Revision request vs update vs new appraisal

[BRCJR]

State of Virginia definition:

"Evaluation" means an opinion of the market value of real property or real estate that may be utilized in connection with a real estate-related financial transaction where an appraisal by a state-certified or state-licensed appraiser is not required by the state or federal financial institution's regulatory agency engaging in, contracting for, or regulating such real estate-related financial transaction or regulating the financial institution or lender engaged in or about to engage in such real estate-related financial transaction. An evaluation is limited in its scope and development to the requirements for evaluations as set forth in the Interagency Appraisal and Evaluation Guidelines promulgated by the Office of the Comptroller of the Currency et al. (75 F.R. 77450)

 

[JJLuzzi]

State of Virginia definition:

"Evaluation" means an opinion of the market value of real property or real estate that may be utilized in connection with a real estate-related financial transaction where an appraisal by a state-certified or state-licensed appraiser is not required by the state or federal financial institution's regulatory agency engaging in, contracting for, or regulating such real estate-related financial transaction or regulating the financial institution or lender engaged in or about to engage in such real estate-related financial transaction. An evaluation is limited in its scope and development to the requirements for evaluations as set forth in the Interagency Appraisal and Evaluation Guidelines promulgated by the Office of the Comptroller of the Currency et al. (75 F.R. 77450)

I FIND IT HELPFUL TO FALL BACK ON USPAP, so here is what I use to determine: New Assignment or Revision or Update?
( from 2023 USPAP course and instructor):

According to USPAP, the "problem identification" process needs to consider six items:
1) Client and Intended Users
2) Intended Use
3) Value definition used
4) Effective date of value
5) Subject property - physical characteristics and ownership interest appraised
6) Assignment conditions - including Extraordinary Assumptions and Hypothetical Condition.

If any of these six items changes, AFTER the original appraisal report is communicated to the client, USPAP requires that the appraiser consider it a new appraisal assignment because the "appraisal problem" has changed.
However, if you receive a request to revise an appraisal report based on some other element, you may consider it a revision of the same appraisal assignment, perform the revision and issue a new appraisal report.

 

[BRCJR]

I FIND IT HELPFUL TO FALL BACK ON USPAP, so here is what I use to determine: New Assignment or Revision or Update?
( from 2023 USPAP course and instructor):

According to USPAP, the "problem identification" process needs to consider six items:
1) Client and Intended Users
2) Intended Use
3) Value definition used
4) Effective date of value
5) Subject property - physical characteristics and ownership interest appraised
6) Assignment conditions - including Extraordinary Assumptions and Hypothetical Condition.

If any of these six items changes, AFTER the original appraisal report is communicated to the client, USPAP requires that the appraiser consider it a new appraisal assignment because the "appraisal problem" has changed.
However, if you receive a request to revise an appraisal report based on some other element, you may consider it a revision of the same appraisal assignment, perform the revision and issue a new appraisal report.

A federally related transaction has to do with appraisals. My comments are about Evaluations and USPAP.

 

[Tom D]

Well, we never heard what the changes are. Some of you are shouting new appraisal, new appraisal. If the changes are minor, affecting mostly nothing, then it's a new appraisal? And you can't tell just by looking at the specs that you don't need new comps.

Early when i was doing new developments all over the place, i would always get a price, or cost, changes with some upgrades, or removing some upgrades. And not just 1 time. Now, having been thru that, you come to realize that pay should be higher for ongoing construction changes to the report That's the problem.

 

[jay trotta]

I completed an appraisal on a proposed new construction project a month ago, the appraisal was accepted after several revision requests to include additional information from the lender( or borrower). ( Non of which affected value.) I just received another “ revision” request to review new documents and new (changed) interior and exterior finishes and new construction costs. The request specifies wanting to know of these changes affect value.
I believe this is more than a revision on the original report, is it a new assignment ? Is it an update, did the assignment conditions change? I don’t believe they are asking for a new effective date.

I would assume you did a "Subject to Completion" on the original report (with requested revisions).
You are now entering (2nd highlighted) a new report due to changes from the Original SEL, based on new information.

IMO-don't know why they are going that way, "proposed new construction" is always "subject to" changes & alterations - nature of the beast itself.

 

[Sadie]

A federally related transaction has to do with appraisals. My comments are about Evaluations and USPAP.

JJLuzzi pretty much quoted USPAP, so not sure what you are going on about. Could not find any reference to FNMA in AO 13. A federally regulated transaction is not necessarily FNMA, there are lots more. AO specifically states that if an evaluation is performed by someone acting as an appraiser, then it is an appraisal. In addition, most of the requirements for an evaluation are similar to the requirements for an appraisal. Also, an appraiser who is bound by USPAP must recognize that an evaluation meets the USPAP definition of appraisal and appraisers must comply with USPAP when providing such a service.

 

[BRCJR]

JJLuzzi pretty much quoted USPAP, so not sure what you are going on about. Could not find any reference to FNMA in AO 13. A federally regulated transaction is not necessarily FNMA, there are lots more. AO specifically states that if an evaluation is performed by someone acting as an appraiser, then it is an appraisal. In addition, most of the requirements for an evaluation are similar to the requirements for an appraisal. Also, an appraiser who is bound by USPAP must recognize that an evaluation meets the USPAP definition of appraisal and appraisers must comply with USPAP when providing such a service.

They were quoting USPAP and the relationship to appraisals.

Not sure what you are implying about my comments.

My comments were only about Evaluations.

My reference to line 82 has absolutely nothing to do with FNMA. Never indicated such, not sure where you drew than conclusion. My comment was regarding the fact the USPAP does not reflect the FRB threshold any longer. It changed a couple of years ago.

 

[Sadie]

They were quoting USPAP and the relationship to appraisals.

Not sure what you are implying about my comments.

My comments were only about Evaluations.

My reference to line 82 has absolutely nothing to do with FNMA. Never indicated such, not sure where you drew than conclusion. My comment was regarding the fact the USPAP does not reflect the FRB threshold any longer. It changed a couple of years ago.

Here is directly from your post: (ii) Involves a residential real estate transaction in which the appraisal conforms to the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation appraisal standards applicable to that category of real estate;

Also please reread AO 13, regarding the differences between an evaluation and appraisal when either are performed by an appraiser. I pretty much copy/pasted it from the Opinion but please feel free to read if for yourself. The whole thing.

 

[BRCJR]

Here is directly from your post: (ii) Involves a residential real estate transaction in which the appraisal conforms to the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation appraisal standards applicable to that category of real estate;

Also please reread AO 13, regarding the differences between an evaluation and appraisal when either are performed by an appraiser. I pretty much copy/pasted it from the Opinion but please feel free to read if for yourself. The whole thing.

Help me with which of my posts you are referring.

Again, I am not addressing appraisals in my contribution (or what I thought my contribution was about) to this thread. Only Evaluations.

My state allows "Appraisers" to complete "Evaluations".......and it is not an "appraisal." Your state law may be different.....

For the "what it is worth department, I do Evaluations on commercial properties frequently. I think I may have a good understanding of the difference.

 

[Sadie]

Help me with which of my posts you are referring.

Again, I am not addressing appraisals in my contribution (or what I thought my contribution was about) to this thread. Only Evaluations.

You brough up FNMA inyour post #36. I copy/pasted your comments. But you are missing the point entirely. If you are an appraiser who is bound by USPAP, then any evaluations you perform are appraisals,, as per USPAP and described in AO 13. If you are acting as an appraiser you cannot give an evaluation with a value conclusion without conforming to USPAP. If you are completing an assignment that does not include a value conclusion, you must conform to USPAP Ethics, Competency and Jurisdictinal Rules. This is done. If you want to go around and do "evaluations" and ignore USPAP, go right ahead. Just don't tell other people to do it.