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Satisfactory Completion Certificate

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Lorie Miller

Sophomore Member
Joined
May 27, 2003
Professional Status
Appraiser Trainee
State
Florida
Our office prepared a 1004 subject to completion per plans at the end of February. Draw inspections were completed by our office. Upon the homeowner receiving his CO we have been asked to prepare a Satisfactory Completion Certificate. I would like clarification on the implication of the Satisfactory Completion Certificate. Does it simply mean the subject was built to the plans, specifications, requirements, conditions etc. that were provided to the appraiser and addressed in the appraisal report? Is the Satisfactory Completion Certificate considered a recertification of value?
 
The satisfactory completion certification is strictly that the home was constructed per plans and specs as stated in the original appraisal report. "Re-certifying" the value is the function of an "update" to the appraisal report. Two different animals.
 
Tom - Thank you for confirming my thoughts. Quite a discussion has occured this morning over this with the lender.
 
Lorie,
The "update" may be what the lender wants, in addition to the completion certificate. You just have to train the client to order what they need. They are two separate things. If you will look at the new Fannnie form, it states "Appraisal Update" AND/OR "Completion" The client needs to let you know just exactly what they want you do do.
 


Recertification of Value
Question:
I heard that recertifications of value are no longer permitted. Is this true?
Response:
No, that is not true. However, there is confusion surrounding this question because the
term ‘Recertification of Value’ is often mistakenly used by some clients in place of the
term ‘Update.’
Appraisers may perform a ‘Recertification of Value’ to confirm whether or not the
conditions of a prior appraisal have been met. However, if a client wants to know
whether the value of a property has changed (or remained the same) since a prior
appraisal, this is an ‘Update.’

Regardless of the label used, an appraisal of a property that was the subject of a prior
assignment is not an extension of the prior assignment – it is a new appraisal assignment.
Information about an appraiser’s obligations in this situation can be found in Advisory
Opinion 3, Update of a Prior Assignment.
 
When using the new 1004D dual-purpose form.......if you are only being asked to provide evidence that the dwelling is complete per plans & specs, be sure to enter a comment such as "This section does not apply for this assignment." in the space at the top of the form for Summary Appraisal Update Report. And leave the box UNCHECKED for that part of the form.

Doing the above will show the lender that an 'Update' was not included as a scope of work, and will also prevent them (hopefully!) of altering your form.

Note that the Update portion of the form only certifies that the value has not DECLINED since the original report effective date.
 
If the value had declined since the original report effective date would you suggest a new report be prepared or would you include comparables to support your opinion? Should a value be stated on the new 1004D?
 
Hello Lorie..........

The form asks if the property has declined in value [Y] [N].

If Yes, you have to support your conclusion, and the only good way to do that is via another form report (2055 or 1004), or with a narrative report.

If you have concluded that the value has declined, I would encourage you to contact the client and explain the situation. You should be compensated for your time to prepare the new supporting report, which may be more than normally charged for just the 1004D Update portion.

When doing these, you need to do a comp search per the new current assignment date. This will be your evidence for a Yes/No decision.

Your original post did not imply that the lender wanted an Update to the value, but just a notice that the home is complete (bottom of form). So ignore the Update unless they specifically ask for that to be done. Their engagement instructions/order form should be your clue. And frankly if they don't ask for an Update up front, don't rock the boat!

Dave
 
I've done a couple of these in the last week or two on reports i did last year. We had this same talk. And if all they are looking for is a cert of completion then simply fill out the lower part of the form. And add a comment in the top part saying this was not part of the assignment.

The one i did yesterday the builder cut corners in what appeared every way he could lol. he got caught i always take out the orginal spec sheet and check out what was and was not done. Reported the information back to the bank on the form (saying of course the house was not completed per plans and specs). See what happens from here.
 
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