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Insurance Appraisal

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Guardian115

Thread Starter
Freshman Member
Joined
Sep 9, 2008
Professional Status
Certified Residential Appraiser
State
Florida
Has anyone ever done a residential appraisal for insurance purposes? I was wondering if there is a certain form they like to have. If not, would it be best to do a 1004 with the cost approach, or a 2055 ext. and add a land value? (trying to save the client money as well). Any thoughts or opinions would be appreciated.
 

VegasWayne

Senior Member
Joined
Nov 15, 2007
Professional Status
Licensed Appraiser
State
Nevada
Ask the client what form they require and if the cost approach is necessary.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
consult your software forms list - GENERAL PURPOSE summary report form or possibly a narrative format would be appropriate for NON-MORTGAGE lending intended use. IF you do utilize a fannie form be certain it is NOT the '05 versions.......revise certifications...........etc. The Reporting Format and whether the Cost Approach is applicable or necessary is a Scope of Work decision. Consult with your client and confirm exactly what Definition of Market Value and which Approaches to Value are required for the Intended Use.
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
...(trying to save the client money as well). Any thoughts or opinions would be appreciated.

Problem #1 is your stated concern.

Problem #2...the appraisal is for "insurance" use: who (what?) is an Intended User other than your client (the homeowner)? You best be certain that whatever you provide meets what is needed. Guessing at what is required will not do.
 

Howard Klahr

Senior Member
Joined
Oct 4, 2004
Professional Status
Certified General Appraiser
State
Florida
Land value is not part of Insurance Value. and before you start using form reports, remember USPAP requires an appropriate definition of value. Get one and understand it.
 

Zambendorf

Sophomore Member
Joined
Jul 7, 2008
Professional Status
IT Professional-Appraisal Related
State
Florida
Use the right tool

The carrier is looking for reconstruction cost, not new construction cost.
For +80% of the carriers, the agent/carrier will use MSB RCT (accucoverage.com if you don't have a license), not M&S Swiftestimator (same company, different software product), and in a few cases the software from E2Value or ISO Homevalue/Xactware.

They (homeowner/agent) assume an apparaiser is an objective and credible professional capable of collecting the data they need to do a detailed calculation with one of these products. It's usually on high-value homes that they are asked for a professional appraisal - check to be sure as there are special versions of the software calibrated for high-value homes.

If you use the "cost approach" from your market value toolkit, and generate an estimate on a new construction basis, you're increasing the likelihood the homeowner will not fully recover from a loss due to application of a co-insurance penalty or inadequate policy limit.
 

Joker

Elite Member
Joined
May 28, 2002
Professional Status
Certified General Appraiser
State
Ohio
"Intended use, intended user."

If you have to ask "which form", you may not be experienced enough to do the job. Work with someone who has the experience. I have done work for insurance companies and for attornies suing insurance companies. You REALLY need to consult with your client about what problems they need to have solved and you really need to forget about a form. It very likely requires a narrative or a specialty format.
 

JMFla

Freshman Member
Joined
Sep 18, 2007
Professional Status
Certified General Appraiser
State
Florida
Yes, several.
Replacement cost new. Done with Marshall & Swift swift estimator segregated cost approach. Give separate values to the building components, amenities, attachments and certain site improvements.
Narrative report. My reports have never been rejected or questioned by local insurance agents. Go talk to yours.
Like they said - You need more info and possibly experience.
 

Zambendorf

Sophomore Member
Joined
Jul 7, 2008
Professional Status
IT Professional-Appraisal Related
State
Florida
Regrettable most agents think Swiftestimator is equivalent to RCT since they both come from the same vendor. Those that do know the difference sometimes keep quiet so they can present the (usually) lower figure and get a lower premium.

The homeowner is unnecessarily put at risk when the wrong tool is used.
 
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