Plat Changed, is appraisal still valid?

[Zoe]

BJCR is a lender.

Subdivisions are not easy on the front end. Bunch of work. I will lay that out. Takes a ton of time.

Op said 80'ish

subdivision lots. Very complex.

My fee would be very high.

I might consider $4k and a long turn time. Since inflation is so high, it might be $6K

It is very complicated.

 

[bsilver]

"Plus, it appears the appraiser might not have known if the plat of the subdivision was legally permissible when they got the number of lots wrong because it seems the subdivision was not approved at the time of the appraisal."

Absolutely right. The appraisal was developed as if it had been subdivided into 86 lot. If the property was not yet legally subdivided as of the valuation date, and was appraised on the basis that it was, then the appraisal was developed under an assumption that was false. This is a hypothetical condition; if it was not reported in the appraisal in compliance with USPAP HC standards, this would be a violation. Note: This would not be an extraordinary assumption if the effective date of the appraisal was prior to the subdivision approval date. An EA which assumes a condition in the future, like an EA that assumes completion of construction as of a certain is appropriate if the effective date is as of or subsequent to the assumed completion date. It is uncertain that will be the case, as of the effective date.
In this example, it sounds like a violation.

The underwriters would be justified in pointing out the violation and request the error be rectified with a revised appraisal as of the date of subdivision with the corrections required made throughout. This is an example of why there are USPAP Standards. Had the HC been documented properly I suspect the lender would have considered that acceptance of the reported value could change. Technically, no the appraisal is not "good". Perhaps the value difference is not significant enough to set off too many alarm bells, but this sounds like an error on the appraiser. Unless they did include the assumption properly. Then I'm a numb skull for the criticism.

 

[sputnam]

BJCR is a lender.

Yes. I know. That is the point. The question isn't about the appraisal. It's about whether the appraisal can still be considered valid when changes to the property occurred after the appraisal was completed and the appraisal report delivered. The appraisal is as of its effective date which is clearly (or should be) reported. The appraiser developed and reported an opinion of value of the subject property. as described. and as of the effective date of the appraisal. That is certainly still valid. It will be valid in perpetuity. Would the value be different if there were an appraisal done after the property changes were made? Don't know. Should the appraiser have made 100% certain that he/she was working from the final plat of the property? Maybe. Can the existing appraisal still be used to support a lending transaction? Ask an expert in the lending industry.

 

[jay trotta]

An appraisal of vacant land for development of 86 SFR lots was ordered April of 2024. Closing was contingent on a city approved plat, which has just been finalized in November. The city plat has 88 lots compared to the now dated appraisal assuming 86 lots. Due to the change in number of lots and the passage of time, would this appraisal be valid? If market conditions could be supported showing the same or better would that allow this report to be used still?

Have to agree with BRCJR (post #9) the original report was based on 86, contingent upon city approval. Closing was contingent on a city approval and assume that was noted in the report, as of the effective date.
IMO- Getting a greater # of lots approved may not require a new report (lower risk), but IF the # of approved lots were less, then you might see a request for a new report, a cause for concern (IE: greater risk) and all the paperwork would ne to be updated.

 

[Zoe]

Have to agree with BRCJR (post #9) the original report was based on 86, contingent upon city approval. Closing was contingent on a city approval and assume that was noted in the report, as of the effective date.
IMO- Getting a greater # of lots approved may not require a new report (lower risk), but IF the # of approved lots were less, then you might see a request for a new report, a cause for concern (IE: greater risk) and all the paperwork would ne to be updated.

I agree. Even an updated report would still reference the same date and state any changes in opinion of value.

If you change effective date, it would take longer.

That is why it would have been easier to get client to wait until the plat was approved.

We have some really strict jurisdictions in Shelby County. More than one. Some are way stricter than others.

That is like you can forget a strip club or massage parlor in some jurisdictions. On a massage parlor, you would have a policeman and detective visiting every day to make sure all you were doing is massaging.

In some local jurisdictions, it would be very hard to get a business license to do business as a massage parlor.

 

[Red Flint]

So you would require the entire verbiage to be changed? Everywhere the 86 is mentioned must be changed to 88.

The entire DCFA will have to be redone. Taxes, commissions, holding costs, etc.

I suggest you speak with a regulator and see if they think using the Appraisal Report, without modification, would lead to an unsafe or unsound lending decision.

Matter of fact, I will be with them next week, I'll ask them.

It is not that hard to revise this type of report once the DCF is established in Excel. Sometimes the developer complains about the (conservative) absorption rate or future lot sale prices. It is best to have a up-to-date and correct Appraisal Report in case of litigation that may occur years down the road due to unexpected circumstances.

 

[TerryRohrer]

"Plus, it appears the appraiser might not have known if the plat of the subdivision was legally permissible when they got the number of lots wrong because it seems the subdivision was not approved at the time of the appraisal."

Absolutely right. The appraisal was developed as if it had been subdivided into 86 lot. If the property was not yet legally subdivided as of the valuation date, and was appraised on the basis that it was, then the appraisal was developed under an assumption that was false. This is a hypothetical condition; if it was not reported in the appraisal in compliance with USPAP HC standards, this would be a violation. Note: This would not be an extraordinary assumption if the effective date of the appraisal was prior to the subdivision approval date. An EA which assumes a condition in the future, like an EA that assumes completion of construction as of a certain is appropriate if the effective date is as of or subsequent to the assumed completion date. It is uncertain that will be the case, as of the effective date.
In this example, it sounds like a violation.

The underwriters would be justified in pointing out the violation and request the error be rectified with a revised appraisal as of the date of subdivision with the corrections required made throughout. This is an example of why there are USPAP Standards. Had the HC been documented properly I suspect the lender would have considered that acceptance of the reported value could change. Technically, no the appraisal is not "good". Perhaps the value difference is not significant enough to set off too many alarm bells, but this sounds like an error on the appraiser. Unless they did include the assumption properly. Then I'm a numb skull for the criticism.

The paragraph you are responding to was fabricated by its author. Nothing in the OP supports your or his as valid criticisms.

 

[Sadie]

You must not understand the question being asked.

Asking the appraisers forum if an appraisal is still valid 6 months after the effective date is not really the best way to get the answer. There is no expiration date on an appraisal. It is as of the effective date. Whether or not a lender can reliably use the appraisal is a different question and is better asked of lending professionals.

 

[sputnam]

Asking the appraisers forum if an appraisal is still valid 6 months after the effective date is not really the best way to get the answer. There is no expiration date on an appraisal. It is as of the effective date. Whether or not a lender can reliably use the appraisal is a different question and is better asked of lending professionals.

Exactly the point I was getting at.

 

[TerryRohrer]

Exactly the point I was getting at.

Exactly the point made directly and succintly in the first there response to the OP.