The time frame for under construction appraisal.

[moh malekpour]

Brad,
No, the appraisal was current and yes, I did put the time frame there. Regarding the value change in connetction with the time. It says it may change, which means it may or may not. When there is a time, there should be a reason for that time. If the time is a reasonable time table for the builder's commitment and it took the builder more than a reasonable time to complete,what would you do?

 

[Carnivore]

I actually never heard of that, giving an estimated time for completion. Never been asked, never read it anywhere, never heard of it until now. Is this for FHA, maybe?

Charlotte,

Well the estimate for completion is USPAP 1-4, but that is specifically proposed construction. I assumed it would apply to in-progress work also, along with the AS-IS value of a partially built house. I forget where that is about the AS-IS value. I thinks its FDIC.

 

[Mike Boyd]

time to complete

There are many justifiable reasons why the projected completion date could not be met. Franckly, I thought that the new 1004D had a place for new comps so that an update could be done. As long as the 1004D was made as an attchment to the original report I see nothing wrong with providing a new effective date, if required.

 

[moh malekpour]

Mike, I agree with that. There is alwasy a possibility that the completion date could not be met, then there should be a reason and a way to update the appraisal if the market has been changed. I am not talking about one or two weeks delay. I am talking about a long time delay.

 

[Brad Ellis]

Moh,

You gave them an "as completed" value under a hypothetical.

Estimated time of completion, while required, applies mostly to commercial projects because the analysis of the projected cash flows discounted back to the present, and considering absorption rates, will matter in the CF analysis.

For SFRs it is very much less important, although still required.
Looks to me like you complied, used a source that is named as acceptable (contractor).

If it takes longer to complete (really very normal and usual), too bad. The original condition you used was that the home was already completed per plans/specs. Any future value will depend upon the market at the time. If over 4-6 months they ought to get an update (4 mos for Fannie).

Brad

 

[moh malekpour]

Brad,
As we discuss, they have just informed me that the construction is completed and ready for final inspection and I agree with your conclusion paragraph and that is why I mentioned in the report the time frame and a subtle condition for the time in the case if it was not completed at the reasonable time. Again, I knew that 5 weeks was short but 4 or 5 months usually is a reasonable time to complete a construction that was already started up to the frame and roof.

 

[Fred]

Estimated time of completion, while required, applies mostly to commercial projects

First, someone ought to point out that SR 1-4 is not a binding requirement. If part of it is "not applicable" to your asignment, then you are not "required" to do it. Even if it is applicable, you are still not "required" to do it (departure).

Second, completion date is applicable for value as is or value on the completion date, not applicable for value as if already completed. That goes for commercial and residential.

FWIW, that SR is omitted from the 06 USPAP, and this remnant of it appears in the SR 1-4(e) (relvant characteristics)

"When appraising proposed modifications, an appraiser must examine and have available for future examination, plans, specifications, or other documentation sufficient to identify the scope and character of the proposed modifications."
This seems to spell out less detail. ​

 

[moh malekpour]

Second, completion date is applicable for value as is or value on the completion date, not applicable for value as if already completed. That goes for commercial and residential.

Steven,
What do you mean by "completion date is applicable for value as is? If the value is in "as is", then the value is for what is there at the time of inspection . If they want as is value at the completion date, then a different as is value would be there at the completion date or a prospective appraisal can be done which is not as is either. But if they want the value not "as is" but "as if it is completed", then it should be subject to as if not in as is.

 

[Robert Dunkle]

As some of the others have hinted, I wish a problem like that was at the top of my problem list! There are a number of things that could have occurred. Maybe the deal fell through, maybe there were weather delays. If it goes past your requirements and they ASK for a final, tell them it will be a new assignment. You may lose a client....or not.

I have done a hundred or more P& S reports for one of my clients and have not been asked for more than a handful of final reports. I told them in a rather direct manner that the reports I had done were not "legitimate" since I hadn't done a final and their response was that they "would look into it". Sometimes I do a P&S and the builder sells it before they have to do permanent financing and I understand. However, many of these have been for custom houses. They only get "ansie" when they are facing a federal examination.

 

[Fred]

Moh,

What do you mean by "completion date is applicable for value as is? If the value is in "as is", then the value is for what is there at the time of inspection.

Present value is function of how long it will take to start realizing the future benefits. Would you buy into a project, put yourself in a position where you would have to invest more money to finish the project – and have no idea when the project would be complete?