Interesting personal thinking from an insider...

[John SRA]

Terrel,

USPAP requires the appraisal report to be labeled as either Self Contained, Summary or Restricted Use. Departures must be disclosed as well. However, there is absolutely no requirement to use the terms "complete" or "limited".

This topic is specifically addressed in the USPAP updates this year.

Have a great day,

JC

 

[Carnivore]

Terrel,

USPAP requires the appraisal report to be labeled as either Self Contained, Summary or Restricted Use. Departures must be disclosed as well. However, there is absolutely no requirement to use the terms "complete" or "limited".

This topic is specifically addressed in the USPAP updates this year.

Have a great day,

JC

John,

I agree.

I also as a matter of calling attention to departure still use the LABEL "limited" to insure the reder absolutely knows that I have invoked departure. Call it over kill, but some would think its implied that a summary does not have any departures invoked. My authority comes from USPAP 2003 SR2-2, lines 753-756

Screwy but, we sometimes have to transition slowly while we continue to make a living.

 

[Ben Vukicevich SRA]

Andrew,

Good one.

And for the benefit of the very young appraisers here in more comtemporary terms he is "so gay in USPAP"

:lol: :lol:

Up north here, he'd be a "USPAP creeper." 8O 8O

Ben

 

[Fred]

Verne posted,
"Tawfik addressed Santora's with regard to depreciation nicely, I thought."

Verne, :? I cannot see where his very articulate post was an attempt to answer the yes/no question - Is the AI Dictionary definition,
"Depreciation: any difference between reproduction cost or replacement cost and market value as of the date of appraisal"
an open endorsement of backing-in to depreciation?

My post was not a comment or question about cost approach theory, only a question about the meaning of the words in the definition. Maybe someone who is more cost approach "happy" then me would know.

 

[maitca]

Terrell:

Please permit me to disagree respectfully with our fellow forumite, John, SRA. In his post of 3/5/03 he says,"...there is absolutely no requirement to use the terms ' "complete" ' or ' "limited" '..." relative to compliance with labeling a report.

Please consider this: when you and your client agree that the scope of your work results in an appraisal that is "...less than, or different from, the work that would otherwise be required by (USPAP's) specific requirements..." you have invoked departure (see lines 409-410). You and your client must agree to this departure prior to entering into your agreement to appraise the property. Should you invoke departure, your report must disclose that departure and label the appraisal "limited" or "limited scope".

As a result of this requirement, you are indeed required to indicate if the appraisal is "limited" (see Statement 7, lines 3514-3519 and 3554-3558).

Were you to do a complete appraisal, however, it is possible that you might not need to state that the report were "complete" since its completeness would speak for itself.

Good Luck!

TIM

 

[Mike Garrett RAA]

I still prefer to include the USPAP ID form which clearly states what type of report I have produced. It says "this appraisal comforms to one of the following definitions....Complete Appraisal or Limited Appraisal. Then it further states: Self Contained, Summary, or Restricted.

Am I to understand this is not necessary any more? I thought departure is still in effect.

 

[John SRA]

Maitca,

The passages cited require an appraiser to disclose permitted departures and to explain the extent of the appraisal process. They do NOT require an appraiser to use the terms "Complete" or "Limited".

The following text is quoted from material provided by the Appraisal Standards Board at a recent USPAP update for regulators:
___________________________
USPAP requires an appraiser to label the report type…

Standards Rule 2-2, for example, states:

“Each written real property appraisal report must be prepared under one of the following three options and prominently state which option is used…”

However, there is no requirement to identify the type of appraisal (Complete or Limited).
DEPARTURE MUST BE DISCLOSED!!
_________________________


Have a good day

JC

 

[Tim Hicks (Texas)]

JC, I don't believe there is anybody on the forum who is as well versed at USPAP as you. I personally want to thank you for contributing to this forum. If I ever have a doubt, I wait for your contribution to clarify the foggy issues that so many try to make foggier.


Thanks,

Tim Hicks

 

[Ross (CO)]

We all know how long it takes for the use of certain words and the definitions thereof to make their transitions throughout the industry. Just think again of how many "legs" that millipede called "Recertification of Value" has been able to sprout. I prefer to combine the two specific words of "Limited Scope" quite regularly as that common report type is requested and the nature of one's description of analysis performed is matched to the client's order for such. Kind of an old-school / new-school way of satisfying the reader of the report with perhaps a minimal amount of confusion. While the USPAP I.D. form has been a good add-on to provide these neeeded details for a report there is another page called the FIRREA / USPAP Addendum (FUA ?) which has a very comfortable format with plenty of space to write and introduces the categories of Purpose / Scope / Intended Use - User / History of Property - Prior Sales / Exposure Time - Marketing Time...and Additional Comments. While there may be no box to "X" for denoting perhaps a Summary Report, one can still easily mention it on this other page and remain compliant.

 

[Lee SW IL]

In my opinion if done correctly the cost approach is almost alway applicable, and should be weighed in the final reconciliation of value.

However, not all see it the same way. More and more lenders are wanting a 2055. The lenders/underwriters are not requiring the cost approach. I will not do a 2055, on a newer constructed home. Mos Lenders/underwriters cannot tell the difference between a good cost approach and one PFA. (pulled from air)

I know of an appraiser that does a cost approach on all the comparables. Not just the subject. You wanna talk about a complete report. That is the most complete report I have ever seen. ( I don't do the cost approach on the comparables). But, I understand the concept. The cost approach calculations should relate to the adjustments on the market comparison approach. If they don't you have functional depreciation.

EX. How many times have you seen an adjustment for basement on a 1600 sq ft ranch be compared to a 1600 sq ft ranch with a crawl and the adjustment is less than $5000 on a house 20 years old in good condition? If this is proved true in a paired sales anaylsis, then functional depreciation is required in the cost approach for the overimprovement.

M & S cost manual, average quality basement 1600 x 12.53 = $20,048-16% depreciation (Eff age 8yr - 50 Econ age basis) - $3208 = TOTAL DEPRECIATED VALUE of BASEMENT IS $16,840.

If the basement is not valued near its depreciated value it is an improvement, super-adequacy. Additional functional depreciation exists. CORRECT?

What say you?