Sale date of comp after effective date by 1 day

[Lawrence R.]

From USPAP FAQ #81:

The Standards Rules require all appraisal reports to disclose the effective date of the appraisal. Must the date be reported as a specific day, month, and year, or is it sufficient to simply provide the month and year?

The effective date of an appraisal is determined by the intended use and the intended user. In most cases the intended use and/or the intended user dictates that the date provided is a specific day, month, and year. However, in some circumstances it may be acceptable to be less specific, (e.g., in a prospective appraisal assignment).

Perhaps you could ask your client which date format would be applicable...month and year? You could include the latter sale with no qualms...

I think it is important to remember that "technically", all appraisals(with possible exception of ERCs, etc..) are really at their core retrospective...even if it is only a day.

Now, if you want to argue that they are not retrospective if only a day or two has passed, then you must accept the "contemporaneous" argument set forth in the earlier post...

Aside from the state of marketing conditions, etc...the HUGE function of the effective date is to "lock in" the date upon which you observed the subject, and its condition. We have all heard about the house burning down 3 days after we inspected it, and our appraisal would still be valid as of the earlier inspection date.

I checked Fannie Mae guidelines, and I could find no specific guidance as to the acceptable format for reporting effective date...maybe someone else will have more luck. This would make a good FAQ for USPAP to consider in 2010.

 

[Carnivore]

I rest my case.

ftr, ASB FAQ are not USPAP, but it is pretty good explanation.

 

[Lawrence R.]

Define Effective date with a source? (my bold)

Why cant Inspection date and effective date be two different dates.

Define Contemporaneous period while keeping retrospective date in your mind with a source if possible.

Do we want what? To be held responsible for everything prior to our signature date? We already are!

From USPAP, Std Rule 2-2

(vi)
state the effective date of the appraisal and the date of the report;

Comment: The effective date of the appraisal establishes the context for the value opinion, while the date of the report indicates whether the perspective of the appraiser on the market and property as of the effective date of the appraisal was prospective, current, or retrospective.

From USPAP FAQ # 82

What is the date of appraisal?

The date of the appraisal is an ambiguous term. The appropriate terminology is either the effective date of the appraisal or the date of the report.

FAQ #83

Is the effective date of the appraisal the same as the date of value?

Yes.


So, it would appear to me that it takes BOTH dates. The date of the report and the date of the appraisal (effective date) are what give context to the applicable "time frame" the reader of the report would use/consider.



In that light, we are back to what everybody's gut should have told them.



You can use the sale, as a sale, with minimal explanation, and be in compliance.



However, since the intended user/use determines the actual effective date, you should tailor your report to the client's(and not your own) expectation in this matter.



PS, these are only my opinions folks, let the standards speak to you as they will.

 

[TJSum]

How about reading the forms we use and sign each and everyday, it is right at the bottom of page 2 in BOLD.

 

[Lawrence R.]

How about reading the forms we use each and everyday, it is right at the bottom of page 2 in BOLD.

USPAP trumps fannie. Any questions?

Edited to add:

Could you please outline for me what part of USPAP is incorrect in this case? And how it could be interpreted any other way than the way I did...As I stated, this is my take on what I read. Do you have another take on the Stds and FAQ's above?

 

[TJSum]

Lawrence, this is from your prior post...

"From USPAP FAQ #81:

The Standards Rules require all appraisal reports to disclose the effective date of the appraisal. Must the date be reported as a specific day, month, and year, or is it sufficient to simply provide the month and year?

The effective date of an appraisal is determined by the intended use and the intended user. In most cases the intended use and/or the intended user dictates that the date provided is a specific day, month, and year. However, in some circumstances it may be acceptable to be less specific, (e.g., in a prospective appraisal assignment)."



My reply...

If it is up to the Intended User, with Fannie/Freddie being the ultimate intended users (FHA also is included by adopting these forms as written), how are they in conflict with USPAP?

Okay, some might say skip the new Fannie/Freddie forms, this is a jumbo loan or whatever so I can use the old URAR or old 2055. Guess what, this same statement is on those forms as well. It seems rather clear to me what the intended users preference is with Mortgage Lending Assignments.

Actually, I have been pestering Clickforms to take this statement off of their "non-lender" forms, it does not belong on a form where Retrospective Appraisal Assignments are written.

 

[Lawrence R.]

OK, I understand that point.

Now, what do you do about the ACTUAL part of USPAP that says the effective date and the date of the report are used to identify whether or not the appraisal is current, prospective or retrospective? If the date of the signature differs from the date of inspection(effective date) then in most cases you are doing a retrospective appraisal. In that case, I am saying that it is OK to use sales after the effective date of the appraisal, as that is clearly outlined in the sections on retrospective appraisals.

I am taking a very technical tack here, I am saying that probably only a small percentage of your appraisal work would be considered "current". Most of it is technically retrospective, and in that case, then what? Can you do a retrospective appraisal on the 1004?

If you let the Stds trump the FAQ's, which I would...then the effective date is simply a tool to tell the client when you inspected the subject. The signature date tells the client when you completed the report of your findings. If your signature date in effect makes your report, retrospective, you can then use sales that closed after the effective date of the report, IF you feel they are still indicative of the market conditions that were present at the effective date of the appraisal.

So, it would appear we have quandary here. However, nowhere does the term "cutoff date" or something similar appear to say that your data collection should or must stop at the effective date of the appraisal.


Perhaps a third or fourth party could come in with their take on it and settle this stalemate?

 

[Carnivore]

TJ,

The post appraisal effective date of a comparable may change the contemporaneous perspective of the opinion of value when it falls inside the contemporaneous signature date.

How is this harmful or misleading to the client? Do you have examples?

 

[TJSum]

Carn,

No one has said not to use it. Everyone agrees it is important data and should be utilized. It is how it is presented is the issue. Based on the OP, IMO the only way to be in full compliance with the guidelines would be to write it up as a "4th" comp, not one of the mandated three closed sales. I would grid it out as a contract on the extra comp page and then below the grid give a full narrative of the entire story, closing price, closing help, reveal that it closed after the effective date, but prior to signature date allowing the details of the sale to be known. This is the best of both worlds, it follows the guidelines as written and allows full use of this comps data.

Really, the only benefit of doing it the other way would be to avoid using 4 comps instead of the minimum 3, should that notion be fully supported?

Larry, my disagreement would be with your definition of a Retrospective Appraisal. My defintion would be having the effective date prior to receiving the appraisal assignment.

 

[Webbed Feet]

This is what we need

<.... snip....>
Larry, my disagreement would be with your definition of a Retrospective Appraisal. My defintion would be having the effective date prior to receiving the appraisal assignment.

TJ,

Thank you! This is what we need. More and more of us need to demand the ASB revise SMT-3 and 4 to include "Engagement Date" in the definitions of "Retrospective, Current and Prospective" meanings. I have posted on this many, many times. It solves the whole debacle about what is what and makes this all very simple instead of complex.

Webbed.