Suggestions needed for Limited Restricted

[Pamela Crowley (Florida)]

Received a call this morning. Client needs appraisal for 7:30 am court date and the appraiser that had over a week to do it went on vacation and isn't back yet. (My X supervisor! HA!!!)

Client is owner going through divorce. Judge order them to get an appraisal for the cost of the residential structure only. House is 1 year old.

I'm thinking of doing this as Cost Approach only, using Marshall & Swift Form 1007, narrative limited restricted report. USPAP compliance is top in mind since I've never done this type of restricted report before. I think that with the house being only 1 year old, this would be reasonable and it's what the judge wants. Atty said the judge will likely ask about the land value but that since the husband (my client) has owned it (vacant) for numerous years prior to this brief marriage, it will not be considered in the judgement.

What say you all? Any and all suggestions are appreciated. Looks like I'll be up all night. Caffein will get me through... I hope!!! The attorney said she will try to get me in front of the judge first. 7:30 AM!!!!! Yikes.

 

[Mountain Man]

You need an engagement letter from your client stating that all he wants is a limited-restricted, cost approach only please.

Just make short list of some land sale in your appraisal, give a value opinion, and state some comment like:
As is typical for the Restricted format, the sales listed are a summary of similar sales used to support the estimated value for the subject lot. The complete information on each sale is available in the appraiser’s file.
And:
1 - Reliance on this report is limited to the client;
2 - This report cannot be understood properly without additional information in the appraisers’ file;
3 - This report is for the sole intended use of the client;
4 - This report will not be distributed by the client to any third party;
5 - The utility of this report is limited.

 

[Anonymous]

I have a problem with the notion that a restricted report, which supposedly is only valid for the client alone, when you know in fact, that the court is also an "intended user."

I cannot see how one could parse the meaning of the restrictions on Restricted reports to mean "Client" plus one.

In my opinion, you could do a cost estimate as a Consulting assignment, and summarize the results in a format of your choice. AO-21 describes a rent survey assignment, which, in my opinion, would be similar to a Cost Valuation assignment. You do not have to render an opinion of MARKET value as part of the assignment, but rather would estimate a depreciated cost new for a structure.

Or, you could provide an oral appraisal, and hope no one wants to see your workfile.....which you will create at some point later.
TER

 

[Mountain Man]

Hmmm, that might work. But the Judge is going to ax for a land value opinion. Gotta have some supporting data.

 

[Mountain Man]

Either way, good luck to ya Pam. Maybe you could ask the court for 3 days to do a proper job. This calls for extra $$$$ with professional witness $$$$. Turn the phone off and get some sleep Tues afternoon.

 

[bradellis]

Pam,

Some important points.

1. You may not do this as a restricted report. That would be intended to be eyes only to a client, but this is for court so it will eventually become a part to a public record (unless the judge tells you he is going to seal the records- not likely in a divorce case).

2. I'd get more clarification. Just because the judge said "cost" does not mean he/she did not actually mean value. Sometimes these things seem simple and end up complicated. If you cannot get an answer (also common) be prepared with at least a 2055 if you are asked to provide an opinion of market value as well.

3. If they really do want cost only, it is "typically" a limited appraisal as you would depart from USPAP in not doing sales comparison. Use the JE as well as your basis for departure.

4. If they want replacement cost only, it is not even an appraisal and would be part of valuation services since cost is a fact and value is an opinion. Once you get into estimating depreciation and adding land "value" is becomes part of appraisal practice.

Good luck,

Brad Ellis, IFA, RAA

 

[Pamela Crowley (Florida)]

Thanks to Mell, Ter and Brad; especially Mel who emailed some very helpful ideas to me late last night.

Never did make it to bed and was 15 minutes late to court this morning tring to get my report to print out properly. At least I wasn't the last one in! Was the last one to get questioned. (more $$$ while waiting)

The opposition attorney tried to get me to comment on the appraisal done for his side. I wouldn't & quoted USPAP. He tried to get me to give him a value as of 4 years ago.... I wouldn't & quoted USPAP. He kept trying until my sides attorney accused him of badgering me. I supported my own values very well. Then he made the biggest mistake of all. He tried to say my narrative was wrong and should have been done on the URAR form as his appraiser did hers - asked me about that. Well.... after my brief dissertation regarding how long narratives were the standard and just who came up with the URAR (Fannie Mae) and what it's used for (Lending/Mortgage purposes), he gave up and had no more questions for me. Even the judge was smirking and I found out afterwards that he has a Real Estate background.

What FUN!!!!

Brad, thank you for your comments regarding Restricted. Wish I had read that or thought of it last night. By the time I was finished though, it actually could have been called a Limited Summary. I'll know better next time. In fact, I'm looking forward to the next time. Hope my performance this morning gets more of this kind of work. I badly need a nap that I won't get but it was worth it. Only my second time.

 

[George Hatch]

Pamela,

To recap your courtroom experience, if I may.....

The opposing counsel was looking for a weak spot in your appraisal knowledge and practices. Because you are a well educated and professional appraiser, your understanding and application of USPAP and appraisal practice was greater than the attorney's. Ergo, your work product 'won' by being successfully defended. Primarily with your reliance on USPAP as a defendable standard of conduct.

IMO, it should always go this way. The appraiser accepts the assignment, figures out what is required (intended use, intended user), delivers it and then is prepared to back it up. In situations like this, it is also important to avoid delving into aspects that are not part of the original engagement. Finally, the appraiser's knowledge of USPAP and how it is applied is sufficient to provide a 'shield' to protect the appraiser from doing things they didn't want to do anyway, and also as a defendable standard for their own work.

Lawyers should never be more familiar with our job than we are. We are supposed to be the experts on what we do, which is why it's called expert witness testimony.

Congratulations on your apparent success.

George Hatch

 

[Mountain Man]

Yeah for Pam :!: Another win for the good guys.

 

[Tim Hicks (Texas)]

Good job, Pam. I am very proud of you and your effort.