Question About Restricted Appraisal Report Under Std 2-2b

[DonRico]

Would this Standard apply to a "Pre-Listing Appraisal" on the current 1004 Form ??

Certainly identify the Intended User and Intended Use per USPAP guidelines. The reason I ask is -- this Form is recognized by Realtors and some civilians as the industry standard. Using a GPAR form here would probably only muddy the waters.

 

[Terrel L. Shields]

No. The URAR has comments regarding what it is used for. That's my take at least. Check the certification. "Restricted Appraisal" means nothing as per Standard 1, the development of the appraisal. And the URAR is long recognized as a "summary" (non-restricted) report as per Standard 2.

 

[Riick]

>> The URAR has comments regarding what it is used for.
Well, the OP could print the report to PDF, then edit the PDF file to remove the restrictions on it's use.
I'd also remove any references to FNMA.
?? Humm.... Is the 1004 subject to copyright restrictions ??

 

[hastalavista]

Would this Standard apply to a "Pre-Listing Appraisal" on the current 1004 Form ??

Certainly identify the Intended User and Intended Use per USPAP guidelines. The reason I ask is -- this Form is recognized by Realtors and some civilians as the industry standard. Using a GPAR form here would probably only muddy the waters.

I would never try to re-configure the 1004 and make it a restricted report for a non-mortgage appraisal assignment.
At most, I would consider using page 2 of the form (the sales grid) and completing the rest of the format myself.
My guess is your form software has some alternative to the 1004.
Depending on how much detail you want to put into your restricted report, the pre-printed form pages may have a lot of "blanks" in them. That never looks good.

 

[Peter LeQuire]

The standard suggestion is to use a proprietary form other than the URAR and develop a SOW, value definition, certifications and limiting conditions - including intended use and user - for a pre-listing appraisal. If the 1004 is used, it is not appropriate to use a current version: prior versions may work if - again - appropriate SOW & etc. are developed.

While Realtors and the general public may be used to the FHMA forms, they are only secondarily concerned with a lot of the report beyond the value indication developed and, perhaps, the similarity of the the comparables used in developing the appraisal. The GP forms in a la mode include a cover page/table of contents that allow the value indication to be shown without digging into the report: the AI form puts the value indication and the reconciliation of it on the first page of the report (and also has a TOC page that shows the value.) The AI form also presents each of the three approaches on a separate page, reducing the number of pages: the absence of those pages can be/is taken care of on the first/reconciliation page, which allows including the reason(s) an approach isn't included.

 

[Mr Rex]

Would this Standard apply to a "Pre-Listing Appraisal" on the current 1004 Form ??

Certainly identify the Intended User and Intended Use per USPAP guidelines. The reason I ask is -- this Form is recognized by Realtors and some civilians as the industry standard. Using a GPAR form here would probably only muddy the waters.

Most civilians have seen maybe 1 or 2 appraisals in their lifetime, and the forms have changed over the years. Most RE agents that have seen an appraisal only know to look at the bottom of one of the pages to find the value. I think you are over thinking that either party may be "familiar" with the 1004 form. Use of a GP or AI form would not muddy the water, but provide clarity if there was any level of familiarity with the 1004, that this was not an appraisal for lending purposes.

 

[Terrel L. Shields]

Is the 1004 subject to copyright restrictions ??

The "form" includes the certifications which say things contrary to the proposed use above

INTENDED USE: The intended use of this appraisal report is for the lender/client to evaluate the property that is the subject of this appraisal for a mortgage finance transaction.​

And

23. The borrower, another lender at the request of the borrower, the mortgagee or its successors and assigns, mortgage insurers, government sponsored enterprises, and other secondary market participants may rely on this appraisal report as part of any mortgage finance transaction that involves any one or more of these parties.
​

 

[DonRico]

Thanks for all the responses. Two more questions come to mind --

Would one of the GP forms in ala mode be the best choice for non-lender report ??

What, exactly, is a "Restricted" report based on 2-2b used for ??


Make that 3 questions.......
Why do we make this stuff so difficult for ourselves ???

 

[Terrel L. Shields]

Would one of the GP forms in ala mode be the best choice for non-lender report ??

Yes.

What, exactly, is a "Restricted" report based on 2-2b used for ??

The Gods only know. It was a sop to someone who wanted to continue to write letter appraisals and so they said, "Fine" but only to a knowledgeable, sole user-client and not for bank work.

Why do we make this stuff so difficult for ourselves ???

We? These things were made that way out of a desire to protect the public, protect us as appraisers, and were developed by committee. Yes, it is kinda dumb but it is the system we have.

 

[hastalavista]

Would one of the GP forms in ala mode be the best choice for non-lender report ??

It is a much better choice than the one designed by the GSEs and intended for mortgage lending.
I personally prefer the AI form report. Takes a little getting used to at first, but I find it is better-designed to communicate the results.

What, exactly, is a "Restricted" report based on 2-2b used for ??

It is just an alternative reporting option. Since the level of reporting can be very brief, the report is limited to a single client(s) who are also the only intended user(s). Further, the USPAP requires that the appraiser ensure that the restricting reporting format is consistent with the intended use.

Here's an example:
A private party owns a vacant parcel and is thinking about building a house on it. They want to know what the site is worth before the decide to take a loan or not. They understand that if they get a bank loan, the bank will order its own appraisal. They are intimately familiar with the property and provide the appraiser with some of the details.
If you review AO-11, you'll see a compare/contrast chart between the "Appraisal Report" requirements and the "Restricted Appraisal Report" requirements.
For this assignment, it would be appropriate to state most everything (rather than summarize). Except, in this case, the client wants to see the comparables the appraiser selected and wants to see that analysis. So every other part of the report is stated but the sales comparison approach would be similar in detail as done in an appraisal report.
Given the client's knowledge of the property and its intended use, this would be appropriate.
Since the report may not contain enough information for someone other than the client to understand and evaluate the results, it is "restricted" to the client, who is the only intended user (there can be more than one client).
Note that just because it is a "restricted report" doesn't mean one cannot expand beyond "stating" for any single reporting element. It just means that "stating" rather than "summarizing" is the minimum requirement.
Also, note that this is an SR-2 (reporting) standard. SR-1, in theory, doesn't change depending on the reporting standard. So, all the same level of research/due diligence is necessary; one would do the same level of analysis as one would do if the results were going to be reported using the Appraisal Report format.