Neighborhood

[Don Clark]

8) Great answers, great advice. However...........beginning with the 1999 issue of USPAP the term "Neighborhood" was removed from the list of definitions. That does not mean it cannot be used, I am not suggesting, amplying, or otherwise stating any such thing(you see, I know how these ideas can be picked apart). What I am stating is that USPAP now wants us to, encourages us to, and implies that we should.........define the subjects "Market Area", as that is the term that TAF has replaced the term "Neighborhood" with. The subjects market area may be just it's neighborhood. It may also be a larger area, several comparble neighborhoods, or even a part of a neighborhood. So, to be USPAP compliant, I have used the following since 1999, and have never, ever, had anyone including the infamous underwriter challenge me: "The subjects greater market area, as defined by USPAP, and which includes the subjects immediate neighborhood, is defined as: Sample: Great Acres, the subjects immediate neighborhood,and the comparable areas, Bounded on the North by Lake Woebegone, East by Happy Acres, South by Big Bucks Mall, and West by Better Acres.

I state that I am using the subjects greater market are instead of the "neighborhood". Most underwriters know or should know that in many areas the subject competes in more than just one specific neighborhood. Also, the way some neighhborhoods are laid out, the boundaries are often questionable or not even known.

Just my thoughts on the matter>

Don

 

[Farm Gal]

Don:
I agree with your source and use, but for the little grid spaces I prefer a brief explanation of the subjects defined "immediate area", and then go to a defined 'larger marketing area a typical buyer would consider in their purchase decision'!

I don't like the overly large spread often found if you define the 'neighborhood' grids by the larger area.

 

[Mike Garrett RAA]

The URAR says ...."neighborhood" and that is good enough for me...at least until they change it to "marketing area".

 

[Don Clark]

8)
I erred slightly. However, to be USPAP Compliant I suggest that you make a statement similar to the following:

"The term neighborhood is hereby changed to mean market area as required by Standard Rule 1-3(a)". Beginning with the 1997 Edition of USPAP, that change being found under the heading "Changes to USPAP since the 1996 Annual Edition", 3rd paragraph from the top, under "Revisions to Standards Rule 1-3(a), to wit.............On June 10, 1996 the ASB adopted revisions to STANDARDS RULE 1-3(a). The revisions were adopted as exposed on April 8, 1986, and delete language in the Comment similar to that adopted by the ASB in the Conduct section of the ETHICS PROVISION in March 1996 and replace the term "neighborhood" with "market area".

Although the Ethics provision has now been changed to Ethics Rule, all else remains the same.

There are many things on the URAR that are not USPAP compliant. It is up to the appraiser to make those changes or modifications to be USPAP compliant. It is not Fannie Mae and Freddie Mac who developed the URAR and has since abandoned it, to be USPAP compliant. It is up to the appraiser. I would also note that the term "Estimate" has also been changed. That is still on the URAR as well. I suggest a statement similar to "The term estimate of value is hereby changed to mean opinion of value, as required by USPAP.

No denigration of anyones opinion intended but, lot's of new folks read this forum and should know what is USPAP compliant and what is not.

Don Clark

 

[Mike Garrett RAA]

[/quote]It is not Fannie Mae and Freddie Mac who developed the URAR and has since abandoned it, to be USPAP compliant. It is up to the appraiser.

Don, I think you mean ...."it was"...in any event I think you are tilting at windmills again. Is it the intent of USPAP to have us pick every word in the URAR apart and write volumes of addendums? My clients would be totally confused if I stated in my reports that which you just posted.

In my humble opinion, we are to be appraisers, not lawyers. Our job is to provide a valule opinion (estimate) that is supportable and not misleading. Please don't ask me to sound like Bill Clinton with "what is the meaning of the word IS".

 

[Don Clark]

:lol: You have picked the one man I dispise. :wink:

I never parse words. I have simply stated what USPAP requires, no more, no less. My experience has been however, that most regulatory boards(North carolina probably excepted) would not pursue such a matter. But............... since I also have a license in North carolina, I choose to do it my way. And, USPAP is the source of the information, not me.

Don

 

[lindasheets]

Is there a different definition or requirement of "neighborhood", "market area", "subdivision", etc. when doing V.A. appraisals? :question:

 

[Frederick R. Ruffell]

The original question was posed specific to the URAR. My neighborhood boundaries expand quite alot on the 1025 simply because the investor market has a different motivation. I personally feel "neighborhood boundaries" should be replaced with "market area" on the 1025.

 

[Lee M. Ragland]

Great read and advice to all!!

Just want to throw a humorous anecdote in along these lines. An old now passed on appraiser in this area who always swore that a transmittal letter with the value listed was the best way to keep anyone from reading the report used to prove his point by inserting periodically in to his neighborhood/market area description of small community

" the population of the city of XYZ is stable due to the fact that whenever some girl gets pregnant some boy leaves town".

Keep your powder dry.

 

[Dave Smith]

Frederick R. Ruffell said:

I personally feel "neighborhood boundaries" should be replaced with "market area" on the 1025.

In the Fannie Mae Guidelines, Section 406.02 – Selection of Comparable Sales it says:

"We require an appraiser to research, analyze, and consider influences that may affect value based on market evidence (such as closed sales, contract sales, and properties for sale in the market area ; market studies; etc.)."

And:

"For properties in new subdivisions or for units in new (or recently converted) condominium or PUD projects, the appraiser must compare the subject property to other properties in its general market area as well as to properties within the subject subdivision or project."

Note the use of "market area" in both excerpts. I use the term "market area" throughout all my appraisals and have had no complaints from anyone, even UWs. I seldom refer to a neighborhood anymore.

My $.02 worth.