New assignment/New report?

[Analytical]

I am reviewing a narrative report (summary format). The original assignment was completed 3 months prior. After the report was completed a survey was done and the acreage was found to be larger. A value change was evidently needed and a new value was reported. In order to comply with USPAP will just a letter referring to the old report and asking for the letter to become an addendum to the original report suffice? After reading the USPAP and AO-3, I wondered how others would have handled this update?

 

[stefan olafson]

Technically it's a new report required.

My new mantra is 'when in doubt, new report'

It is a CYA move that sometimes is unnecessary in most instances.

If the legal description changed or the site size changed, aren't you dealing with a different property?

 

[Analytical]

Thanks for the answer. I'm trying to get a consensus on what other appraisers think is the right way to do this.

 

[Lost Cause]

You could write a letter informing your client what the impact of these changes in the property would be on your opinion of value. In the letter you can incorporate the earlier appraisal by reference. This would satisfy regulatory requirements.

Edited to add: Forget what I said. I made the comment under the mistaken impression that the original appraisal was yours. It would be true if the original report were yours. It would not be wise to try incorporating someone else's appraisal by reference in that manner.

 

[Analytical]

Thanks, what would need to be included in the letter?

 

[Michigan CG]

I think I would redo the report and discuss what happened in your scope of work section. My reports have a separate section to describing the process and this would be a good place for it. A simple letter does not make the whole report "right".

 

[Couch Potato]

Thanks, what would need to be included in the letter?

In the technical sense it is not a "letter," it is an "appraisal report." The content requirements are found in Standard 2 and would need to fit the brief scope of work you are using.

The assignment appears to me to be the commercial equivalent of wanting a new value on a 1004D. Not that it can't be done, but a modified version of the original report my be a safer, more practical way to go. If the increase in size of the land is enough to affect the value, it likely affects the entire analysis.

 

[Mr Rex]

Don't they have computers in Arkansas yet? My god man, charge and earn some money, do a new report (wink, hint, reuse your prior report as a template for the new analysis) and issue a report, not a letter. While it can be done with some USPAP fire hoop jumping, is it prudent business practice? I think not. The fee for the new analysis is your decision.

 

[Webbed Feet]

I am reviewing a narrative report (summary format). The original assignment was completed 3 months prior. After the report was completed a survey was done and the acreage was found to be larger. A value change was evidently needed and a new value was reported. In order to comply with USPAP will just a letter referring to the old report and asking for the letter to become an addendum to the original report suffice? After reading the USPAP and AO-3, I wondered how others would have handled this update?

Analytical,

I suspect we have a few very confused responders here. They seem to be telling you to charge for YOU doing a new appraisal report. If I read you right this is NOT the case.

Again, you are REVIEWING some persons appraisal, and three months after they did it the land was surveyed and it was found out the site was larger than the appraiser had previously reported. An error probably caused by inaccurate public records regarding the site size. The appraiser to correct this error in a factual element of the analysis created a "letter addendum," referenced the prior appraisal report and restated a value conclusion using that same old effective date originally used. Just analyzing, considering, and making a new conclusion due to the error in the factual data.... Do I have this all correctly?

You are asking if the letter addendum should have been done by the original appraiser as a solution to the factual data error? Correct?

Webbed.

 

[Terrel L. Shields]

After the report was completed a survey was done and the acreage was found to be larger. A value change was evidently needed and a new value was reported.

When I do those, normally I simply do a new report. In the case of say 45 acre vs 47.2 acres, its not substantial. I give a per acre value and therefore, the "new" report has the "new" value reflecting the same comps, only a different size, new date of report (assssssuming that it is not like a year later.) The "new" report will be the "new" value with a comment that this is to change the acreage to reflect a survey. That might be buried in the transmittal letter and/or reconciliation. In a summary, I am not going into great detail when the situation is obvious.
I just done one where the estimate is 84 acres and it is subject to a future survey. The per acre value will be the same because it is unlikely the acreage difference could be as much as 5%. I have some that have been done over maybe 3, 4 times to correct such errors or add subtract some item like one where the barn turned out to be on an adjacent parcel.

In review, the question would be if you have the original unchanged report was that info available the date of the appraisal (SOW needs to be same to compare apples and apples) If you are seeing the original report attached to a sheet stating the valuation changed due to a subsequent change in acreage, then it would have to be very poorly stated to be misleading and therefore I suspect it complies with the intent, if not the letter, of USPAP...nothing I would lose sleep over.
In a review I might simply say it could be worded better if that was the case.