USPAP question

[J Grant]

I would like to address your post 39 but am still not sure what purpose of report is - is it a market value opinion purpose ? ( you said earlier FRT/foreclosure but did not say if purpose is MV opinion ...thanks for your kind reply to my comments- I am assuming unless otherwise it is a MV purpose appraisal.

 

[KONA]

If you ignor the first inspection, then you would be covering up. I am not saying you are doing this.

 

[J Grant]

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It appears you have answered your own question. Throughout the string, it is agreed an appraiser needs to own the first physical conditions report within the second appraisal (simple disclosure). However, I am not sure you can EA away anything.

Agree, can not (imo) EA the first report away.

Here is something else I am not sure of which you appear to be alluding to. So correct me if I am wrong. It is my opinion, the second report was standard procedure. The first report (which provided core samples) is actually above and beyond what is generally seen. My point is I am not convinced the second is substandard. What is convincing is the first report appears more credible. This may be splitting straws but none the less true.

You are saying ordering a less in depth inspection report is standard procedure commercial properties or foreclosure sellers ? That may be the case, but it is not applicable now to this assignment.

The extraordinary assumption could be something as simple as "had xxxx company inspected the subject under ideal conditions the report would yield similar results". As a group, we have no idea how the second engineering firm will respond. It is not unusual to have dueling reports. Whether they are related to the physical condition or the valuation of the property, reconciliation is a major part of commercial appraising. This reconciliation is done in the third step of the assignment.

You said in first sentence you are not sure can EA away ! The fact is client ordered two reports, the first was more complete, end of story. Stuck with it. Have to disclose the first report was done and what results are, and how it might affect MV , because MV assumes a well informed buyer- who might become aware of/order a complete inspection report. Either provide two values, or disclose

Here is what I do not get from many of the comments (not yours exclusively). That somehow the lender is going to cherry-pick the report and place the most desirable ones in the file? This begs the question of how is this possible without being caught? There are appraisal orders, emails, and checks paid for services. Further, such behavior would be a felony on the banker's part, it does not make sense to me as to why some believe this could happen. And most of all how is this the appraisers' responsibility?

We can not anticipate, nor be responsible for, what a lender will do. It does not matter what the lender does /or which report they use - we are responsible for what WE do in the appraisal, and we can not be, or appear to be, deceptive/misleading in our appraisal , no matter which inspection we base a value on. Since so many of your peers are seeing an issue imo that is valid feedback

 

[Stephen J. Vertin MAI]

"Since so many of your peers are seeing an issue imo that is valid feedback"

I consider it all valid feedback. Even Glen's input. However, you have to admit the majority of concerns (as to even addressing the issue in a manner helpful to parties involved) come from people in the residential industry. I believe this evolves from limited scope work. Generally, clients like Fannie, VA, Freddie all have specific guidelines (paint by numbers approach to problems). So many appraisers are left with "can I or can't I do this" instead of answering clients' valuation questions. This is no slight it is just coming from a different perspective and I can appreciate it.

As you pointed out, two reports are a solution with a reconciliation (adding full disclosure). I think most of us agree as to the process. It echos "a well-informed buyer" as you pointed to.

 

[Stephen J. Vertin MAI]

"You are saying ordering a less in-depth inspection report is standard procedure commercial properties or foreclosure sellers? That may be the case, but it is not applicable now to this assignment".

Sorry, I hit reply but wanted to add your comment above.

Personally, I would not use the term "less in-depth." I would say "core samples are not normal". I have only seen samples taken in HUD's assessment of needs reports. Generally, such analysis is not prepared in the normal course of business. It would be similar to an appraiser providing 5-years real estate taxes and noticing the taxes were not paid 2015. While this type of analysis was required by FEMA (at one time) most reports forego the process.

So, unless I am misinterpreting what you are saying, both reports are applicable. Both reports warrant application. It is just as deceptive or an error of omission to not mention the second report relying only on the first.

 

[George Hatch]

Like I said before, if you have your reasons for whichever choice you do end up making then that's the thing - your reasoning. If your reasoning makes sense under the circumstances then beyond that it's hard for someone to criticize the opinion after the fact.

 

[CANative]

With all due respect Mr. Vertin, the difference between your scenario and a similar residential scenario doesn't seem to be all that different. Two roof reports that do not agree and the client doesn't know. And I understand the issue of this leaving the client still wondering. So the best option seems to be the solution of provide multiple valuations. I would also get the client to agree to making the first valuation scenario based on the more credible "older" report (the one they don't like) with at least one other valuation using the "newer" report (the one they don't like) as an alternate scenario.

If they don't agree to your terms, the other option is to withdraw from the assignment. Personally, I don't like being played by a client.

 

[Stephen J. Vertin MAI]

With all due respect Mr. Vertin, the difference between your scenario and a similar residential scenario doesn't seem to be all that different. Two roof reports that do not agree and the client doesn't know. And I understand the issue of this leaving the client still wondering. So the best option seems to be the solution of provide multiple valuations. I would also get the client to agree to making the first valuation scenario based on the more credible "older" report (the one they don't like) with at least one other valuation using the "newer" report (the one they don't like) as an alternate scenario.

If they don't agree to your terms, the other option is to withdraw from the assignment. Personally, I don't like being played by a client.

No argument the mechanics behind applying the scenarios are pretty much the same. However, my comments have to do more with the reaction to using the mechanics. In this sense it is fairly divided. I am not sure that getting the client to agree to something before they read it is possible. But the jester does not fall on deaf ears Curious as to why you you believe anyone could be played here? Perhaps it is used as a figure of speech but if not I interested in possible pitfalls.

 

[CANative]

I didn't really mean anything by the comment. I did not go back and read all of your later posts but I seemed to remember one report seemed to imply a more serious problem than the other report. Or perhaps just less information due to snow on the roof.

In any case, I was just posting to be posting. I always enjoy reading your posts here and, as one of your fans, it's sometimes tempting to write something.

 

[Stephen J. Vertin MAI]

Can: I appreciate the positive feed back