Summary Vs. Self Contained

[Austin]

Steve:
Let me ax you a question. If you hired me to do an appraisal on a commercial property you owned and requested a SC report, would you want me to spend an hour or so explaining what H & BU is, what zoning means in your own market, what the market trend is in your market area, etc.? I think the answer is no, SC is client specific. I work mostly for a local bank and my personal clientel and their top people are involved in local affairs. I do SC reports for them all the time but I don't explain the same thing over and over again that I have been telling them for the last 20 years. I know these people, we discuss these issues, they know the area as well or better than I do, so SC takes on a totally different view under these circumstances. What do I need to explain to a man that owns 1,500 apartment units? Hell, I wish he would explain something to me.
If a state board was not present when the client and appraiser discussed the purpose and intended use of the appraisal, they don't know what each knew about the background knowledge each perceived the other party possessed, there is no way they could pass judgment on the scope of appraisal or the content of the report. SC to me means explaining and describing what needs to be described to the client-intended user and summarizing what the appraiser knows what the client already understands. SC like a beauty is in the eye of the beholder. I know it when I see but I don't know when I can't see.

 

[Stone]

Actually, Austin, I don't think SC does depend on the client. That is kind of the point with a SC report. The client doesn't have to fill in the blanks. What you are describing, IMO, is a summary report for a knowledgeable client who for some reason asks for a self-contained but is fine with a summary.

I'm not saying you should explain the same thing over and over. But the fact that you don't means you are not producing a self-contained report. There is nothing wrong with a summary report for many, many clients. As long as they understand what is up and you give them enough info to come to an understanding of the report. One of the things I like about not doing SC reports for clients who don't demand them, is not explaining stuff to the same degree when I know that they already understand what is going on.

 

[Hal Mann]

Originally posted by Austin+Aug 25 2005, 10:32 AM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (Austin @ Aug 25 2005, 10:32 AM)</td></tr><tr><td id='QUOTE'>Steve:
Let me ax you a question.[/b]

Sorry Austin, but violence is not permitted on the Forum.


<!--QuoteBegin-Michael Stone@Aug 25 2005, 11:32 AM
I don't think SC does depend on the client.[/quote]
I agree with Michael; Austin's example is a summary report. It is a not a relative thing. I can't find the source offhand, but I have seen it stated numerous times that if any part of a report is summary in nature, then the report, overall, must be considered summary in nature.

I'm sure that there are very few reports produced that would meet a strict definition of "self-contained" (though there are many which claim to be "s-c").

As for form reports, these are inherently summary in nature (to me forms are in some ways closer to restricted in nature), and I doubt even Otis could attach enough addenda to bring a form report to a self-contained level.

 

[Austin]

Michael:
The key word you used is degree. I have a standard statement I put into all narrative reports. I state the purpose and intended use. I explain the scope of appraisal and explain how I determined the scope of appraisal. I state that I discussed the particulars of this assignment with John Doe Client the intended users and that the narrative is directed to John Doe based on our meetings of the minds as to what information we agreed the client needs to solve his problem. I state that it is not possible to write a report that can explain a complex assignment that everyone can understand and for that reason any other intended or unintended user could find it misleading and should consult either the client or appraiser.
The appraisal report is written to the client and is not a general publication for mass distribution to the public. The object is to inform while at the same time not mislead. There is no way you can explain something as complex as a commercial appraisal to the average person short of attaching a copy of the 12th edition in the addendum. I write on my clients perceived level of understanding and put enough information so he or she can understand it. If a state board does not know my client or was not privy to the conservation we had when determining the scope of appraisal there is no way they can pass judgment about the sufficiency of the report or where the line is between summary and self-contained. If this line could be clearly perceived, we would not be having this conservation. If the state boards are so clairvoyant on this point, let them clarify it with a detailed explanation of the exact content of each report type. The fact that no board has ever done that should tell you something. They don’t know either, but that doesn’t stop them does it. “I know it when I see it and if I don't understand it, it is misleading, won’t pass the arbitrary and capricious test.” The fact that this happens repeatedly is just further proof that state boards have more authority than they have competence and I blame the legislatures for that. Fifteen years of this crap is long enough for the system to have figures that out.

 

[xm39hnu]

Austin,
You'll be okay next year when SOW takes over from complete/limited and restricted/summary/self-contained. Right now, you're summarizing some parts--and you're right to do so! It's what your client wants. If I could get away with it, I'd label everything that goes out "Restricted Use." If I were you, I'd try to get the client to accept a summary label with the contents you provide.

As you say, state boards have a lot more power than competence. (I like that, and I'm going to pay it the highest of compliments and steal it ) Don't give'em a foothold, unless you know where they buried the bodies and can bluff'em.

 

[Fred]

Jim

Would you do it differently? If not, why not? If so, why?

Yes, no, maybe.

I have to get into some legacy here before I needle George. That AO has been changed, including an error that I pointed out in a comment letter – where the self-c said “describe” and summary said “provide a description.”

The original version is funnier in several ways. For example, it suggested “tabular” form as a summary, but then included the table in the self-contained example instead of the summary example.

We labor under an incongruous system because the ASB doesn’t recognize the single factor that most determines the necessary length and complexity of a report – the complexity of the appraisal problem. Even the skimpiest lease-by-lease analysis of Mall America would dwarf the most self-contained report of a new condo unit with an active model-match market.

Flammable, inflammable and non-inflammable – why are there three?

- George Carlin

The other monkey wrench is that logically there are only two types of situations - 1) the report is sufficient on its own or 2) it refers to important stuff left behind in files. Why are there three labels for that? People engage in imagining massive self-contained requirements because they assume the ASB is rational and would not have created a third name that duplicates the second.

Beam me up, Scottie!

 

[Fred]

Steve:
Let me ax you a question. If you hired me to do an appraisal on a commercial property you owned and requested a SC report, would you want me to spend an hour or so explaining what H & BU is, what zoning means in your own market, what the market trend is in your market area, etc.?

Austin,
It's just a wild guess, but if you did a report, I would expect to see what I needed. I can't imagine your reports are less comprehensive than your posts - although I would make your payment contingents on you using more than one paragraph for the whole repoort. :lol: I think your reports would be similar to mine in market analysis - I don't include bulk demographics, but if the reason that one-bed condos are going down and two-beds are not is that the proportion of gray-haired empty-nesters is going up and the proportion of single 20-somethings is going down - then its going to be mentioned.

 

[Fred]

George,

If it's any consolation, the ASB tried to get away from the Self-Contained option some time ago during one of their exposure drafts. I think it's safe to say that the idea of a "Self-Contained Report" that follows the ASBs example in their AO never caught on as the label was the same as the legalistic example where the report would be required to include everything everything everything.

We now have the overwhelming percentage of commercial appraisers who produce as much or more under the Summary Appraisal Report option than they ever did as pre-USPAP narrative reports. Hardly anyone will cop to a Self-Contained Appraisal Report these days. It's days are numbered

Put your pom-poms down, George, and watch the game. There was no draft that dealt with “scope of report,” but there was suggestion in one of the concept papers of getting rid of “labels.” So IMNSHO, the current draft throws out the baby and keeps the bathwater.

FWIW George, I know a national firm that routinely labels narratives self-contained. I have sold them “summaries” that I have seen them shrink in half and call the end result self-contained.

However, your point about “copping” to self-c has merit. So many appraisers, and in my view the ones who don’t write narratives, have conjured up gargantuan images of the report requirements for a self-c, despite the fact that the controlling standard simply says “SUFFICIENT INFORMATIOIN.” Parlez-vous "minimum standards?"

There is some legacy here:
Pre FIRREA, the FHLBB came up with standards called R-41b and those called for “self-contained” report. I don’t think they intended or anyone interpreted that this meant 100 pages of addenda on a 1004 as has been suggested here.

As to what the difference is, the federal condemnation agencies can’t figure it out either. The Yellow Book says call it either one.

The only thing that concerns me is the person who thinks he knows for sure.

I see people suggesting labeling a report as "Restricted" as a way of isolating the intended user to one individual client rather than as a way of identifying content level of the report.
Can someone clarify this?

Easy. Which label to use is measured by two variables, not one. Content and the number of intended users of the appraisal.

The not-so-easy part is when you mix that together with the standard that says that USPAP only give the minimum for each option, so there is no upper limit. Just read SR 2-2. If there is only one intended user, you can label the report restricted. If it is a thorough report, then you have exceeded the minimum content requirement.

 

[xm39hnu]

Originally posted by Steven Stantora answered...
Yes, no, maybe.

With answers like that, you should be on the ASB. But I know what you mean.

I still say the best course is to hang the Summary label on anything the Restricted label won't stick to; develop a good Scope of Work with the client's input; then give him enough information to make a decision. Hell, throw in a little extra, if you think it'll help him/her in the decision making process. And if it's not needed for that client's decision making, then leave it out.

 

[Fred]

Jim,
Point taken. Does it help if I say your example of “summarize” looks a lot like “state.”

I also see your point about using the term “summary” as a form of defensive appraising.

Suppose you decide the only fact necessary in your examples is that subject apparently conforms to zoning. Can you illustrate the difference between state, summarize and describe with respect to that one fact? I can’t.

BTW, Jim, Std 2 doesn’t specifically require that we report zoning.