Obligation To Take Future Offsite Conditions Into Account

[Restrain]

We had a similar issue here. Doing refinance appraisals in a development that was centered around the golf course. However, the golf course was privately owned by the developer, and the developer decided to sell the land, going to more SFRs. So one home was going to lose the golf course view. A second home backed onto one of the lakes and we had to see if the lake was going to remain (it was-mandated greenspace retention pond).

We disclosed what was happening, potential impact on the property, etc. A failure to discuss would open us up to all sorts of liabilities. In the instance set forth by the OP, the question would be the knowledge of what was going to take place (public disclosure in the paper, MLS pre-sales, big sign on the property, etc) or was it in the planning stage and not publicly out there.

If you are in a valley and there is land where multi-story structures are allowable on land above you (already some existing, etc), or between you and the view area (lake, etc), it would seem that the buyer would be on notice that he may lose that view. A flip on that is where the properties in the area have view control (tree height, building height) that means that a property owner is guaranteed a certain level of minimum views. IMO, it all comes down to a knowledge of the market and the due diligence of the buyer in this case.

 

[Atlanta CG]

Mark K: Ten lashes with a wet noodle. The East Coast is reeling from your comment

 

[Amy Perkins]

First off, no residental appraisers are not compensated a living wage to get into details like future development. However, there are many things I learn when I verify sales. Also, as a former ROW agent, I would have checked. A low sale has a reason and you should call and ask. Secondly, I still don't know if the seller told the buyer or if the buyer's agent knew. For all you know, everyone knew except the appraiser. This is most likely the case. If it wasn't obvious that it would be developed; the appraiser is not at fault. I got outbid on two multiple family reviews by an appraiser two Counties away. At least 2 hours away, this is the problem. People won't get ethical, good appraisals until we get living wages. If you are one of the skippies going around undercutting every appraiser you deserve to get sued. A vacant lot might or might not be an indication and I don't know New Jersey. When they call me for the second review I am going to tell them; they should have come to me in the first place.

 

[Meandering]

The appraiser is not at fault anyway
because,

The buyer did not rely on the appraisal report, to make their buying decision, nor, to contract to purchase the property, after signing the seller's disclosure with the notification that the buyer had to verify any future issues, prior to entering in a legally binding contract to purchase.

The buying contract was already made, before the appraiser was retained by the lender, for the lender's purposes.

The buyer screwed up, now wants to blame the appraiser.

.

 

[Howard Klahr]

The appraiser is not at fault anyway
because,

The buyer did not rely on the appraisal report,

Fault by the appraiser has absolutely nothing to do with the buyer's obligations or reliance. Once again, fault is determined by what the appraiser did and didn't do or should have done. All reliance does is determine damages and to whom.

The buyer may not have had any right to reliance at all. However that does not alter fault. Notwithstanding, I am not assigning fault either in that there is insufficient information to assess fault on this thread.

 

[Meandering]

We agree.

I just get tired of the arm chair reviewers without any access to regulations, or knowledge of differing state SOP, making comments about what the appraiser should or should not have done. It's a witch hunt and the lemmings fall right in line.

 

[hastalavista]

I'm not aware of anyone in this thread indicating there should be some reliance-liability linking the appraiser to a non-intended user (and that wasn't the question in the original post).

I am aware of many appraisers (myself included) who have opined that an open space to the rear of the subject is a condition that should be (a) identified (at a minimum) and (b) prudently be investigated and commented on within the report.

Does anyone disagree with that?

 

[Dale Smalley]

How did they calculate a loss of value for the change of view? Did they pay extra for the view?

 

[Meandering]

I'm not aware of anyone in this thread indicating there should be some reliance-liability linking the appraiser to a non-intended user (and that wasn't the question in the original post).

I am aware of many appraisers (myself included) who have opined that an open space to the rear of the subject is a condition that should be (a) identified (at a minimum) and (b) prudently be investigated and commented on within the report.

Does anyone disagree with that?

Who said anything about an "open space to the rear of the subject"?

Are homes only built in front of mountains so the mountains can be seen out the back?

Are apartment complexes only built on vacant space in already overdeveloped areas?

.

 

[hastalavista]

Your focus is on the appraiser not being liable to the homeowner. Again, that isn't the question in the OP and no one so far has disagreed with you.

The question is about describing externalities that are relevant to the subject in an appraisal report (i.e., "should the report have identified such conditions"). You are correct that the intended use/assignment-type has not been described for this particular situation.

I stated that this is a good discussion because I believe many appraisers are not thinking about such potentials.
I described a process where, if done for each and every report, such conditions (assuming they are adjacent or across the street from the subject) would be identified (at a minimum) and I recommend that some investigation should be completed if warranted. I further advise that the report should identify the issue, and the report state whatever conclusion it makes. That way, the parties with whom the appraiser does have liability with are duly put on notice.

In my opinion, your strong argument (which I don't disagree with) that the appraiser should not have any liability to the homeowner is different from my (and others') point that externalities should be identified and analyzed.
I think it is fair to say that if there was development potential adjacent to the subject that should have been identified (i.e., a vacant parcel) and if the report identified and analyzed it, then everyone would agree the report did exactly what it should do.

And that is my point: so I'll say it again clearly:
A. The report has no liability to a non-intended user.
B. The report should identify and discussed adjacent externalities that could reasonably affect the value.

Does anyone disagree with that?