Reasonable Exposure Time

[Meandering]

I just think it's dumb to mischaracterize either the nature of the question and/or the nature of the answer.

Totally agree with you,
however, it's still a valid question in the real world,
"If I want to sell this place within X days, what could I expect for a price?"
A valid question that becomes invalid in the face of accounting procedures that say the former owner/or the lender who is now the holder of the asset was not discounting the price in favor of taking a write off - or pay off from the Treasury, or, in favor of going after the former owner for the difference. Maybe someone could get the AF to address this in USPAP so that appraiser are not left to mischaracterize answers to valid questions.

.

 

[George Hatch]

Fannie already ignores ASB input on stuff like this; why would we expect them be smarter about it now?

I think a clarification paragraph that points out the disconnects between the definition of MV and the other assignment elements this user is requiring, and pointing out the fact that the result may be more similar to an expression of the concept DV or LV would be in order. At the least it would more accurately convey what the users are really asking for and how the appraiser is acting in good faith WRT that request, as opposed to simply saying nothing about it under the theory that the 800# gorilla is always right by virtue of being the 800# gorilla.

 

[Joyce Potts]

its perfectly fine for a client to undue a reasonable client assignment condition for market and/or exposure time. ERC and Fannie REO's do it all the time.

 

[Meandering]

ERC and Fannie are not held to USPAP and its definitions, only appraisers are. It's the foundation that has let appraisers down by not defining verbiage that allows for this real world situation. Everyone in the world realizes that if you want to sell something faster, the heightened desire to get rid of it will result in a lower price, hence is the driver of the value, and that the value opinion is made to fit the need of the client, to expediently dispose of the property. The Foundation needs to address verbiage for these scenarios that favor the cause of the client, instead of pretending they don't exist.

 

[bnmappraisal]

123456
Great Thread!

 

[Mr Rex]

Anytime you use the REO form you should probably have 2 comments regarding exposure. Of course only one is required if the client imposed limitation on exposure falls within the "typical" exposure. I would then point this fact out in the exposure comments.

 

[George Hatch]

The definition of MV has zero to do with USPAP. USPAP doesn't require any specific definition of value for any assignment nor does it provide a definition of MV.

We disclose the definition we're using and then we produce a value opinion that meets the assumptions therein. It's not that complicated. Say what you do and do what you say. Don't call a horse a cow.

The reference to MV in SR1-2.c is not a definition of value. All that reference does is remind appraisers that they need to identify and include consideration of the assumptions in that definition in their valuation.

The reference to developing an opinion about exposure time is conditional - it only applies when the definition in question includes that assumption. Not all definitions of MV are the same or include all the same assumptions.

 

[Meandering]

The definition of MV has zero to do with USPAP. USPAP doesn't require any specific definition of value for any assignment nor does it provide a definition of MV..

Right! The definition of MV is provided by Fannie and is pre-printed on the 1004. The REO addenda is the addenda to the 1004, it is not a stand alone document.

We disclose the definition we're using and then we produce a value opinion that meets the assumptions therein. It's not that complicated. Say what you do and do what you say. Don't call a horse a cow.

The reference to MV in SR1-2.c is not a definition of value. All that reference does is remind appraisers that they need to identify and include consideration of the assumptions in that definition in their valuation. .

Again, we are speaking of the pre-printed forms and the definitions of Exposure Time and Marketing Time in USPAP

The reference to developing an opinion about exposure time is conditional - it only applies when the definition in question includes that assumption. Not all definitions of MV are the same or include all the same assumptions.

On the REO addenda, it's NOT AN ASSUMPTION it's a fill in the blank client dictated time frame, of which, impacts the opinion of value, to which, USPAP does not address as being available to us, in that, under USPAP:

the time frame is our opinion, not dictated by the client
The opinion of the time frame is based on the value opined,
and we can not produce a value in favor of a client's direction.

With the REO addenda,
The time frame is dictated by the client, - We have no term for a client dictated time fame.
The value is opined based on the allowed time frame, - we have no term for a value developed or discounted based on a time frame, we did have disposition value by the AI changed the definition.
We are producing a value that favors the client's direction to sell off faster than market typical, when market typical days on market exceed the client's desired time frame. We have no USPAP "pass" for developing a value that favors the direction of the client.

AND


An appraiser must not accept an assignment, or have a compensation arrangement for an 274

assignment, that is contingent on any of the following: 275

1. the reporting of a predetermined result (e.g., opinion of value); 276

2. a direction in assignment results that favors the cause of the client; 277

A value to sell faster than market typical is a direction that favors the client.

.

.

 

[Pittsburgh Pete]

AND


An appraiser must not accept an assignment, or have a compensation arrangement for an 274

assignment, that is contingent on any of the following: 275

1. the reporting of a predetermined result (e.g., opinion of value); 276

2. a direction in assignment results that favors the cause of the client; 277

A value to sell faster than market typical is a direction that favors the client.

.

.

Say what?

 

[Meandering]

Say what?

USPAP
ETHICS RULE
MANAGEMENT
PAGE U-8.