Newly licensed appraiser - $1M limit question

[George Hatch]

The "transaction value" amount is both defined and set by the feds, and it technically only applies to FRTs. The AQBs repeat in their scope of practice summaries is just that - repeating what the feds have said.

It's the users - including the GSEs - which have also adopted these limitations that is having the greater impact in the appraisals of 1-4s.

 

[alebrewer]

FRT (Federally Related Transaction): "The term “federally related transaction” means any real estate-related financial transaction which— (A) a federal financial institutions regulatory agency or the Resolution Trust Corporation engages in, contracts for, or regulates; and (B) requires the services of an appraiser." Last I checked, neither the FHFA, nor FHA, fall under the auspices of the FFIRA (which includes: the FRB, NCUA, FDIC, OCC, and CFPB). At least as I understand it.

 

[glenn walker]

some million $ range appraisals aree easier than a 200k starter home. It really depends on the comps and data and is the subject typical/non conforming or not.

A Million Dollar home in Los Angeles or Orange County around here is usally a small home of no significance and not complex at all. 3 Bedroom-2 bath - 7,000 Sq.Ft. Lot 1,500 Sq.Ft. and 20 others just like.
.

 

[George Hatch]

FRT (Federally Related Transaction): "The term “federally related transaction” means any real estate-related financial transaction which— (A) a federal financial institutions regulatory agency or the Resolution Trust Corporation engages in, contracts for, or regulates; and (B) requires the services of an appraiser." Last I checked, neither the FHFA, nor FHA, fall under the auspices of the FFIRA (which includes: the FRB, NCUA, FDIC, OCC, and CFPB). At least as I understand it.

Right. But like I said, many of these users voluntarily adopted similar limitations 30 years ago and the momentum has basically carried them through to this day. Similar with some of the states - they have required an appraisal license and applied that scope of practice to all appraisals performed in the state regardless of what the appraisal is being used for.

These are discretionary decisions which, theoretically, could be revised at will. Similar to when lenders require the supervisor to personally inspect with the trainee even after the trainee has acquired the competency to inspect alone.

 

[BRCJR]

From the Interagency Appraisal and Evaluation Guidelines:

Transaction Value – As defined in the Agencies’ appraisal regulations:
• For loans or other extensions of credit, the amount of the loan or extension of credit;
• For sales, leases, purchases, and investments in or exchanges of real property, the market value of the real property interest involved; and
• For the pooling of loans or interests in real property for resale or purchase, the amount of the loan or market value of the real property calculated with respect to each such loan or interest in real property.
For purposes of this definition, the transaction value for loans that permit negative amortization should be the institution’s total committed amount, including any potential negative amortization.

 

[skelly9131]

I received a response from California's BREA first thing this morning, via phone. I must say, I have been very pleased with their responsiveness throughout my licensing journey. They basically reiterated what many of you have already said. The transaction value limitation only refers to federally related transactions. They also mentioned the competency factor, which I have already decided I have for this particular assignment. There was no mention of complexity, but this was a pretty standard "cookie cutter" assignment, so I'm also confident that there was nothing atypical about this one. So, as far as I can tell, I'm in the clear to sign this document independently. It's exciting and scary all at the same time as it will be my first signature. Thanks to all for your insights.

By the way, it's a pretty standard 1720 sf home valued at $2.3M. It's on the lower end of values for this particular area. This is our reality in the Bay Area.

 

[glenn walker]

I received a response from California's BREA first thing this morning, via phone. I must say, I have been very pleased with their responsiveness throughout my licensing journey. They basically reiterated what many of you have already said. The transaction value limitation only refers to federally related transactions. They also mentioned the competency factor, which I have already decided I have for this particular assignment. There was no mention of complexity, but this was a pretty standard "cookie cutter" assignment, so I'm also confident that there was nothing atypical about this one. So, as far as I can tell, I'm in the clear to sign this document independently. It's exciting and scary all at the same time as it will be my first signature. Thanks to all for your insights.

By the way, it's a pretty standard 1720 sf home valued at $2.3M. It's on the lower end of values for this particular area. This is our reality in the Bay Area.

Your fine and the assignment is not a FRT loan involved. Good Luck

 

[George Hatch]

I received a response from California's BREA first thing this morning, via phone. I must say, I have been very pleased with their responsiveness throughout my licensing journey. They basically reiterated what many of you have already said. The transaction value limitation only refers to federally related transactions. They also mentioned the competency factor, which I have already decided I have for this particular assignment. There was no mention of complexity, but this was a pretty standard "cookie cutter" assignment, so I'm also confident that there was nothing atypical about this one. So, as far as I can tell, I'm in the clear to sign this document independently. It's exciting and scary all at the same time as it will be my first signature. Thanks to all for your insights.

By the way, it's a pretty standard 1720 sf home valued at $2.3M. It's on the lower end of values for this particular area. This is our reality in the Bay Area.

You know that there are a couple of other considerations for an appraisal that's being used for tax purposes. Right? And that unlikely as it may be that they would scrutinize the report, you still don't want to run afoul of the IRS on your first assignment out of the gate.

Do yourself a favor and do some research on the requirements for these appraisals before you get started. It's mostly minor housekeeping stuff but you still want to know before you go. I wouldn't even use a 1004 for one of these and I especially wouldn't use the certs and limiting conditions pages.

 

[Socrates]

Thanks for the offer, but I already have a supervisor that I continue to work with. The question is more about whether or not I can sign this type of report on my own y

The transactional value is the loan amount.

 

[glenn walker]

I recently received my residential license in California. I know I have the following limitations:

"The Licensed Residential Appraiser may appraise non-complex 1-4 residential units having a transaction value less than $1,000,000 and complex 1-4 residential units having a transaction value less than $400,000."

However, can I independently appraise/sign a general purpose appraisal report that is for date of death tax purposes if the value exceeds $1M? It is unclear to me if this is considered a "transaction value". Any insight would be appreciated. Thank you.

$1,000,000 is $50.00 bucks more than $500,000 so just get it and be done