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Recertifications, Updates... Help!

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KD247

Senior Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
Just as I'm beginning to develop an understanding of the new USPAP Update requirements, this morning a client requested a "Recertification" of an appraisal I did several months ago. The client's only requirements are that I review current sales data (without physical inspections of the subject or comparables) and provide an opinion as to whether the subjects value has declined since my original report. (I'm sure it hasn't as the market is still strong in this area.)

So...

Here's my challenge: To provide the most streamlined, economical appraisal that conforms with current USPAP requirements.

Now I feel like I'm reinventing the wheel, which is usually a sign that I've taken a wrong turn somewhere. The client only wants me to research the most recent sales in the area and state that the subject's value has not declined since the appraisal. Most of the posts I've seen indicate that the best way to go is to do a complete new appraisal.

Isn't there someway to quickly deliver something similar to the old Recertification form that meets with current USPAP requirements?

Here's what I'm really in the mood for: a form with the seven critical "incorporation by reference" requirements, a space for the new value, the certification, and a checklist for the items that must be in the workfile.

Thanks for your thoughts,

Koert
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
Write a letter with at least the seven items listed in Option 3, include a certification (see Standards Rule 2-3) at the end or attached to the letter, prepare a market grid with some new comparables that you have looked at, provide photos of the new comparables, a map showing the location of the subject and the new comparables, at least drive by or maybe walk through the subject property, take new photos of the subject, and type up an invoice. Since you are incorporating by reference (you and the client are all the originals--aren't you?), you don't need all the extra stuff that was in the original report because everyone involved has the original appraisal with everything in it. I can email to you my sample letter that expired 12/31/2002 and the new letter that I am working on. Need all the suggestions, corrections and help I can get with the new letter! I use Day One/Nova, in the 16 bit program was a single page for a sales comparison grid to use with the Field review form, but the Nova 32 bit program doesn't have one. So in the future I will be writing my update to a prior assignment letter in the 16 bit Day One program, just so I can attach a grid sheet with new comparables to the letter. As you drive by the subject or walk through the subject, if something looks different or doesn't look right, you might want to remeasure--or if the original was based on plans, you might want to measure to check to see if they did build the amount of GLA they said they would.
 

Frederick R. Ruffell

Senior Member
Joined
Jan 21, 2002
Professional Status
Certified General Appraiser
State
California
Ditto what Jo Ann said, and you might want to call the owner to as k about what changes, if any have been made to the property since you were last there. Do not forget to list your extraordinary assumptions as to the condition of unseen parts. Oh, and next time just tell your client that a new appraisal is required, dicount the fee if you feel you must. It is just a whole lot easier.
 

KD247

Senior Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
Thanks for the replies. I'm anxious to see what Jo Ann comes up with.

Although I would prefer to do completey new appraisals everytime, I'm also trying to be reasonable in providing appraisals that meet my client's needs, without getting involved in managing their risk.

If the client only needs a new effective date and is willing to forego re-inspection, I'd like to provide a product that meets the client's needs as closely as possible, as long as my appraisal complies with USPAP. If someone has a $100,000 first TD on a $900,000 property and wants to refinance at a lower rate a few months after my appraisal, it just doesn't sound right to insist that the lender purchase a new $750 appraisal to cover the risk that the value has dropped 80% since the inspection. This is an exagerated example, but the risk decision should be the client's, not mine. Of course, this all changes if I suspect that the subject has changed or if a minimal report would be misleading in any way.

Here's an update form that was forwarded to me:

http://www.pierpont.com/update.pdf
 

bradellis

Member
Joined
Jan 16, 2002
Koert,

Forget about a recert- call it an update. 999 times out of 100 that is what they want.

Use any for you want and call it an update- no mater what may be printed on the form- that part is easy.

Next, make sure you get a properly defined scope from them and one that you can do under USPAP.

Our bank requires new comps, if available. Not all do. Communication iwth the client is the key here- not what the assignment is called.

Brad Ellis, IFA, RAA
 

KD247

Senior Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
The link to the update form is now active:

http://www.pierpont.com/update.pdf

It's clear that we'll be spending some time explaining to clients that most requests for "Recertification" are really request for updates. In the future, when a client requests a Recertification, I'll probably send them a blank copy of this form with my fee quote. Any additional lender requiremens would result in additional fees. If a lender wants a complete re-inspection and detailed sales analysis, the fee will probably be the same as for a new appraisal.

Brad said "...make sure you get a properly defined scope from them and one that you can do under USPAP." Let me rephrase my original question: Has anybody outlined the minimal requirements for an update that meets USPAP requirements? Some clients will have additional requirements (subject re-inspection, gridded comparables, etc.) but most clients will probably want the minimum that I can ethically deliver.

The form that I've linked to appears to be satisfy most of the requirements, but I've noticed one questionable phrase. It uses the word "Extension of Original Value Opinion" as one of its reporting options. The USPAP advisory opinion specifically states that an Update is not an extension of the original value opinion. However, if one of the other options is selected, the use of the word "extension" becomes a moot point. Any other thoughts regarding the use of this form?


Well, I better get outside and shovel snow off the driveway...not!

weather.jpg
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
It also uses the term "estimate of market value"--appraisers offer opinions of value. And they use the word inspection all through the form, another term I don't like since appraisers are not "inspectors" (yes I now, Fannie Mae and USPAP use the word inspect). I do like their comment after "I have not inspected (observed) the subject property. (NOT acceptable for secondary market requirements). Fannie Mae's Section 201 does require inspection (observations), so that comment is very applicable. The form could be used for Option 1 or 2 because of the sentence of "should be relied on only by a reader who is familiar with the original appraisal report and any other prior updates". If I am understanding Option 3 correctly, that isn't quite correct, Option 3 specifically requires the client for the new assignment to be the original client and also the original appraiser or appraisal firm---not just somebody that is familiar with the original report (original client ABC mortgage, new client XYZ mortgage for example). In that example only ABC mortgage can get a report in the Option 3 manner. Interesting side note on the form, this form only requires the appraiser to keep the market data in the work-file and doesn't make provisions for a market grid to be attached unless a different opinion of value is offered. That is interesting!

All very interesting!
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Carol:
It works: but may be overloaded, I had to 'hit it' three times to 'get in'.
 
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