residential review short form

[TC]

I have a client looking for me to give a Reviewers Recommendation value on this form. Seems to me I would be violating USPAP unless I do an appraisal myself, anyone else run into this?

Thanks

TC

 

[wyecoyote]

TC,

No where in USPAP does it say that you have to inspect the subject or the comparable sales to come up with a value.

Comment on (i)–(v): If the necessary subject property information is not available because of assignment conditions that limit research opportunity (such as conditions that preclude an onsite inspection or the gathering of information from reliable third-party sources), an appraiser must:

obtain the necessary information before proceeding, or

where possible, in compliance with Standards Rule 1-2(g), use an extraordinary assumption about such information.



An appraiser may use any combination of a property inspection and documents, such as a physical legal description, address, map reference, copy of a survey or map, property sketch, or photographs, to identify the relevant characteristics of the subject property. Identification of the real property interest appraised can be based on a review of copies or summaries of title descriptions or other documents that set forth any known encumbrances. The information used by an appraiser to identify the property characteristics must be from sources the appraiser reasonably believes are reliable.

That being said. Any desk review that I complete I do not agree or disagree with value and do not put my own opinion of value on it. Specificaly due to the following you the appraiser must decide the scope of work required not the client.

In making the scope of work decision, the reviewer must identify any extraordinary assumptions necessary in the assignment. An extraordinary assumption may be used in an appraisal review assignment only if:

it is required to properly develop credible opinions and conclusions;

the reviewer has a reasonable basis for the extraordinary assumption;

use of the extraordinary assumption results in a credible analysis; and

the reviewer complies with the disclosure requirements set forth in SR 3-2(d) for extraordinary assumptions.

Just my thoughts.

Ryan

 

[TC]

Ryan,

I agree that you do not have to inspect a property to give a value, but you still have to have a report in the file to back it up. So for me to put a value on that review form, wouldn't I have to do an appraisal of my own?

TC

 

[Pamela Crowley (Florida)]

TC,

Yes. Even if it's Limited/Restricted, you still need to do the necessary due diligence so as not to be misleading and include the Appraiser's Certification. A value conclusion by an Appraiser IS an Appraisal. Doesn't matter what some wacky lender want's to call it.

 

[TC]

Ryan,

I agree that you do not have to inspect a property to give a value, but you still have to have a report in the file to back it up. So for me to put a value on that review form, wouldn't I have to do an appraisal of my own?

TC

 

[Jo Ann Meyer Stratton]

If you offer an opinion of value, whether it is agreeing or disagreeing with the value in the original report--you are doing an appraisal and Standards 1 of USPAP applies. Now how and what you do is the Scope of Work that you and client agree upon--as long as it is compliance with Standards 1--Your report would be in compliance with Standards 2 and your Review would be in compliance with Standards 3. So read those three standards and then decide what and how you are going to complete the assignment (or decline the assignment if that is what you decide).

 

[Farm Gal]

TC:
The short answer is yes, however if you are restating the value of the original appraiser in concurrance with thier value estimate, it is my understanding that you do not have to do a seperate appraisal.

If however you disagree, you must have justification for the value estimate you arrive at. As in an appraisal. As Ryan quoted: taking Extraordinary Assumptions is your best bet for USPAP compliance.

The appraisal can be rudimentary, with the assumptions stated in your review report, or complete as in a fully developed grid and all attachments. Depends on what you (and your state board) think you need to accomplish the goal!

At at least one USPAP class, in a class discussion, several of MY state board members stated that even taking a photocopy of another appriasers work, modifying a few lines of their grid and coming to a different conclusion would suffice as 'appraisal' as long as you otherwise concurred with thier selection of comparables ( :!: your state may vary!!!)

 

[Pamela Crowley (Florida)]

If you are doing this based on a review of another appraisal, you must have the COMPLETE original appraisal. What are they providing to you?

 

[George Hatch]

A review is simply developing and reporting an opinion of the quality of another appraiser's work product. Developing an opinion of value on the subject property is a separate act or process and the rules for SR-1 (development) apply. However, there is no need to do a separate appraisal report in compliance with SR-2 (reporting). If there is an opinion of value to be made in addition to the review, the reviewer is allowed to accept and incorporate those areas of the original appraisal that they agree with in developing their opinion of value.

For example, say the reviewer basically agrees with the original appraisal and report and agrees with the value opinion. At that point, the reviewer can express the same opinion of value with no further added data or written analysis. All the Reviewer has to do is to include what steps they went through to develop their opinion in their scope of work disclosure that is already supposed to be included with their review.

On the other hand, if the reviewer disagrees with the description of the appraisal problem or with the data or analyses used in the original appraisal, they are allowed to accept those areas they agree with and then separately develop and report those areas with which they disagree. If that means new comps, then that data should be presented. If that means the same comps but with different analysis, then that analysis should be presented as the basis for the disagreement. Although not required in USPAP, the easiest way to do this is usually by doing a new Sales (or site or rental) Comparison Grid.

Sometimes, there is so much doubt about the original appraisal that the reviewer cannot reasonably be expected to rely on enough of it to develop any opinion of value without doing an A-Z appraisal process of their own. In such cases, it is entirely approrpiate to decline to express an opinion of value, the clients desires notwithstanding.

The one element that is always required is the scope of work disclosure that explains what the reviewer did and did not do. None of the appraisal review forms have this, and many lack even an SR 3-3 review certification. So the last thing anyone should be doing is simply filling out a review report by itself with no supplementary addenda to cover these required elements.


George Hatch

 

[Jo Ann Meyer Stratton]

And Fannie Mae released a new verison of the Field Review 2000 report last month with is current with 2003 USPAP, including asking for a 3 year history of the subject and all comparables. Check with your software vendor to see if it is available. Day One just posted it on their website last week (thank you dgill).