Two Values Including Prospective Opinion

[Terrel L. Shields]

I have had every covid shot available

Must affected your mental health then. You do understand that every Covid vaccine was designed to fight the previous kind of Covid as the virus is evolving (or de-evolving) into a new version faster than the vaccine can be developed. So the vaccine is months behind and totally ineffective unless you accidently stumble into a Covid infection that was left over from the disease a year ago. Studies now show the vaccine is totally ineffective to the point it is actually harmful in latter iterations of the disease.

You also risk side effects

...some individuals have reported chronic symptoms, known as long post-vaccination syndrome (LPCVS), developing shortly after vaccination. These symptoms, which can last longer than four weeks, are highly variable and may include visual disturbances, fatigue, muscle pain, and more.​

 

[Zoe]

Must affected your mental health then. You do understand that every Covid vaccine was designed to fight the previous kind of Covid as the virus is evolving (or de-evolving) into a new version faster than the vaccine can be developed. So the vaccine is months behind and totally ineffective unless you accidently stumble into a Covid infection that was left over from the disease a year ago. Studies now show the vaccine is totally ineffective to the point it is actually harmful in latter iterations of the disease.

You also risk side effects

...some individuals have reported chronic symptoms, known as long post-vaccination syndrome (LPCVS), developing shortly after vaccination. These symptoms, which can last longer than four weeks, are highly variable and may include visual disturbances, fatigue, muscle pain, and more.​

I know that. That is the way viruses operate. Like some food can kill people that are highly allergic to them. A wasp or bee sting can kill some people.

I understand what you are saying.

I am not a doctor and don't claim to give medical advice to anybody. I will say you need to go to the doctor or I can take you to hospital. That is about as far as I go on medical advice.

I don't even know CPR.

I did do the birthing classes. I think I could help a woman in a dire emergency. I would be calling 911 while helping her. LOL

 

[Zoe]

If you lost a limb and were bleeding to death, I think I could tie some of my clothes or your clothes around it until ambulance got there. That is extent of my medical advice.

Put a bandaid on it. LOL

 

[PushinValue]

I have done countless FNMA, FHA and private party rehab loans wanting as is and as repaired. Never have they requested a prospective date. Always have been the same effective date

Hypothetical condition only. You are valuing contrary to what exists, not assuming anything, it’s a condition of completion per plans

 

[George Hatch]

The answer isn't never and it isn't always. I have performed many SFR assignments where the prospective value was requested in addition to the "as is". I also have reviewed many others over the past few years. (wearing my boots on the ground, no less)

Although I've reviewed many appraisals including a prospective which were written on a GSE form, for the last 15 years I've been doing my SFR reports on a custom appraisal report form that no appraisalware vendor has. So that's how I know for a fact that none of the SFR appraisals I have done during those years have ever been used at the GSEs.

Construction lending - including flip projects - are done at commercial rates/terms and the borrowers are short term investors or builders, not home buyers. They get held in the lender's portfolio, not sold off in the secondary market. They're not written at residential rate/terms and then sold off.

There are about to be thousands of one-off SFR builds in the LA region in the aftermath of the wildfires. Most or all of these projects will be done by portfolio lenders. They aren't going to request a prospective because they want to; they're doing it because their regulators are requiring it of them and are dinging them if they don't get it.

Those appraisers who have never done a prospective value are about to face such requests if/when working on these construction loans. It might not be all of them but my guess is that it probably will be most of them. No appraiser wants to get involved with fortune telling the future value, but the regulated lenders have no choice - they are required to get them.

 

[Zoe]

The answer isn't never and it isn't always. I have performed many SFR assignments where the prospective value was requested in addition to the "as is". I also have reviewed many others over the past few years. (wearing my boots on the ground, no less)

Although I've reviewed many appraisals including a prospective which were written on a GSE form, for the last 15 years I've been doing my SFR reports on a custom appraisal report form that no appraisalware vendor has. So that's how I know for a fact that none of the SFR appraisals I have done during those years have ever been used at the GSEs.

Construction lending - including flip projects - are done at commercial rates/terms and the borrowers are short term investors or builders, not home buyers. They get held in the lender's portfolio, not sold off in the secondary market. They're not written at residential rate/terms and then sold off.

There are about to be thousands of one-off SFR builds in the LA region in the aftermath of the wildfires. Most or all of these projects will be done by portfolio lenders. They aren't going to request a prospective because they want to; they're doing it because their regulators are requiring it of them and are dinging them if they don't get it.

Those appraisers who have never done a prospective value are about to face such requests if/when working on these construction loans. It might not be all of them but my guess is that it probably will be most of them. No appraiser wants to get involved with fortune telling the future value, but the regulated lenders have no choice - they are required to get them.

That is fine. If you are doing discounted cash flow analysis , then the future income stream is valued as of effective date. So it takes forecasted income as of concurrent date. You may have both HC and EA in your prospective value appraisals, which is fine.

 

[Zoe]

TO BE 'AS STABILIZED' OR NOT TO BE 'AS STABILIZED' - Enlighten Financial

Bankers have long known to use the appraised valuation that best represents the phase or status being financed for a commercial real estate (CRE) acquisition, development and construction (ADC) loan. The valuation should provide an opinion of the highest and best use of the property, considering...

enlightenfinancial.com

That article is pretty good on explaining it. Most lenders just don't need the prospective value when making the loan today. It is very possible you could have EA and HC in prospective value appraisal

 

[sputnam]

"as is" and "as if completed" is common as of the same effective date.

It is.. but that isn't what the OP said. The OP said... prospective as repaired value. Are you assuming that the OP doesn't know what a prospective value is?

 

[Zoe]

Bingo. As it occurs so often, the AF is supported by so many super-intelligent folks that it is a humbling experience, although I also often wonder whether "most" of the thousands of residential appraisers are familiar with these nuances that appear new every durn day????

I know what you mean

 

[bsilver]

Thanks as always, although I'm unsure whether I will ever be able to understand "since it is the probable event, it's not contrary to what will exist..." that caused a flashback to confusion I experienced during a Philosphy course decades ago...although I often wonder why residential lending appraisals aren't based on prospective opinions because it's the future rather than current value of a property that most affects collaterization in the long run, possibly because the accuracy would be so problematic...

The difference between EA and HC is subtle but important. The label used to identify the assumption is not the test of whether the assumption made is an EA or HC, but it is the knowledge of the reality versus the assumption, as of the effective date of valuation.
- If the assumption premises a condition that is KNOWN TO BE FALSE, as of the effective date, that is a HC.
- If the assumption premises a condition that is UNCERTAIN BUT REASONABLY PRESUMED, as of the effective date, that is a EA.
So, an assumption of completed construction as of a future date, if the future date is the effective date of valuation, is not known to be false, it is uncertain, hence it is an EA.

The nut of the difference is generally related to assignment conditions. If the appraisal is to be "as-is", HC cannot be employed because that would be "as if". There seems to be some debate as to whether an appraisal premised on an EA is an "as is" valuation. Some sources say no, some say it's "as is subject to the EA", some say it's flat out fine.

Another common error stems from the appropriate use of an EA for presumption of future events versus its inappropriate use. Let's say you're assignment is to estimate the value of a four lot subdivision that is under contract to close in 6 six weeks contingent on permit approvals, which are in process and expected to be awarded. Often reports will say that there is an EA that approvals will be in place as of closing or language to that effect. Labeling such an assumption an EA does not make it one. This is a HC unless the date of valuation is prospective as of the date of proposed approval award.

So if the lender has required an "as is" premised opinion (no HC), and will not accept a prospective value (to use an EA), the appraiser can not provide the value consistent with USPAP. This is a tough situation; because of the nuanced and esoteric nature of the jargon definitions, it's hard enough just to think this through let alone discuss the situation with a lender.