Small apartment 71 B form

[valuecommando]

I'm appraising a small apartment (8 unit) for an asset management company on a 71 B form. It is a non lending appraisal for asset valuation purposes with a loan amount of zero. The form says borrower/client. I'm assuming that the client and the lender are the same, right? Why does it say borrower/client in the same line by the way? Also, is it okay to use a Freddie mac form for a non lending appraisal?:icon_question: Looking forward to hearing your response.

 

[Michigan CG]

I don't know of any appraisers who use a form for an 8 unit property and I doubt many of us are familiar with the form you are referring to. I have heard of the form but have never looked at it.

 

[JSmith43]

That form was last edited in the 1970's. Don't expect to meet current USPAP reporting requirements by filling in the blanks. I know you didn't imply that, but if someone is using this form, it is because the client doesn't want the expense of a narrative report & may have this one tied into it's data systems so that certain field information can be mined or flow through to its various housekeeping software. Maybe

It is going to be a compliance document for them, unless you make the argument presented in the report & addenda compelling. Otherwise, they will go with the most compelling BPO & keep your report for regulator target practice:icon_mrgreen:

I think the Statute of Limitations has expired for the last report I did, based upon a 71B & I aim to keep it that way. An appraiser might as well use a good narrative template & staple the 71B to the end, right after the license, resume & copy of E & O declarations.

Have a nice day

 

[CANative]

Why does it say borrower/client in the same line by the way?

Right above that cell is the statement:

This Form may be used for appraisal of income producing properties provided the loan request does not exceed $750,000.

Why would you select this for to report a non-lending use appraisal?

 

[hastalavista]

I've used that form before for asset management purposes when I was working for another appraiser to earn my commercial experience hours. The client was not a lender, but a private investor. I've also used it once for a bank (the value was well under $750k, let alone the loan).

I find that form a bit "clumsy" (the best word I can think of) in its presentation of the data and how it flows. But, you certainly can use it, and unlike the current GSE residential forms, there is no prohibition against modifying the pre-printed SOW or certifications that are imbedded in the form.
You'll have to make sure you correctly touch upon all the current required reporting elements.

Question: If for asset management purposes, depending on the client, have you considered offering a Restricted Appraisal Report? You can customize that reporting format to give the client exactly what it wants (it doesn't have to be "state" for everything; you can put as much detail in any reporting element as you want, but for others that are not so critical to your client, those you can simply "state"). If you are not fully familiar with the reporting limitations and the client/intended user limitations, make sure you bone-up before you pursue that option.

Good luck!

 

[CANative]

I noticed that the comparable rent and market comparison adjustment tables have unit breakdowns for only 4 units. How do you work the tables when there are more than 4 units (8 in the OPs example)?

 

[hastalavista]

I noticed that the comparable rent and market comparison adjustment tables have unit breakdowns for only 4 units. How do you work the tables when there are more than 4 units (8 in the OPs example)?

It has four grid lines, but in the first box it states "number of units".
Presuming the unit breakdown is
1. Studio
2. 1br
3. 2br
4. 3br
there are a number of scenarios that fit the form. Most would (yes, the bath counts could add another wildcard into the mix).
For those that don't, that's where my "clumsy" description of the form comes in. :new_smile-l:

The OP has 8-units. If they are all 2br/1ba, the form's grid works very well.

 

[George Hatch]

I used that form many times before I developed my own forms in 2007, and it isn't any less of a problem for those assignments than any of the GSE forms are for their's. It's easier to fill in the USPAP blanks for pre-USPAP forms than it is to do repair work on forms designed in 2005 that never entirely meshed with USPAP in 2005, let alone 2014.

Unless there are leases there's no reason to get any further into a unit breakdown than by unit type. Most smaller projects don't have more than 3 different unit types at the most.

I personally think the 71b form is more useful for those assignments (say, 5-15 units) than the GSE 1025 form for 2-4s. TO ME, that's the worst appraisal form there is in appraisal practice.

I still occasionally see the 8-pg 71a form used for bigger projects - usually with a substantial narrative attached as an addendum. It works okay for the reader although I think that's a more time consuming process for the appraiser. I would never do it that way because in those I think the narrative is actually easier.

The one benefit of forms is that the casual reader can quickly find what they're looking for without having to embark on the easter egg hunt. Narratives mostly require a complete read.

 

[hastalavista]

Unless there are leases there's no reason to get any further into a unit breakdown than by unit type. Most smaller projects don't have more than 3 different unit types at the most.

I know a longtime MAI whose practice is almost exclusively estate or small-investor portfolios. For apartments, unless there is a good reason not to, she uses this form for all of those valuations.

 

[George Hatch]

Makes sense to me. I am not a format snob. If it works for the user then that's a big benchmark for me.

WRT the larger and more complicated properties the 71b is too skimpy on income/expenses or supporting cap rates for my tastes but that's what addenda are for, right?