"Recertification Of Value"

[Webbed Feet]

The recertification of value is simply stating the conditions of the appraisal have been met. They want the 1004D update, too. Don't try to argue nomenclature with them. Just give them two separate reports and bill them accordingly. You can give them a new appraisal if it warrants, too.[/quote]

Mr. Hicks,

I think I know you know this. But an "Update" is a new appraisal. We all really need to stop thinking, or posting, as if a fresh URAR is what it takes to constitute a "new appraisal."

 

[Webbed Feet]

This is verbatim a portion of a new construction appraisal request from a major national bank, after they tell you the report must be USPAP compliant...

"For proposed construction, the appraisal may be "as completed" with the estimate of value based on the appraiser's review of the subject's plans and specification, subject to a final inspection. When the construction is completed, the appraiser must provide certification that the property was completed in accordance with the plans and specification considered in the original appraisal report. In addition, the appraiser must provide a re-certification of value that states that the subject's value is at least equal to the value estimate outlined in the original appraisal report. This re-certification of value must be based on the appraiser's exterior view of the subject property and knowledge or current market conditions.


What to do??

Rewrite the entire thing for them and tell them to get their heads out of their butts. Any major national bank should know better than that at this point.

Dear Major National Bank,

It is no longer "estimate of value", it has been "opinion of value" for a long time now. There is no longer any such thing as "re-certification of value." What you are doing is ordering two appraisals in a phased assignment context. Stop trying to get a free "Update", or "New Assignment" in a sneaky manner. This is not two-fers at the local bar. Your "Update" has to be based on an entirely new market analysis of the subject property. Not something pulled mystically out of the appraiser's ***. I have forwarded your requirements to my State appraisal board, one of whose staff, I am sure, will be calling you shortly because they don't care a lot for major banks confusing their appraisers with such things.

In the meanwhile, I will happily quote a fee for appraisal "A", a following 442 completion certificate, and the second appraisal "B" in a lump sum if you so desire.

Thank You,

Joe Appraiser.

P.S. Oh, Dear Major Bank... Since I HAVE to do an interior inspection for the 442 completion certificate ??? Don't you feel it just MIGHT be a better idea if I use that inspection for your second "Appraisal B" rather than some unneeded exterior only inspection that Fannie doesn't really want due to the EA's that would be involved? .. Let me know won't you?

 

[Tim Hicks (Texas)]

The recertification of value is simply stating the conditions of the appraisal have been met. They want the 1004D update, too. Don't try to argue nomenclature with them. Just give them two separate reports and bill them accordingly. You can give them a new appraisal if it warrants, too.[/quote]

Mr. Hicks,

I think I know you know this. But an "Update" is a new appraisal. We all really need to stop thinking, or posting, as if a fresh URAR is what it takes to constitute a "new appraisal."

Quack! I should have said, "you can give them a new 1004, too." Don't do what I say, do what I thought I said.

 

[Otis Key]

"For proposed construction, the appraisal may be "as completed" with the estimate of value based on the appraiser's review of the subject's plans and specification, subject to a final inspection. When the construction is completed, the appraiser must provide certification that the property was completed in accordance with the plans and specification considered in the original appraisal report. In addition, the appraiser must provide a re-certification of value that states that the subject's value is at least equal to the value estimate outlined in the original appraisal report. This re-certification of value must be based on the appraiser's exterior view of the subject property and knowledge or current market conditions.


What to do??

On top of what Mr. Webbed Feet posted, I have a problem with the red verbiage above that I accented. It might be possible that a board could perceive that as a minimum valuation directive, IMHO.

And then you have the two blue accented sections which appear, in my interpretation, to be conflicting instructions. How can you indicate a completion certificate without seeing all of the property?

 

[Tim Hicks (Texas)]

Someone correct me if I am wrong on this, but it seems to me that it would be impossible to issue a 1004d form saying there has not been a decrease in the value of the subject property on a house that will be completed 9-12 months from now and be USPAP compliant.

The question on the form reads: " Has the market value of the subject property declined since the effective date of the original appraisal? Yes or No"

Even though it is a simple question, it is asking for an opinion of value based on market conditions 9-12 months AFTER the original effective date. So essentially I would need to complete a new appraisal in order to properly answer the question.

Am I just being "too difficult" about this?

It depends. If the value has increased remains stable (you determine that by researching new sales), then you check "no."

If the market has been stagnant or stable or there are no new sales. Then, maybe the market has not changed and "no" would still work.

If the sales reflect a lower market, then you check "yes," and they will most like ask you to do a new 1004.

However you do it, you have to build a file to support your answer to the question. If it takes re-gridding for your file, then do it.

Tell me, Camp1, what happens if you go to do a final inspection and find out they did not build according to plans and specs? What if the home is smaller than presented to you in plans and specs? What if it is larger? What if they added upgrades? If you comment on these things, are you making an appraisal? If you state, "they added these additional upgrades or this additional room..." are you updating the appraisal with a new effective date by stating their affect on the original appraised value?

 

[Webbed Feet]

Mr. Key,

I believe between the two of us we shot that major national bank's instructions / request right down the ol crapper. Flush with vigor!

 

[Webbed Feet]

Someone correct me if I am wrong on this, but it seems to me that it would be impossible to issue a 1004d form saying there has not been a decrease in the value of the subject property on a house that will be completed 9-12 months from now and be USPAP compliant.

The question on the form reads: " Has the market value of the subject property declined since the effective date of the original appraisal? Yes or No"

Even though it is a simple question, it is asking for an opinion of value based on market conditions 9-12 months AFTER the original effective date. So essentially I would need to complete a new appraisal in order to properly answer the question.

Am I just being "too difficult" about this?

No you are not being too difficult. You are absolutely correct. However, it is not impossible to issue a 1004d nine months later after the improvements are completed... not if you add pages of addendums, signed certifications that actually comply with USPAP, and patch the bugger up so it meets Standards. But why bother? .. Just do a new URAR. Patching it up would be a pain to meet Standard Two reporting requirements.

Worse, what was Fannie thinking? When Fannie created the 03/2005 SOW and certifications it was done to prevent things Fannie did not want done. Then in her brillance she releases at the same time a 1004d that has a SOW and certifications that allows all the things done Fannie did not want in the first place! EA's, lack of third party verification of interested party information, you name it. Whoever created that form obviously failed to understand it constituted a new appraisal assignment and new opinion of value as of a new effective date... duh!!!!! So why would it suddenly be ok to invoke EA's not allowed in a URAR SOW and to ignore certifications that were with the URAR for an "Update?"

The answer to the above is those involved with the 1004d were viewing it as an "extension" of the original report... only it's not. But they missed that little fine point. So are lots of other people.