limited scope?

[grant gryseels]

Can someone please tell me what a "limited scope" appraisal consists of? It's for a commercial property and a residential property. Other than a broker's opinion, I haven't done anything "limited scope". I asked the lender what they expected to be in a limited scope, and I know you'll find this hard to believe, but they didn't know. But they conveniently set the fee very low ball. How can you set the fee for something you don't even know what you're asking for?

 

[CANative]

Figure out the problem to be solved using the least amount of time and resources necessary to stay within the clients budget and still produce credible assignment results for the intended use.

They can say "limited scope" all day long but it's up to the appraiser to set the limits.

 

[H.B. Userman]

I assume they are asking for a restricted use report that addresses the primary approach to value, stating conclusions and leaving the rest in the work file. I have clients that request that. Yes, the fees are less in many cases, but so is the work.

 

[kristin0731]

Limited scope is an old term that people used to use when there was still the Departure Rule. I can't recall the entire rule off the top of my head, but it had to do with using all of the relevant approaches to value. Like if you were appraising a income property and only used the sales comparison approach at your clients request. This would evoke the departure rule and you would have a limited appraisal - This is very different than a restricted use appraisal.

Now....They have done away with the Departure Rule and thus there is no such thing as a limited scope appraisal. It is up to the appraiser to determine what approaches to value are necessary. If the client has requested that you only use one....you must state so in the scope of work and state if you feel it has an impact on the value. You should only do this if you think you can produce a credible result - if not you must do what you feel is necessary despite the fee or clients request to provide credible results.


Maybe you can give the client a USPAP update


hope this helps - good luck

 

[kristin0731]

FYI - they did away with the departure rule because of how confusing it was in the first place.

It all boils down to the Scope of Work...

 

[CBBoston]

Too many lenders believe Restricted Use means low fee. And while the actual writing may be less, the work required to come to a conclusion of value is pretty much the same as a complete report. Therefore while the fee may be lower, you're doing the same work for far less money.

 

[Lee Lansford]

I assume they are asking for a restricted use report that addresses the primary approach to value, stating conclusions and leaving the rest in the work file. I have clients that request that. Yes, the fees are less in many cases, but so is the work.

Jsut so that others (many who "look", but do not post) are not misled, your words "...stating conclusions and leaving the rest in the work file" would appear, on the surface, to be something that is less that what Standard Rule 2-2 requires.

I'm trusting that you intended to describe your communication of assignment results to the client as something more than "stating conclusions" (i.e., consistent with Std. Rule 2-2, c)...yes?

 

[Terrel L. Shields]

they did away with the departure rule because of how confusing it was in the first place.

It all boils down to the Scope of Work

...which is equally as confusing as "departure" and "departure" from standards was about as confused as it got.

...you intended to describe your communication of assignment results to the client as something more than "stating conclusions"

the report WRITING is the least of my worries. I cannot for the life of me see how the fee can be substantially cut with a "Restricted" report over a "Summary" report save you simply guess an outcome and then assume that at some later date, if your hand is forced, to produce the evidence that you have implied is in the workfile. In other words, I'll wave my arm for now, then create the workfile later by backing into the results I report.

 

[kristin0731]

...which is equally as confusing as "departure" and "departure" from standards was about as confused as it got.

Really??? It’s up to the appraiser to determine scope of work. If an appraiser cannot figure out which approaches to value to use and what needs to be done to get there, a new profession or additional training may be in order.

The departure rule however, was quite confusing. If the appraiser cannot understand something how do they ever expect a client to understand it? Glad to see it go!

 

[H.B. Userman]

It's always boggled my mind why appraisers (in general) are always so scared to provide RU reports. It's a reporting option that USPAP allows. It's like having a coffee shop and deciding not to sell espresso becasue you think the small serving doesn't look as good as the grande size, but in reality once you eliminate the time involved with SUMMARIZING or DESCRIBING, it can actually be where you make a lot of money, similar to selling an espresso.