USPAP question

[J Grant]

The credibility issues has to do more with the season inspected and type of testing. I believe both firms did their best under specific conditions which we all can relate to. The first company inspected the roof late spring and did core samples of decking and suspension rafters. The second did it in the dead of winter with 6 inches of snow and completed no core samples. The repair cost difference between the two reports is significant. The latter report showed half the repair cost of the first. There is nothing dodgy going on. The client and I have no intentions of doing anything dubious. How could we, a significant paper trail exist? Again, there are legitimate reasons they want the second report used. The client has even contacted the developer of the second report so they can read or review the first report for possible reconsideration.

Why an extraordinary assumption again? Whoever said you can't undo seeing the first report is absolutely correct. Thereby, it seems the simplest way to handle it would be to assume it does not exist, when in fact it does exist and say why we are using the second report (simply claiming it is done for analysis purpose).

I wouldn't call it credibility re the inspection report, I would call it thoroughness. Hard to understand why your client wants an appraisal based on a less through report done in winter when no core samples could be taken due to snow, when the first report had the core samples done . It does sound dodgy, sorry to say , like your client went inspector/season shopping to get a result they wanted ( less repair cost ).

The MV definition is based on a well informed and well advised buyer acting prudently. So unless most buyers for this property are going to rely on a partial inspection report which skipped essentials,- that t assumes the buyer is an idiot and will never find out about the more serious problems the first report uncovered.

In Real Estate most state laws say a seller must disclose known defects, so how could the seller of this building fail to disclose the first inspection findings ?

 

[Stephen J. Vertin MAI]

Glen; it is an issue of the preponderance of the evidence.

 

[Stephen J. Vertin MAI]

You guys are funny. Did you all start thinking these thoughts when reading questions on the comprehensive? A question has to have parameters. Please do not go outside of them. You have all the relevant information to answer the question. I can not nor do I have the energy to disclose more.

 

[J Grant]

It's a FRT purpose foreclosure.

sorry not familiar with frt purpose what that means...the property is in foreclosure? Still not understanding this assignment, is it MV or not , aka some user or client wants to know what is worth?

Analogy a dealer has a used car that is a repo. Dealer gets car inspected, , first mechanic does a full inspect and finds 5k of repair. Then seller orders a second mechanic when they know the lift is broken in garage so mechanic can only see half the systems, thus second mechanic finds only 2k in repair, and seller wants value of car to only reflect the 2k of repair.

 

[KONA]

JG, good analogy. FRT (Federal Related Transaction). I believe Glen hit the target.

 

[glenn walker]

Stephen if you would have said it was for a FRT foreclosure, that would have changed the entire discussion, because those literally require no disclosure at least in my State its "as is" --I think you were being a little disingenuous, by not telling this up front -That it was a foreclosure, and there was not even a reason , to post your so called BS assumptions, and I am highly disappointed, with your conduct as a so called professional , there is no need to jerk other appraisers around when you had already determined what you were going to do, regarding what and how you were going to proceed, In the future I will consider your questions as nothing but BS and wasting other appraisers time.

 

[George Hatch]

Mebs! Mebs! Maintain low tones. This isn't how we did it back home in....France.

We have no way of knowing what other assignment conditions may apply to this assignment. Besides, just in general it was a good question for Stephen to ask and it gave us another opportunity to consider anew the ins and outs of the HC vs EA question. I stumbled across another way to explain them so I learned something from it, too.

And there's nothing wrong with having a plan but taking the extra step of bouncing it against the sounding board to see what makes sense. Better to do that here with us than with our clients.

 

[Stephen J. Vertin MAI]

Glen, my friend, you should consider switching to decaf. And my cover-up BS was performed because??? Well...put on your aluminum pyramid-shaped hat and think about it. I am excited to hear the answer that comes to you through the cosmos.

Anyway, I appreciate the thoughtful feedback and God bless you. George thanks for the input and the rest who gave some insight into this issue. It is greatly appreciated.

 

[KHS445]

A question and a thought as to why the client has requested the use of one report over the other.

- How eminent is the roof issue? Is it something that requires immediate attention and repair, or is it something that should be addressed in the 3 to 5 year range? If the latter one could argue that as of the date of inspection the roof was adequate, but may be reaching its end of life. All physical improvements eventually need some attention.

- If the client is the lender how the property is valued could affect where any loss is taken. General financial accounting states that basically any loss determined at the time of acquisition can be covered by their loan loss reserve. Then any loss that occurs after they have initially established a book value needs to be deducted from their operating income. So depending on the size of the hit the lender may have made the decision to book the property at the highest possible value, avoid the hit to the loss reserve at the present time and then plan for and make any necessary adjustments to value in the future. Yes, the loss reserve is funded out of operating expenses and generally in equal monthly transfers so as to smooth out the operating statement. The calculation to determine adequate funding is based on a series of steps, each of which is weighted differently depending on the anticipated loss potential. Sort of a mark to market thing.

 

[Mike Kennedy]

"The first company inspected the roof late spring and did core samples of decking and suspension rafters. The second did it in the dead of winter with 6 inches of snow and completed no core samples."

Apple vs Lemon comparison, placing more/most weight on the Winter report would be, IMO, intentionally negligent.