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Request For Master Appraisal "generic Appraisal"

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Sean Sutton

Senior Member
Joined
Jun 19, 2006
Professional Status
Certified Residential Appraiser
State
Missouri
I have a large lender that I do work for asking for a Master Appraisal of a proposed duplex that is going to be built on several different lots within the same subdivision. They sent me the top of the first page of a 1004 which shows comments that say...

This is a Master generic appraisal for plan ______. The average lot in this development are
similar in size and their market values are similar with any differences have a minimal market value impact on the subject improvement.

Legal Description says: Typical Lot for Master Plan - Generic Appraisal for Development

Obviously they are not wanting to pay for 5 separate appraisals given each duplex will be constructed within the same subdivision and have the same floor plan. I can't say I blame them, although I would prefer to clone five separate reports with ACTUAL legal descriptions and charge them full bore on each. :)

I can see it both ways. Don't we have to identify the EXACT property being appraised? Can I complete this and comply with USPAP? Its an in-house construction loan.
 

Eli

Elite Member
Joined
May 12, 2007
Professional Status
Certified General Appraiser
State
Tennessee
No 1. Absorption will have to be considered if it is a contemporaneous opinion. Think of it like a residential subdivision development on vacant land if you are doing all 5 as of effective date and it is a contemporaneous opinion of value. Like a 150 lot residential subdivision.
 
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Ken B

Elite Member
Joined
Feb 18, 2004
Professional Status
Certified General Appraiser
State
Florida
I used to do "Master Appraisals" for VA. If you look around, you can probably find a general format for them. We used the 1004 form.
 

Sean Sutton

Senior Member
Joined
Jun 19, 2006
Professional Status
Certified Residential Appraiser
State
Missouri

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Seems a great way for a bank to circumvent FDIC's lot discount when dealing with more than 4 units. Wouldn't touch with ten foot pole. A CR did that for a local bank back ~2006 and 3 years later I am doing all of it over when examiners sent an unkind letter about trying to cover a single loan with multiple appraisals without compliance with Interagency guidelines.

For existing or proposed developments of five or more residential lots in a single development, the appraiser must analyze and report appropriate deductions and discounts. Appropriate deductions and discounts should reflect holding costs, marketing costs, and entrepreneurial profit during the sales absorption period for the sale of the developed lots. The estimated sales absorption period should reflect the appraiser's estimate of the time frame for the actual development and sale of the lots, starting on the effective date of value and ending as of the expected date of the last lot sale. The absorption period should be based on market demand for lots in light of current and expected competition for similar lots in the market area.​
 

AMF13

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
I would like a generic appraisal please.
Never mind the property is unique. :leeann:

Never mind, I'll take widgets for $1000 please. :peace:
 

SpartanAG

Member
Joined
Feb 12, 2008
Professional Status
Certified General Appraiser
State
Arkansas
I dealt with this situation multiple times when I worked for a bank. There are circumstances that allow a lender to use an appraisal of a specific floor plan to support the value for other lots/units with the same floor plan in the development. We wouldn't use a "master" report. We would get an appraisal on a specific property within the development and use that as a support for the subsequent units with the same floor plan. Our policy set a specific length of time that the report would be considered valid.

Most of the time, the developers we were dealing with had 4 or less units under construction in any one development at a time. If certain criteria are met, a lender can use an appraisal from a single unit in a development to support the value of like units even if there are more than 5 lots/units being developed at the same time. However, if 5 or more lots/units are to be developed at the same time, then the lender must have an absorption and feasibility study on file showing that the units can be built and sold within a 12 month period.

I see the OP declined the assignment of doing a "master" appraisal. I would say that was a smart move. If it was for a specifically identified property in the development, it wouldn't have been a big deal. The lender could have used your report as a "master" appraisal and you never would have known.
 

Ken B

Elite Member
Joined
Feb 18, 2004
Professional Status
Certified General Appraiser
State
Florida
Seems a great way for a bank to circumvent FDIC's lot discount when dealing with more than 4 units.

Except that the lender is not lending on bulk properties, but on single properties, either as construction loans or for end unit purchases. Additionally, someone with a residential license is not permitted to appraise more than 4 units. And yet, residential appraisers can provide "master appraisals" because they are appraising a single "typical" base model and may also estimate the value of various options and lot premiums. A "master appraisal" is similar to the estimate of end unit pricing for use in estimating a bulk value for a subdivision or condominium project, except that a bulk value of the subdivision or condo project is not provided and the individual values of each unit/lot are not summed for the aggregate retail value. It also helps to remember that appraisers are not qualified to be bank examiners and are not expected to assume such a role.

This service may exceed the comfort levels of some appraisers and they may decide to decline the assignment as a result. But, that doesn't mean that the service can't be provided ethically, competently, and in accordance with USPAP. If anyone cares to discuss further, I would be interested in knowing exactly which rules or standards would be violated by such an assignment.
 
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