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My opinion on Limited Appraisals and Departure

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brunge

Thread Starter
Sophomore Member
Joined
Aug 24, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Wow, what a hot topic. I’ll take a stab at it too…..

I think some of the appraisers on this forum forget one of the main purposes for USPAP: Appraiser Accountability.

The State Courts could care less when the appraiser who is found to have been negligent in the value conclusions tells the Judge; the client didn’t need the cost approach.

As a licensed appraiser you MUST do what is appropriate for each and every assignment, regardless of the fact that the lender wants to shave the fee and receive a “restricted use report” such as a 2055 (suitable only for in-the-know readers) .

Invoking the Departure Provision is when the appraiser and the client communicate that one of the commonly used approached to value will not be preformed and that it will not be included in the work file. The appraiser can only use the departure provision if the appraiser is confidant that the elimination of that analysis will not result in a non-credible value opinion.

When appraising odd ball houses with limited sales comparables, the cost approach is often as credible, or perhaps, more credible than the sales comparison approach. In such a case the Departure provision would not be appropriate. You could still provide the 2055 report, however, you would not invoke the departure provision because you would need the cost approach in the work file to do a credible appraisal. (This would be a complete appraisal)

In theory we can offer the 2055 for a reduced fee, because, we technically spend less time writing the report that summarize the results: not necessarily because we spent less time developing our opinion of market value….. If we are confidant that we can depart from one of the approaches to value and provide a credible opinion we can save ourselves the time and not perform that approach to value. It must be disclosed.

To answer the original question… a 2055 is a Restricted use Appraisal Report. A Limited appraisal is when the departure provision has been invoked in the development of the opinion of value.

The work file MUST be sufficient to produce a Summary Appraisal Report unless the departure provision is evoked, regardless of the method or the form used for communicating the results. (See USPAP / 2002 Advisory opinion AO-11).

We use the departure provision because we as appraisers are confidant that we can do it and still provide a credible opinion of value, not because the client wants us to or is only willing to pay less.
 

rtubbs

Junior Member
Joined
Jan 15, 2002
Brian, I agree with most of your comments. However, the 2055 is a form that can be used to report either a limited appraisal or a complete appraisal. Nowhere in USPAP does it say that a 2055 results in a Restricted Use Appraisal Report.

About 75% my appraisal requests are being reported on the 2055. I make the determination if it will be a compete appraisal or a limited appraisal.
 

Bill_FL

Senior Member
Joined
Aug 23, 2002
Professional Status
Certified General Appraiser
State
Florida
Brian:

A few points to your comment.

To answer the original question… a 2055 is a Restricted use Appraisal Report.

Not so. A 2055 can be a summary report. In fact, I believe that Fannie as termed it as such. Personally, I agree with you. If you read what is required of a summary, I do not think that the form contains enough info. Infact, a URAR does not either. However, both have been found to be a summary format form.

The work file MUST be sufficient to produce a Summary Appraisal Report unless the departure provision is evoked, regardless of the method or the form used for communicating the results. (See USPAP / 2002 Advisory opinion AO-11).

The sticking point in this comment is "unless the depature provision is invoked. One may not invoke the Departure Rule on the contents of your work file in this instance. If you have invoked the Departure Rule, you have created a Limited Appraisal. If you chose the Restricted Use format, your file must still contain enough information to produce a Limted Summary appraisal report. The Departure Rule has nothing to do with the content of your work file as it relates to the requirement to have the data to produce a Summary Appraisal from a Restricted Use appraisal.
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
The 2055 is not a restricted report., it is a Summary Report. See the top of the form itself.

Self Contained Appraisal Report is very thick with lots of data in the report and a very small work file since everything is in the report.

Summary Appraisal Report is medium sized with some data in the report and a medium sized work file that contains the data not in the report.

Restricted Use Appraisal Report is very, very small with the minimum amount of data in the report and a very thick workfile that has all the data.

See the chart on page 149 of USPAP 2002.

A Complete Appraisal can be reported in any one of those three types. But the departure rule has not been applied.

A Limited Appraisal can be reported in any one of those three types, but the departure rule has been applied.

See 2002 USPAP Page 125, line 29-31
 

Head Surfer

Administrator
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Founder
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Joined
Jan 4, 2002
Professional Status
Retired Appraiser
State
Florida
Wow, what a hot topic. I’ll take a stab at it too…..

I think some of the appraisers on this forum forget one of the main purposes for USPAP: Appraiser Accountability.
.

Brian,

You posted virtually the same message under the topic
"2055 int/ext considered a limited appraisal?"

Please do not "cross post", that is post the same message under more than one topic or under more than one forum.
 
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