastalavista]

The person who sent me the example bid $175 for these assignments. The company asked for his bid.
He was added to the company's fee panel (after submitting an application). This just occurred, so he hasn't received an assignment yet.

I asked this appraiser to let me know if he gets any assignments at his fee quote. If he does (and he gives me permission to pass it on), I'll post it.

 

[hastalavista]

3. Principal. I worked too hard to sign my name with an opinion of value for what fees they are offering

On this, I agree 100% as far as I'm concerned.
What I'm not as comfortable doing is telling another appraiser what they have to charge for their services.
I have my fee schedule and my own standard; which, at this time, eliminates these types of assignments from my target market.
But I'm not going to tell another what they should do as a business decision. What I will tell another (like you) is what I'd do as a business decision.