Phased assignment

[Caligirl]

When you provide a phased assignment, one is expecting the client to use it properly, per discussion and agreement with regard to the intended use, user, and SOW. As always, we are held responsible for providing the appropriate product for the client's intended use.

If the restricted use portion of the phased assignment is then used in congunction with lending, it seems inevitable that the question will sooner or later arise: why did the appraiser provide a RUR when the ultimate purpose of the appraisal was for lending purposes.

Opinions will vary.

 

[PL1957]

If the restricted use portion of the phased assignment is then used in congunction with lending, it seems inevitable that the question will sooner or later arise: why did the appraiser provide a RUR when the ultimate purpose of the appraisal was for lending purposes.

Opinions will vary.

"For lending purposes" is such a broad term that it becomes essentially meaningless. "Lending purposes" can mean anything from initial preliminary due diligence, to actually being used as a basis for lending decisions, to determining potential alternatives in a workout situation, to acting as a valuation basis in a foreclosure. All of these fall under the term "lending purposes". In some cases, a restricted report is appropriate - in others it is not. One size has never fit all and it certainly doesn't in today's environment.

 

[Caligirl]

'In today's environment'. That means a lot of things, too.

Years ago, working for direct lenders, I might have had a certain level of comfort with such an assignment.

Today, not so much.

Experiences will vary.

 

[JSmith43]

As always, we are held responsible for providing the appropriate product for the client's intended use.

I'd like to get a ruling on this from the USPAP weenies.

Are appraisers responsible for a client's future misuse of a report if the SOW is based upon the client's stated intentions and not their actual or future intentions?

Personally, no matter the development SOW, I think it is unrealistic to expect to make a report fool proof. There are trade offs in clarity, etc. Think document dump.

As to making the SOW and report bullet proof for future misuse, other than clear writing, numbered pages and watermarks, it just isn't going to happen.
If appraisers decide to put a hair trigger on this concept of "misleading" simply because a sophisticated user does something unpredictable or pretends to rainman what is presented in a report, it will come back to bite them in the behind. Better to draw the line and insist on a higher threshold before some report or practice is labeled as misleading.

 

[PropertyEconomics]

When you provide a phased assignment, one is expecting the client to use it properly, per discussion and agreement with regard to the intended use, user, and SOW. As always, we are held responsible for providing the appropriate product for the client's intended use.

If the restricted use portion of the phased assignment is then used in congunction with lending, it seems inevitable that the question will sooner or later arise: why did the appraiser provide a RUR when the ultimate purpose of the appraisal was for lending purposes.

Opinions will vary.

If the purpose of the report is to provide an opinion of market value for financial planning purposes or marketing purposes ... lending is never mentioned ... in fact my intended use would preclude the appraisal being appropriate for lending.
If it is used in conjunction with lending then the "intended user" of the report did not follow the "intended use" of the report. That, in my opinion, is not my problem nor any concern I have.

I have reported what Ive done, why Ive done it, and its in full compliance with USPAP. That is the standard I am held to .. not anticipating what my client may wrongly do with the appraisal report.


If the second phase of the assignment is to upgrade the report to summary requirements, there is no predetermined value, the value within the restricted report was mine to begin with. Upgrading the reporting type does not make the "assignment" predicated on a predetermined value .. the second "report" is an expansion of the first and a continuation of the original assignment.

 

[Lee Lansford]

...

If the restricted use portion of the phased assignment is then used in congunction with lending, it seems inevitable that the question will sooner or later arise: why did the appraiser provide a RUR when the ultimate purpose of the appraisal was for lending purposes.

Opinions will vary.

Yes, "opinions" will vary, but some opinions are uninformed.

What might be the "ultimate purpose" (I'm guessing that you meant to use the term "Intended Use" instead of "ultimate purpose") for an appraisal that the appraiser properly identifies for a different use?

 

[Lee Lansford]

...

If the second phase of the assignment is to upgrade the report to summary requirements, there is no predetermined value, the value within the restricted report was mine to begin with. Upgrading the reporting type does not make the "assignment" predicated on a predetermined value .. the second "report" is an expansion of the first and a continuation of the original assignment.

"And", importantly, the conclusion of the 2nd assignment may differ from the conclusion of the 1st assignment.

 

[Lee Lansford]

I'd like to get a ruling on this from the USPAP weenies.

Are appraisers responsible for a client's future misuse of a report if the SOW is based upon the client's stated intentions and not their actual or future intentions?

Personally, no matter the development SOW, I think it is unrealistic to expect to make a report fool proof. There are trade offs in clarity, etc. Think document dump.

As to making the SOW and report bullet proof for future misuse, other than clear writing, numbered pages and watermarks, it just isn't going to happen.
If appraisers decide to put a hair trigger on this concept of "misleading" simply because a sophisticated user does something unpredictable or pretends to rainman what is presented in a report, it will come back to bite them in the behind. Better to draw the line and insist on a higher threshold before some report or practice is labeled as misleading.

It's impossible to "fool proof" the use of an appraisal because there is no short supply of fools.

 

[PropertyEconomics]

"And", importantly, the conclusion of the 2nd assignment may differ from the conclusion of the 1st assignment.

Or .. it may not .. either situation does not make the second expanded reporting option predicated upon a predetermined value conclusion. This argument always come from those that wish to bring lending into the equation, which no one that does phased assignments would put as an intended use of a restricted report ... we all understand that the report is for a single identifed user, we explain that to our clients.

Im just always amazed at those that dont understand what USPAP says with regard to restricted use reports but rather how they wish to interject things that are not found within the document, nor found within the assignment.

 

[Caligirl]

This argument always come from those that wish to bring lending into the equation, which no one that does phased assignments would put as an intended use of a restricted report ... we all understand that the report is for a single identifed user, we explain that to our clients.

Perhaps I misunderstood the OP.

Lender wants restricted report to see if borrower is 'in the right ballpark' to refinance (does not want to pay full fee).