REO company requesting a 1004 to be used on a 4-plex

[Michigan CG]

....... You could not provide a credible report on that form alone that would not be misleading.

I think I said that two hours ago, but who am I to disagree.....?

 

[CANative]

That's just ridiculous. 3 sales of similar units in similar condition in a grid.

Web... where you come from is it relatively easy to find comps for units that don't need a lot of adjustments?

 

[Blueprint]

Yea I had to put it into layman's terms though. Shouldn't you be asleep or something by now Mr. Moderator? :new_smile-l:

 

[c w d]

What does the form have to do with anything? And why is an income approach NECESSARY when other methods will work and may even be superior?

If all they want to know is how much can they sell it for then sales of other screwed up 4 plexes would be pretty credible. Maybe they want to save time and money on the appraisal fee and don't need an income approach on a property that won't be getting any income until it's not theirs anymore.

I understand your reasoning. However, how can one credibly opine a value for a property whose primary purpose for existence is the generation of income without the consideration of the income approach? Unless of course we're saying the building is so trashed as to prevent it from being used to generate income. Then I could see not using an income approach. But, I still would not use the 1004. Perhaps the AI forms? I don't know. Using a product specifically designed for single family and states single family in several locations that cannot be removed or changed just says "misleading" to a reader who didn't know the subject is a multifamily.

 

[PropertyEconomics]

That's just ridiculous. 3 sales of similar units in similar condition in a grid.

Web... where you come from is it relatively easy to find comps for units that don't need a lot of adjustments?

What is ridiculous is your arguements that a four family property can be put on a one family form. I dont care about the grid ... the four family form has a tremendous amount of information regarding "units" that are not found on the single family form ... and since its called a SINGLE famliy form I would suggest to you that MULTIFAMILY doesnt fit.

Its about credibility and not being misleading.

Lets say you dont read the appraisal at all, and yet you see that form, what is the first thought you will have ... yup ... its a single family house. That in and of itself should lead you away from this form.

The quite simple answer is the old 1004 (Single Famliy Form) was not designed for multi units and therefore should not be used. Period.

Double Peace

 

[Dirty Harry]

Yes, it does have places for "units" on it. But I have issues. The standard for income plex properties is Gross Building Area, not Gross Living Area. I find the form inadequate for dealing with each of the units if they have drastically different "condition" ratings. Just the general lack of detail in reporting on each unit seems a Standard Two violation if the appraiser just stops with using the old 1004 and fails to supplement it considerably.

Would not it make more sense to use the old 1025 and not complete the income section if under USPAP it was deemed unnecessary?

Webbed.

Yes, it does make more sense to use the old 1025. The REO Company is trying to use a one-size fits all format. :Eyecrazy:

I'm not the OP on this thread, but I noticed the same c**p in the orders I receive from an REO client of mine.

This dialogue will come in handy when the time comes to contest them on why their instructions don't make "sense". :icon_mrgreen:

 

[CANative]

Lets say you dont read the appraisal at all, and yet you see that form, what is the first thought you will have ... yup ... its a single family house.

I am not a sophisticated lender of money who relies on appraisal reports to give me the information I need to assess the risk. If I was and I didn't read the report and made a loan and lost some money then I guess it would be my fault, unless I was a litiginous weasel who blames others for my lack of diligence.

In the early days of appraisers forum the mantra was that the form does not drive the appraisal. It seems now that some are formbound.

No one on this thread can really give a definitive answer as to whether or not the income approach is necessary because the necessary part has too many things which are assignment specific.

Read cert 4 on a 1025 form. It states that the opinion of value is based on the sales comparison AND income approachs to value. So how can any push this form and then take this tactic:

I don't know why they would not let you do the report on the 1025, leaving the income section blank.

Just "X" out the certification verbiage that doesn't apply?

 

[Mountain Man]

A bombed out 4 plex in my area would best be done on the LAND form.

 

[Rich Heyn]

It's interesting how many posts on this forum comingle business decisions, personal preferences and USPAP.

There's development and reporting. Standards 1 and 2. The development of a credible opinion of value is not affected by the appraiser's choice of reporting format.

Stated another way, the client's preferred reporting format places no restraints on the appraiser in terms of development. So no problem with Standard 1.

I just scanned Standard 2. I found nothing that would prevent an appraiser who wanted to comply with a client's request and who was willing to use the appropriate disclaimers, disclosures, countermanding statements and supplemental addenda from reporting assignment results for a 4 unit on a 1004.

Poor business decision, unprofessional, and just plain old nasty and ugly, yeah. USPAP non-compliant? I don't think so. However, your mileage may vary with your state board.

Greg's correct in that too often on this forum we see forms-centric mentalities that begin with "what form do I appraise it on?" Not saying that was the mentality of the OP, just trying to make the point that development and reporting should be viewed as distinct entities.

 

[stefan olafson]

I've written appraisals in the old days on one or two sheets of yellow notebook paper. Had all the items necessary to make a compliant report which was easily understood and to the point.

USPAP has taken us away from that, good or bad, I'm not going to judge. Too many appraisers when completing a summary appraisal don't even look at SR2-2b to find out if all eleven points are covered. To often the state boards, if SR 2-2b is covered go back to the development of SR1 and decide that even if you did something, they don't think you did and ding you.

It's not the form it's the content. No, you don't always have to complete the income approach. If it's a credible report without it, then you're okay in my book.

I once did a small eight plex that was so unique there were no sales.... I convinced the lender (GSE type) that the SC approach was not applicable and not necessary.