This is a Rebuttal Letter for the Desk Review completed on 08/02/02 review appraiser is unknown.
Item 9: Functional Depreciation checked unacceptable for the cost approach. The review appraiser states the report does not recognize functional depreciation due to current condition. However, as stated in the improvement comments paragraph five, “The estimated cost to cure will be reflected in the cost approach is included in the physical depreciation and in the sales comparison market grid under condition of improvements.” This was included in the physical deprecation section of the cost approach, because, these items reflect the physical depreciation of the subject’s overall condition. The original adjustment for physical deprecation was made at $35,438 and an additional physical depreciation of $2,000 was made for the Recreation Room. This is not a functional depreciation but physical depreciations included as such in the cost approach.
Item 8: Condition Adjustments checked unacceptable for the sale comparison grid. The review appraiser states, “Report adjusts -$2,000 for subject condition, Appraiser is increasing this adjustment to -$10,000 due to anticipated market reaction regarding subject needed repairs and the uncertainty of undiscovered repairs. The -$2,000 will be recognized as what the appraiser has estimated the cost of repairs. Reviewer recalculates value range to be $168,500 to $169,000 and subject value being lowered to $169,000.”
All repairs were estimated based upon Marshall and Swift Home Repair and Remodel Cost Guide and local contractors’ estimates. The cost of the dry rot damage to the eves is based upon an approximately 2 ½ foot width by 6 foot length soffit (eve) 15 feet linear. Marshall and Swift estimates are $5.00 per linear foot times a local multiplier for Roofing 1.09 equals $5.45. Therefore, costs estimate of 15 feet linear times $5.45 equals $81.75 total cost to repair as estimated by Marshall and Swift. Based upon Marshall and Swift Home Repair and Remodel Cost Guide the estimated cost of repair is $81.75
The Recreation room is 24 feet by 18 feet which, equals 432 square feet or 48 yards. There are approximately four holes total varying from less than 6 inches diameter to approximately 2 feet by 3 feet or 6 square feet. The estimated cost to cure as provided by Marshall and Swift is Repair of existing gypsum extra large room for (ceiling) $215 with a local multiplier for (ceilings) 1.12 equals $236.50. The estimate as provided by Marshall and Swift for repainting extra large room (ceiling) $180 with a local multiplier for (ceilings) 1.12 equals $201.60. The estimated cost to cure as provided by Marshall and Swift is Repair of existing gypsum and wainscoting extra large room (walls) $295 with a local multiplier for (walls) 1.12 equals $330.40. The estimated cost to cure as provided by Marshall and Swift is repainting extra large room (walls) $350 with a local multiplier of (walls) 1.12 equals $392.00. The cost to install average quality carpet and pad based upon Marshall and Swift is price per yard is $18.85 the room yardage is 48 yards $904.80 with a local multiplier of 1.05 equals $950.04. Based upon Marshall and Swift Home Repair and Remodel Cost Guide the total is $2,192.29
Local contractors were consulted for costs estimates based upon the size of the Recreation Room and dry rot damage. The cost estimates for the dry rot damage and drywall damage as provided by “Mr. Handyman” Contractor #ALLPRBM997KC at 866-533-1028 the estimated cost to repair said dry rot damage was $100-$200 dollars. The estimated cost to repair and retexture the drywall/wainscoting was $50-$200 dollars. The cost to install new carpet and pad as estimated for a 48 yard room provided by “Carpet Liquidators” for average quality carpet and pad was between $12-$15 dollars per yard or $576 to $720. The cost to repaint a 24 linear foot by 18 linear feet with approximately 8 foot high ceiling for a total of 1,104 square feet as provided by “Superior Restoration and Services” License #SUPERRO33MA at 253-472-0795 was $200-$300. These total cost estimates as provided by licensed and bonded companies in the subject’s market area ranged from $926 to $1,420.
This provided an estimated repair range per local contractors and Marshall and Swift Home Repair and Remodel Cost Guide is $926 to $2,192.29. The local contractors’ estimates were given most weight and estimated high and rounded to the nearest $500, in the appraisers final opinion of the estimates with an overall estimation rounded to $1,500.
The appraiser took into consideration that there could be a market reaction to the repairs necessary for finishing said items. Therefore, a search of the market was made for the subject’s area of houses that had sold in the past twelve months that required repairs. The indications were that the incentive of sale would be from 10% to 30% for a marketing incentive, thus creating a further adjustment required from $150-$450.
The overall adjustment for the condition ranged from $1,650 to $1,950. This adjustment was then analyzed and reconciled at $2,000 (or to the nearest $500). The appraiser did include a market opinion based upon the reaction of the market area to repairs required, analyzed and summarized in the original appraisal report. Per, USPAP Standards Rule 1-4 (a) and summarized based upon USPAP Standards Rule 2-2 (b) (ix).
Discrepancies in the desk review report completed by the review appraiser are summarized below.
The “review appraiser ”:
CERTIFICATION AND STATEMENT OF LIMITING CONDITIONS
• CONTINGENT AND LIMITING CONDITOINS: 5. Disclosure of the contents of the report is governed by the Uniform Standards of Professional Appraisal Practice and the bylaws and Regulations of the professional appraisal organizations with which the appraiser is affiliated.
According form utilized by the review appraiser, the certifications and limiting conditions number 5 states that the review appraiser has followed USPAP Standards Rule 3 in completing this review report. However, the review appraiser appears to have violated USPAP Standards Rule 3-1 (This Standards Rule contains binding requirements from which departure is not permitted.) This is based upon the following analysis of USPAP Standards Rule 1, 2 and 3.
© identify the scope of work to be performed;
• When the purpose of the assignment includes a requirement for the reviewer to develop his or her own opinion of value, the following apply:
the reviewer’s scope of work in developing his or her value opinion must not be less than the scope of work (Complete or Limited) applicable to the original appraisal assignment. However, the reviewer is not required to replicate the steps completed by the original appraiser. Those items in the work under review that the reviewer concludes are credible and in compliance with the applicable development standard (STANDARD 1 or 7) can be extended to the reviewer’s value opinion development process on the basis of an extraordinary assumption by the reviewer. Those items not deemed to be credible or in compliance must be replaced with information or analysis by the reviewer, developed in conformance with STANDARD 1 or 7 as applicable, to produce a credible value opinion.
the reviewer may use additional information available to him or her—locally, regionally, or nationally—that was not available to the original appraiser in the development of his or her value opinion
A summary of this is that if the review appraiser’s opinion differs from that of the appraiser the review appraiser must complete standards rule as applicable to arrive at a credible adjustment. “Appraiser is increasing this adjustment to -$10,000 due to anticipated market reaction regarding subject needed repairs and the uncertainty of undiscovered repairs.” In making this adjustment the appraiser, per USPAP Standards Rule 3-1 © must follow USPAP Standards Rule 1-4 (a) When a sales comparison approach is applicable, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion. And Standards Rule 2-2 (b) (ix) summarize the information analyzed, the appraisal procedures followed, and the reasoning that supports the analyses, opinions, and conclusions;
Comment: The appraiser must be certain that the information provided is sufficient for the client and intended users to adequately understand the rationale for the opinion and conclusions.
When the purpose of an assignment is to develop an opinion of market value, a summary of the results of analyzing the information required in Standards Rule 1-5 is required. If such information was unobtainable, a statement on the efforts undertaken by the appraiser to obtain the information is required. If such information is irrelevant, a statement acknowledging the existence of the information and citing its lack of relevance is required.
The review appraiser has provided an opinion of market value for the subject at $169,000 with no summary of the analysis of the market reaction for said adjustment. This may be a violation of USPAP Standards Rule 1, 2 and 3.
Item 20: Amenities Adjustments checked Unacceptable. The review appraiser makes no mention of how the Amenities Adjustments are Unacceptable. Review Appraiser should disclose how said adjustments are unacceptable and provide the summary of the analysis of the comparable sales and market data as provided by USPAP Standards Rule 1-4 (a) and Standards Rule 2-2 (b) (ix). The appraiser can not refute or agree with the Review Appraiser’s analysis and summary for said Amenities Adjustments. Or the appraiser should amend the review appraisal to 20: Amenities Adjustments checked Acceptable.
Comments by the Review Appraiser the Review Appraiser states that the opinion of market value is $169,000 which falls within the 5% variance for opinion of market value provided by the appraisal report of $179,000. However, based upon the analysis of the further supporting data, the original opinion of market value of $179,000 is supported.
