Scope of Work Question

[Mary Tiernan]

Well, I tell you I got a little concerned after reading some of the comments regarding "draft" reports about how I handle this.

As it is stated the Scope of Work does not have to be "labeled", my Scope of Work is typically throughout the whole report, i.e., three paragraphs at beginning of addendum broadly describing the steps utilized, then exact neighborhood under Neighborhood Description, market analysis under Market Conditions, exactly which MLSs and the extent of research under sales comments, etc.

When a client has correction or addendum requests, I utilize the Additional Comments section of the addendum (ACI) and begin with:

Original report signed and sent to client on June XX, 2008.

One June XX, client asked appraiser to provide additional detail regarding XXXXX.

Additional paragraph regarding what client wanted addressed is placed here.

Report resigned and resent to client on June XX. No other changes made.


Occassionally, client will send additional sales in the area or ask for additional comparables.

I do the same thing as above, then pull some quotes out of the sales comments as to why no other comparables were utilized: As stated in appraisal under comments to sales comparisons:

Blah Blah Blah

Then I add a statement that the sales provided by client on XX were considered in the development of the appraisal and deemed not relevant to the subject. Then I explain that I did not add the sales as they are not considered relevant and including them in the report may result in a misleading report. No other changes made. No change to opinion of value as provided on June XX.


Never had anyone come back at me with that one.

But, because of the "draft" issues in another thread, and the fact that our own Ray is fighting with his Board over this exact issue, I have to wonder if it is all fruitless anyway.

 

[Mike Garrett RAA]

Timely topic. I recently concluded an appraisal assignment and reported my value conclusion to the client via my appraisal report. My opinion of value was about $6,000 below the contract amount. Two days later I get a call from the builder stating there was a sale that occurred two months ago that would support a higher value but it wasn't reported on MLS. I had ask the on-site sales rep if she had any sales she wanted me to consider at the time of my inspection of the subject. She did not indicate there were other sales that did not appear on MLS.

To make a long story shorter...that sale did cause me to change my opinion of value. The client is the Department of Veterans Affairs and asks appraisers to "reconsider" if there is other data that might affect my value conclusion. I don't believe this is a new assignment but rather an extension of my original work. Effective date remains the same, I did change the date of the report and added a comment stating why I changed my appraisal and issued a new report.

Don't think that changed my Scope of Work.

 

[Fred]

my Scope of Work is typically throughout the whole report, i.e.,

I think you mean, the disclosure of your SOW is throughout the report.

 

[Fred]

The client is the Department of Veterans Affairs and asks appraisers to "reconsider" if there is other data that might affect my value conclusion. I don't believe this is a new assignment but rather an extension of my original work. Effective date remains the same, I did change the date of the report and added a comment stating why I changed my appraisal and issued a new report.

I think many of you are missing something very critical to how we got here.

I think it was in 2000, that the ASB added the term “assignment” to the term “assignment results.” Together these two definitions create a timeline, in which an assignment is something that begins (with an agreement for service) and ends (with the communication of results). Up to that point, the ASB recognized through AO-3 that doing subsequent work on the same property for the same client was an “extension” of the prior work. That is, assignments didn't end, but were little pieces readily extensible. So, in the 2001 USPAP, the definitions (of assignments as something that end) and the opinion that assignments don’t end were in conflict.

In 2002, the conflict was resolved when the ASB put AO-3 through an about face. From that point on, in concert with the definitions sections, AO-3 opined that subsequent research and analysis involving the same property for the same client, was “simply a new assignment,” rather than an “extension” of the old assignment. Mike, the "extension" idea is gone, replaced, and in contradiction to what replaced it.

From reading this forum, I would say that most understand readily that when the limited assignment comes first, e.g. the “comp check.” And the “full” appraisal comes second, that there are two assignments, two agreements that each led to its own unique scope of work, each developing its own unique results. However, I would say there is little recognition, in some cases, that when the “full” appraisal comes first, and the “comp check” ("extra" comps) or something else comes second, that these are also two assignments, with two scopes and two sets of results.

When the little assignment comes second, in the form of "stips," people want to backslide into the old "extension" logic. There is probably a general impression that recognizing the stip as a new assignment is more effort, but it isn't. When the VA or anyone else causes you to do new research and new analysis, that this is “simply a new assignment,” not an “extension” of the old assignment.

Don't think that changed my Scope of Work.

Your first SOW ended and you issued a report. So, of course, when you receive what is "simply a new assignment," your original completed scope is unaffected by the fact that there is now a second assignment leading to a second scope. It's not that you have an unchanged scope, you have two scopes.

 

[CANative]

Steve... What about just rearranging the presentation of data? See my above post with the sample verbiage. The "additional comp" I sent them was already analyzed and included in the report. In the first report it was included in a spreadsheet of all sales in the area for the past year. I knew about the sale and in my head I added and subtracted (adjustments) to the sales price and decided it the MV indicator was still in the range of what I was getting from much better comp sales. But since I had 5 comps on the same rural road all with about 160 acres, I didn't present this sale in the FannieForm sale grids. The problem with the "good sales" is that they ranged in sale dates from 2006 to late 2007 and the UW wanted a fresher sale.

So did the scope of work change and was this a new assignment? The only thing that changed was how I communicated.

 

[Fred]

Steve... What about just rearranging the presentation of data? See my above post with the sample verbiage. The "additional comp" I sent them was already analyzed and included in the report. In the first report it was included in a spreadsheet of all sales in the area for the past year. I knew about the sale and in my head I added and subtracted (adjustments) to the sales price and decided it the MV indicator was still in the range of what I was getting from much better comp sales. But since I had 5 comps on the same rural road all with about 160 acres, I didn't present this sale in the FannieForm sale grids. The problem with the "good sales" is that they ranged in sale dates from 2006 to late 2007 and the UW wanted a fresher sale.

So did the scope of work change and was this a new assignment? The only thing that changed was how I communicated.

Apparently the difficult point to get a across, is that after you submit the report of a completed assignment, I don’t see how that scope can cange after that - any more than you can go back and change the Battle of Gettysburg. Time only runs in one direction.

In the abstract, a subsequent request for service can entail a number of functions. You could be revising typos, you could be doing a market analysis, and you could be, in effect, reviewing your own work. Each variation of combination of variations is something different. To some extent, what you seem to be describing here could be disclosing more of your work file, - ie you relied on five sales, but only put three on the form - and now showing the others could be amending a report, rather than developing anything. It's possible. You have to know what you did, better than I do.

That said, don’t you find it troubling that the UW is controlling the selection of the comps that go in the report?? From what I have seen, the three sales that go in the report are the ones that get the weight. It seems to me that the UW is exerting control both over the process and the result.

I haven’t read much of the HVCC and IVPI stuff, because it seems too far across the border into absurdity. What is the point of all this bureaucratic hoopla safeguarding independence, when apparently any UW at any bank can determine ahead of time which variables will control the comp selection process? First, you have Fannie telling appraisers three sales make an appraisal and the UW telling you which three sales - I am not sure I would sign the cert as the developer of the appraisal, just a junior associate. And perhaps cross out some of those lines about how you picked the best comps? Maybe this seems simple to me because scope of work is nothing more than what you did, and disclosing it nothing more than saying what you did. Look at the scope disclosure you gave in this thread - you found five sales and selected the three that met the UW's search critieria. I bet you didn't say that in the report.

 

[Mary Tiernan]

I would tend to agree that letting someone else tell the appraiser what comps to place in a report is just not acceptable.

I often get upset at appraisers that come here and say they want more comps. SO

There are no other comps, and the original report should fully detail that. Any subsequent requests to add more comps or listings should be rejected.

To add comps to a report which are not relevant to the subject, I just think you have now affected the report in an adverse way, so why add them????

We are not pacifiers, we are appraisers. We should be proud of our work and stand by it.

Yes, Steven, I guess I should have only spoken in complete compliance with USPAP.

So, going to the new assignment stipulation that you have opined . . .

This is all semantics. I cannot reassign a report to a new lender, it is a new assignment. Send me an order. I will go back and see the house, look for any additional sales since two days ago, and provide a report for this lender under the guise of a new assignment. It is a cut and paste operation, considered a new assignment for a new lender. But, guess what, I just reassigned the report. I followed the stupid steps and rules, but, I just reassigned the report.

I do not change my file numbers for edits to my report. I do, however, consider it an addendum to the original appraisal. Effective data has not changd, the date I signed the report has changed, as has some of the information provided in the report. It is not a new assignment.

Does USPAP cover addendums???? Does it prohibit addendums? Does it allow addendums?

 

[CANative]

Look at the scope disclosure you gave in this thread - you found five sales and selected the three that met the UW's search critieria. I bet you didn't say that in the report.

I have a separate scope of work statement and a separate sales comparison, cost approach and income approach section. Here's the SA addendum. I bet I did say that in the report. :new_newbie:

Comments on the sales comparison:
Rural, sparsely populated region with very few sales of any kind in any given year. This is a very large geographic area with most properties on large tracts of land and distance between the subject and the available sales which could be considered reasonably comparable is not a factor relating to value. It was also necessary to use somewhat dated sales as well as sales which required numerous adjustments and adjustments which exceed the guidelines of secondary market GSE's. This is typical when appraising properties in the Anderson Valley. The comparable sales used in this report were considered to be the most reasonably similar, proximate and recent sales available. All sales and listings presented are located in Yorkville Ranch on Yorkville Ranch Road. Generally, higher street numbers are closer to the gate from Highway 128 with the lower numbers being some 40 to 45 minutes from Highway 128. Highest and best use for a residential property is at about 20 to 50 acres. Larger tracts of land considered surplus (undividable) land. Market data indicates that surplus land adjustments of about $5,000 to $7,500 per acre are supportable. Due to the high cost of construction, lack of inventory and market demand for large homes of good quality the appraiser has determined that GLA adjustments when ncessary are supportable at about $150 per square foot. Many properties in the more remote areas of Anderson Valley have no electrical service due to the high cost of bringing power lines to the site. As the state of the art of solar photovoltaic systems advances and cost of these systems decreases it has become an acceptable alternative to public power and there does not seem to be any evidence that marketability and sales prices are adversely effected by lack of connection to the power grid. Other adjustments are self explantory or discussed in the comments on the sales comparables below. 2006 sales prices adjusted downward by 10% to reflect changing market conditions. Mid-2007 sales adjusted downwad by 5% for apparent changes in market taking place at this time. Comp 2 not adjusted for mid-2007 sale as there was a large reduction in the sales price after a long time on the market.

Of the 43 closed sales in the Anderson Valley in the last 24 months and the 17 listings active at this time, the properties presented in the sales comparison grids in this report and described below are the most reasonably similar available and the most relevant based on proximity and lot sizes.

Comparable sale 1, 22451 Yorkville Ranch Rd
2006 sale of a large lot residential property on Yorkville Ranch Road. Located about 1/2 mile from the gate at Highway 128, this 200+- acre parcel features a unique custom home with a southwest architectural design. Larger residence of good quality construction and good appeal for high value recreational property in this area. The property features a small detached accessory unit with 1 bedroom and 1 bath but no kitchen. Other features include two very large, but older barns. This property is off the public electric power grid and uses altnerative power systems. More or less similar topography and zoning. Surplus land adjusted downward at about $5,000 per acre. Difference in GLA adjusted downward at $75 per square foot <edit... this is a typo I just found. Dagnabbit!). Views from the residence are panoramic valley which are arguably superior to subjects less panoramic hill and valley views, but the difference is not sufficientlyt dramatic enough to support an adjustment.

Comparable sale 2, 19840 Yorkville Ranch Rd. July 2007 sale of a 169 acre tract located very near the subject. This is a similar tract of land with inferior views in general and average wooded views from the homesite. A large view adjustment was required. Although the residential improvements are more similar in GLA that the other comparable properties, they consist of an older cabin of fair quality and average condition. Older barn or orther outbuilding of little or no measurable conntributory value.

Comparable sale 3, 22785 Yorkville Ranch Rd, 22785 Yorkville Ranch Road. The most recent sale of a 100+ acre residential property in Yorkville. Located closer to Highway 128. 113 acre tract of rangeland and meadows. The property includes a 4 acre Pinot Noir vineyard. The appraiser has a number of files with data indicating that a small but high quality wine vineyard in the Yorkville Appellation will command a premium of about $40,000 per acre. Larger 2,100 square foot residence of good quality and good condition. Very good views, Accessory dwelling unit, barn and pond.

Comparable listing 4, 21161 Yorkville Ranch Rd. This is an active listing of the property adjacent to the subject and which shares a small portion of the driveway. The lot is very similar to the subect but is less developed (driveway is fair, spring water system versus well and storage tank, etc.) The improvements consist of two small yurt style cabins (polygon shape) and a large barn. Listed at $2,750,000 on March 30, 2008. This property is obviously priced well above market acceptance. The listing agent stated that the list price was set by the seller.

Comparable listing 5, 16260 Yorkville Ranch Rd. Recently listed at $949,000 (April 30, 2008). 161 acre tract with a newer cottage or cabin of average quality and in like new condition. Mostly steep and hilly land with small areas of gentle or meadow type land. There is also a stocked pond on this property. Located on the backside of Yorkville Ranch about 40 minutes from the gate at Highway 128. Listing price appears to reflect the more remote location along this dirt and gravel road.

Comparable sale 6, 975 Highway 128, Philo. Added at the request of the client's investor. March 2008 sales of a 40 acre property located between the small Anderson Valley communities of Philo and Navarro. Mostly gentle land with some acreage suitable for a vineyard. Superior to the subject's steeper and hilly topography and the lot size difference of 120 acres was adjusted upward at $2,500 per acre versus $5,000 per acre. Improvements include a very small one bedroom cabin, a 20 stall barn with office, large hay barn, fencing and cross fencing, a 1 car garage and a one room guest cottage with bath. See additional comments regarding this sale in the scope of work section on Page 3.

Wow! Lots of typos.

 

[Mike Garrett RAA]

Funny how summarize has now become describe!

 

[CANative]

Funny how summarize has now become describe!

I work in areas where breaking every rule in the GSE form book is the norm. I'm just heading off UW's at the pass.