T.E. Faravelli
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Yeah, I hear thee. If we are directed to find the answers in supplemental standards then it becomes a moot point.
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Hypothetical Condition
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CANative
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I don't know how to answer the question either. Maybe there is no single answer.
Maybe the answer is: If you have to wring your hands over whether to make the appraisal subject to or as is in regards to the use of an HC, perhaps the use of an HC was not appropriate to the appraisal problem.
Maybe the answer is: If you have to wring your hands over whether to make the appraisal subject to or as is in regards to the use of an HC, perhaps the use of an HC was not appropriate to the appraisal problem.
Well, we disagree about this Greg. I should never have posted that "house and 5" example anyway, because it really creates unnecessary contention. My position on it is simply that the actual site is greater than 5 acres, so an HC is necessary to describe the site being appraised. It is neither surveyed nor platted, and is not a separate assessor's parcel. So the client wants to know what it would be worth if it *were* severed from the principal tract. That's a HC, at least to me.
"If it was, it would be; if it were, it might be; but as it isn't, it ain't. That's logic." --Through the Looking Glass which is a good subtitle for this thread.
"If it was, it would be; if it were, it might be; but as it isn't, it ain't. That's logic." --Through the Looking Glass which is a good subtitle for this thread.
Carnivore
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Jim,
Where did you say you found that in USPAP?
I read SR1 to mean what it says.
(e) identify the characteristics of the property that are relevant to the type and definition of value and intended use of the appraisal,9 including:
(i)its location and physical, legal, and economic attributes;
(ii)the real property interest to be valued;
(iii)any personal property, trade fixtures, or intangible items that are not real property but are included in the appraisal;
(iv)any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, or other items of a similar nature; and
(v) whether the subject property is a fractional interest, physical segment, or partial holding;
It goes on to say:
An appraiser may use any combination of a property inspection and documents, such as a physical legal description, address, map reference, copy of a survey or map, property sketch, or photographs, to identify the relevant characteristics of the subject property. Identification of the real property interest appraised can be based on a review of copies or summaries of title descriptions or other documents that set forth any known encumbrances. The information used by an appraiser to identify the property characteristics must be from sources the appraiser reasonably believes are reliable.
An appraiser is not required to value the whole when the subject of the appraisal is a fractional interest, a physical segment, or a partial holding.
No where in there does it suggest we need and HC.
ftr, I have changed my position from a couple of months ago.
Where did you say you found that in USPAP?
I read SR1 to mean what it says.
(e) identify the characteristics of the property that are relevant to the type and definition of value and intended use of the appraisal,9 including:
(i)its location and physical, legal, and economic attributes;
(ii)the real property interest to be valued;
(iii)any personal property, trade fixtures, or intangible items that are not real property but are included in the appraisal;
(iv)any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, or other items of a similar nature; and
(v) whether the subject property is a fractional interest, physical segment, or partial holding;
It goes on to say:
An appraiser may use any combination of a property inspection and documents, such as a physical legal description, address, map reference, copy of a survey or map, property sketch, or photographs, to identify the relevant characteristics of the subject property. Identification of the real property interest appraised can be based on a review of copies or summaries of title descriptions or other documents that set forth any known encumbrances. The information used by an appraiser to identify the property characteristics must be from sources the appraiser reasonably believes are reliable.
An appraiser is not required to value the whole when the subject of the appraisal is a fractional interest, a physical segment, or a partial holding.
No where in there does it suggest we need and HC.
ftr, I have changed my position from a couple of months ago.
CANative
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Jim, I don't disagree with you. I'm not in a position to disagree. Even though I am a certified residential appraiser, I'm still a relative newbie. The purpose of my input was to bring on a detailed discussion from the super brains on the forum so I could learn more.
I'm still not sure why a HC is necessary if the subject that is under appraisal has been identified. "The subject of this appraisal is a portion of Parcel A, Section 2, T14N, R14W, MDBM. described by the clinet as follows: Commencing at the SW corner of the above above parcel thence 466.5 feet north, thence 466.6 feet east, thence 466.5 feet south, thence 466.5 feet to the Point of Beginning."
That tract of land exists. Maybe not legally, but the dirt is there.
I'm still not sure why a HC is necessary if the subject that is under appraisal has been identified. "The subject of this appraisal is a portion of Parcel A, Section 2, T14N, R14W, MDBM. described by the clinet as follows: Commencing at the SW corner of the above above parcel thence 466.5 feet north, thence 466.6 feet east, thence 466.5 feet south, thence 466.5 feet to the Point of Beginning."
That tract of land exists. Maybe not legally, but the dirt is there.
Denis,
I wonder if you can PDF that document. I think that would be an important reference for those assignments on which SMT-10 is relevant. I find it interesting that SMT-10 can indicate that it is an error not to report "as-is value," while the AF is issuing other communcation that indicates "as-is value" is a term that has no USPAP signiificance.
Miami had it all together. So much for that game. Good game from one perspective, but not from mine.
So Andrew & Greg,
I'm only talking about hypothectical conditions, because I, like the ASB, don't know which box is supposed to be checked. I used to think it was subject to, but I'm not so sure the subject to is for that any more because we have to use Fannie logic. But back to the hypo or not to hypo which really is a USPAP issue.
If I understand what you guys are saying, since the land is real estate and exists, even though it's legal discription is in question, its existence is not, so no hypothetical is necessary. The house on the other hand, even though it exists is not real estate but is personal property and a hypothetical is necessary? But if the house is real estate and remodeling or additions are to be made then we make a hypothetical condition because even though the house exists the changes don't.
How is that different from a subdivision of land that hasn't been legally described? That description does not exist even though the land from which it will be made does. The hypothetical refers to the legal description not the dirt. To me that seems to be the same thing as the house we may appraise from plans and a materials list. It doesn't exist when I did this work (except in the one case as dirt and in the other as materials and plans), but when it does then this is what it will be worth.
Isn't an imaginary (in that it is not actual) legal description as much a hypothetical as an imaginary house is? Neither one exists, but the material exists out of which either may be made. In the one case ouir law changes the components from personal to real, in the other the size and description changes.
So Andrew & Greg,
I'm only talking about hypothectical conditions, because I, like the ASB, don't know which box is supposed to be checked. I used to think it was subject to, but I'm not so sure the subject to is for that any more because we have to use Fannie logic. But back to the hypo or not to hypo which really is a USPAP issue.
If I understand what you guys are saying, since the land is real estate and exists, even though it's legal discription is in question, its existence is not, so no hypothetical is necessary. The house on the other hand, even though it exists is not real estate but is personal property and a hypothetical is necessary? But if the house is real estate and remodeling or additions are to be made then we make a hypothetical condition because even though the house exists the changes don't.
How is that different from a subdivision of land that hasn't been legally described? That description does not exist even though the land from which it will be made does. The hypothetical refers to the legal description not the dirt. To me that seems to be the same thing as the house we may appraise from plans and a materials list. It doesn't exist when I did this work (except in the one case as dirt and in the other as materials and plans), but when it does then this is what it will be worth.
Isn't an imaginary (in that it is not actual) legal description as much a hypothetical as an imaginary house is? Neither one exists, but the material exists out of which either may be made. In the one case ouir law changes the components from personal to real, in the other the size and description changes.
Couch Potato
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It is the legal attributes that necessitate the HC in the 5 acre situation. ANY situation where something contrary to fact is used as a basis for an opinion of value is a HC. Having physical existence is not the same as legal existence; you need both to not be using a HC.
Carnivore
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Greg,
What do you say to the paragraph below what you quoted?
An appraiser may use any combination of a property inspection and documents, such as a physical legal description, address, map reference, copy of a survey or map, property sketch, or photographs, to identify the relevant characteristics of the subject property. Identification of the real property interest appraised can be based on a review of copies or summaries of title descriptions or other documents that set forth any known encumbrances. The information used by an appraiser to identify the property characteristics must be from sources the appraiser reasonably believes are reliable.
An appraiser is not required to value the whole when the subject of the appraisal is a fractional interest, a physical segment, or a partial holding.
What do you say to the paragraph below what you quoted?
An appraiser may use any combination of a property inspection and documents, such as a physical legal description, address, map reference, copy of a survey or map, property sketch, or photographs, to identify the relevant characteristics of the subject property. Identification of the real property interest appraised can be based on a review of copies or summaries of title descriptions or other documents that set forth any known encumbrances. The information used by an appraiser to identify the property characteristics must be from sources the appraiser reasonably believes are reliable.
An appraiser is not required to value the whole when the subject of the appraisal is a fractional interest, a physical segment, or a partial holding.
David Bodtcher
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I see how it can go either way. Underneath whichever you choose to list it as ("as is" "subject to") there is a section called "condition of appraisal". You put the Hypothetical condition in this section whether it is "as is" or "subject to".
There seems to be nothing wrong with saying the appraised value is "subject to" the hypothetical 5 acres.
Then again, there seems to be nothing wrong with saying the appraised value is "as is" based upon the hypothetical 5 acres. Nothing needs to be changed in order for the subject value to be supported with its hypothetical condition. Lender says that's how they want it, so no need to be subject to lender approval.
There seems to be nothing wrong with saying the appraised value is "subject to" the hypothetical 5 acres.
Then again, there seems to be nothing wrong with saying the appraised value is "as is" based upon the hypothetical 5 acres. Nothing needs to be changed in order for the subject value to be supported with its hypothetical condition. Lender says that's how they want it, so no need to be subject to lender approval.
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