Summary, self-contained

[Terrel L. Shields]

the exception being the 3yr services disclosure.

For me, that's just a waste of breath...and this little tete-a-tete dance we go thru prior to acceptance is a clear waste of time for clients... One client asked me, "What do you tell us that? We KNOW you appraised it before and that's why I picked you..."
I have no quarrel with reasoned mandatory disclosures but some are not well thought out. And for those of us in resource appraising oft run into situations that make some disclosures very awkward and rather trite or pointless.

 

[Lee Lansford]

...

All three terms should be abolished and the appraiser should have a choice to provide a form report or a narrative and each to be appropriately fleshed out according to the needs of the client and the appraisers own judgment of what needs to go in it to make it understandable.

Abolish the 3 levels.

Brother Terrel, I have to disagree.

I understand that the definitions and understanding of the 3 reporting options are a bit fuzzy. But, I also think that most competent (side-note: too few of these types) appraisers would be able to conclude--after reading two separate reports--which one is more "restricted" and which one is more "self-contained". Eliminate the standards and we have--what?

As to relying upon "the appraisers own judgment"--well, I don't have a whole lot of confidence in that.

 

[Terrel L. Shields]

But, I also think that most competent ...appraisers would be able to conclude--after reading two separate reports--which one is more "restricted" and which one is more "self-contained".

Your very verbiage is ambiguous.

The "standards" - reporting options - are "Restricted", "Summary" and "Self-contained". John Widdoss, MAI, past Pres of ASFMRA, instructor deluxe, said once "I don't know what a "self-contained" report is... He was working on a valuation of geo-thermal power plant at the time and the 700 page report was a "summary"...

I have repeatedly heard instructors preach that the option is that of the lowest common denominator.... If one statement required by USPAP is summarized in a 1,200 page report, then it is a summary, no matter how much detail lies in the remainder of the report. If say, zoning is stated "Zoning is C2" without further explanation, then the report is restricted no matter what else the report contains or whether it is labeled "summary" or not. The absurdity of that logic is built into the 3 reporting options.

The forms have a format - UAD now - and that is a summary. It is not the only summary option. So? I just finished a 39 page "summary" report. I could have labeled it "restricted" and who is to vet it otherwise?

Eliminate the standards and we have--what?

Pre-1994. Were reports from then so muddled no one could understand them? Were we in appraisal purgatory before the scales fell from our eyes in the true white light of USPAP brilliance as the PTB pulled back the curtain of our ignorance? Nah. Everyone raised bloody L about it then... We also got "limited" and "complete"...terms that are now eliminated but not before the word "limited" completely tainted our lingo.

Prior to 1994, narrative reports were typically described as "full" reports and "limited" reports. It was descriptive of the detail of the report. A 20 page report was likely a Limited reporting format, whereas the "full" report implied all three approaches and a more detailed report. And guess what they called "form" reports? ...duh, "Form" reports. How quaint. Terminology that really described what was what.

 

[farmguy]

Right on Terrell

 

[George Hatch]

My feeling all along was that we should have dealt with this at the same time and in the same manner as was used for the SOWR. Beyond some basic disclosures, content is driven by what's meaningful to the users based on their usage of the report.

Doing it that way for the SOWR didn't make the development side of appraising any more complicated or difficult, and it was sure a lot easier to explain to appraisers and users than the concept of Complete vs Less-Than-Complete. Some appraisers never did figure that out and still don't understand it to this day.

I can't tell you how many appraisers thought that the difference between a complete appraisal vs a limited appraisal was whether or not there was an interior inspection. And no, I'm not making that up.

Like I said, in the real world certain clients want your conclusions without any explanation. It makes sense to retain the Restricted Use(r) report option for those narrow uses, just as it makes sense to limit its usage to the client due to the complete lack of context provided for those conclusions. Nobody reading a bare bones Restricted Use Report can develop any opinions about credibility because the content excludes all that information and analyses.

Having another option requiring more detail makes sense, too. But once you get into multiple intended users or users who require more explanation and detail that's all going to be user driven anyway. Likewise, the benchmarks for judging how much is enough will also be established by the expectations of the types of users who normally use such reports and the actions of the appraisers who deal with them.

The SOWR uses a building-block approach to development. There are a few basics that are present in every assignment no matter what, and then additional components get added as appropriate under the circumstances. It seems to me that using any other approach toward reporting requirements would be both inconsistent and unnecessary. Why *wouldn't* an appraiser want to aim their report content at their intended users?

The 3-yr sales history and 3-yr services history are basically housekeeping requirements. It's annoying to be required to go through the motions even when it's not relevant or desired but they're not really making your job tougher, either. The ASB had to weigh the cost of requiring it for all assignments no matter what vs the benefits of "catching" disclosures that would never be missed if omitted were they not required. It seems apparent that they were added in response to complaints from the mortgage lending business, so I guess we can blame the bankers for those.

The whole form-drives-the-process mentality makes me insane, though; particularly when considering the fact that a couple of these forms designers basically have it in for appraisers. Putting appraisal standards in their hands is the wrong direction, IMO, because they're not necessarily looking for the level playing field between appraisers and their users.

 

[Terrel L. Shields]

in the same manner as was used for the SOWR

correct

3-yr services history are basically ...to go through the motions even when it's not relevant or desired but they're not really making your job tougher

Liability is liability and walking the plank sooner or later you fall off. I do repeat jobs for a lender. They are under orders to revalue all FRT appraisals annually...performing or not. I have done a lot of those from 1994 - present, any number of times.

The wasted motion is enormous. Some I have valued twice in 3 years, and will 3 times by end of next year. Some REOs I have valued 3 times in a year. Pre-foreclosure, post-foreclosure, and pre-sale. One of those is sitting on my desk now.

Today I will inspect 11 properties -6 are all one property but were purchased separately. I have appraised each and every one in the past six years. Maybe only 3 in the past 3...It's probably 20 - 30 minutes wasted time every week with this same issue. The back and forth necessary to secure an assignment within the letter of the law....but who would be the wiser or even give a hoot, if I ignored that and made the generic statement within the report? My client couldn't care less.

The argument for such disclosures can only rest upon the premise that we appraisers are scumbags. We cannot be trusted to disclose important information. We cannot be relied upon to report what we see and value the property independently. And it is rapidly becoming a self-fulfilling prophecy as the GSEs creatively attempt to make forms that do all, catch all, and USPAP adds their own form of "stips"...

 

[Mike Garrett RAA]

I have yet to do an appraisal assignment on a property appraised within the last three years since this requirement took place. Since I don't deliver pizzas or mow other peoples lawns that isn't an issue.

Once upon a time, mid 80s, I was appraising for FHA and they asked us to appraise their REO inventory every 90 days until those properties were sold. One property I appraised 6 times. Those were the "good old days" as it simply was just a matter of finding new comps. That was when FHA would "re-hab" the property too.

Good post, George...I think you covered it all.

 

[CANative]

I can't tell you how many appraisers thought that the difference between a complete appraisal vs a limited appraisal was whether or not there was an interior inspection.

It seemed to me that the biggest difference was that elimination of the departure rule was that the appraiser didn't have to get permission ahead of time to eliminate an unnecessary approach.

 

[Terrel L. Shields]

When I started appraising, my mentors, to a man/woman were reluctant to submit any report that did not consider a report "complete" if it didn't use at least 2 approaches to value.

 

[George Hatch]

correct

Liability is liability and walking the plank sooner or later you fall off. I do repeat jobs for a lender. They are under orders to revalue all FRT appraisals annually...performing or not. I have done a lot of those from 1994 - present, any number of times.

The wasted motion is enormous. Some I have valued twice in 3 years, and will 3 times by end of next year. Some REOs I have valued 3 times in a year. Pre-foreclosure, post-foreclosure, and pre-sale. One of those is sitting on my desk now.

Today I will inspect 11 properties -6 are all one property but were purchased separately. I have appraised each and every one in the past six years. Maybe only 3 in the past 3...It's probably 20 - 30 minutes wasted time every week with this same issue. The back and forth necessary to secure an assignment within the letter of the law....but who would be the wiser or even give a hoot, if I ignored that and made the generic statement within the report? My client couldn't care less.

The argument for such disclosures can only rest upon the premise that we appraisers are scumbags. We cannot be trusted to disclose important information. We cannot be relied upon to report what we see and value the property independently. And it is rapidly becoming a self-fulfilling prophecy as the GSEs creatively attempt to make forms that do all, catch all, and USPAP adds their own form of "stips"...

I fail to see how simply changing the words disclosing "No, I dint" to "Yes, I did previously appraise this property lasy year" in a report would take you 20 minutes. That is, unless you're spending 19 of those minutes venting your anger and your contempt for USPAP to your computer monitor before editing the sentence.