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What Would You Have Done?

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Blue1

Thread Starter
Elite Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
California
Did an assignment in May for a proposed construction. Made the appraisal "subject to" completion per plans and specs. Last week, I'm asked to do a "442" (final inspection) but.....by the way.....the sale price is increased $6,000 (on a 300+K sale price) because of "upgrades" the buyer wanted. This was over my original appraised value for the property. "You can just state that you think the higher sale price is O.K per the underwriter" (the LO tells me)

I said "NOPE" I need to do an "update" and, oh yeah, I need the Cost list for the all the upgrades. The LO provided my with all the info I requested. In our increasing market, there were adequate comps to support the "new" sale price which coincided with the upgraded Cost list.

I Charged for an upgrade and for the "442" final inspection.

I got paid but was told that the underwriter said I didn't have to provide the update........Did I do more than I had to do? Did I do wrong? What say you all?
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Bruce:

It seems to be common practice in my area to toss the additional higher value supporting sales in the folder, and just give them what they want in terms of value statement - right on the 442

Something along the lines of "there was a nominal increase in the final sales contract of 2% due to upgrades including - yada-yada-ya. The market supports a higher value of 'blah blah blah... This is a restricted use limited appraisal and cannot be understood without additional information found in the appraisers workfile and incorporates by reference the original report on the subject dated xx-xx-xxxx, and may not be used by other than the named client."

This should keep you out of USPAP hot water... I dunno if the great state of CA would consider it acceptable if under fire: I'd throw a rudimentary grid into my file just to be sure, and charge more than a final but less than a new appraisal... but then that is sort of what you did...

Actually I think they got mad cause you gave them the extra paper... they'd have passed off on the addditional chage but you made them read something and gave them value for thier money :roll: .

Didn't your mentor teach you KISS? :wink:
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Bruce,

Your client is simply behind the times. IMO, you did the right thing. After they get a few more appraisers like you to do the right thing, they'll get the message and make everyone else do it the same way. This is a classic case of choosing whether to be a leader or a follower. You chose to be the leader, thereby taking control of the situation. This is the professional way to handle it. Those who choose to follow are doomed to be forever on the defensive, constantly looking over their shoulder for the inevitable complaint.

That said, you might have also been able to do it on the 442 form, as Lee Ann has suggested. I just think that it was easier to do it correctly by doing it the way that you did. Less hassle in the long run.

George Hatch
 
Joined
Jan 16, 2002
You got it right. Just more manipulation by lenders. Yesterday, lender called after final inspection on new construction was completed and received by them. Lender calls and says "what's the new higher value ?"
Sorry, a final inspection is a final inspection.
 

Dave Doering

Sophomore Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Missouri
IMHO you did exactly the right thing. The key or operative words are "new" and "value", both of which involve an appraisal activity subject to the rules of Standards 1 and 2. What your client is requesting is an Update of the appraisal to reflect changes from the original assumptions. To simply state the value has increased without sufficient documentation either the update reporting document and most certainly in the work file would leave you vulnerable to a USPAP violation charge.

In addition, if you are updating the appraisal to reflect changes found as of the date of completion, since your are no longer limiting your completion inspection to verifying that the conditions of the appraisal as of the original effective date have been successful met, it would also seem to me to be appropriate to analyze sales as of the last inspection date to reflect any changes in the market value as of the new effective date. This would include a review of current sales as well.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
All right. I'm going to differ. If they did updates, but DO NOT NEED an updated appraisal to support the value (significant down payment, etc), then it's not your concern. Your concern is whether the home is complete. If you want to state that there were additional updates in the comment section, that's fine, but no value estimate was requested or required.
 

Dave Doering

Sophomore Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Missouri
In reading the original post on this thread, it appears that according to the underwriter they were requesting a statement to support the higher sales price. For the appraiser to acknowledge and make any such statement affirming its support or lack of support in the market, in my opinion, falls within the definition of an appraisal. That was the basis of my prior comment stating that in order to make such a statement; whether to acknowledge a specific value; direction of value; or to state a new value, falls under Standards 1 and 2 and must be documented and communicated to the client accordingly.

On the other hand, if all the appraiser does is required to do is to verify that the conditions of the original appraisal have been met (via the 442 or other mechanism) it is merely and extension of the original assignment and does not put forth a new value or new effective date of valuation. However, to state a value based upon a revised set of circumstances or as of a new date is a new appraisal problem.
 

Blue1

Thread Starter
Elite Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
California
Dave,

That's right, they wanted me to state that I concurred with the new sales price. They said I could "write an addendum" like I said....NOPE! I could not do that without doing an update of my original report. In that report, I included the updated cost sheet, the new contract addendum stating the new purchase price and I also provided comparables sales that closed subsequent to the original report date. I also did a 442 and (asked for and got) a Certificate of Completion which I included in the 442.
 

Frederick R. Ruffell

Senior Member
Joined
Jan 21, 2002
Professional Status
Certified General Appraiser
State
California
Blue 1,
You did exactly what I have done in the past.
I cannot believe how many clients do not know what they actually need. How many times have we been asked for a recertification of value and then when we give it to them we get a phone call asking why the effective date has not been changed? And then when you explain that what they really need is an Appraisal Update they get annoyed and ask why you did not tell them that in the first place as if you are a mind reader. :twisted: They are soooo ready to tell you how to do your job. Another example, just today I got a call from a coordinator asking if they could give me the number of a borrower (appraisal already complete) who wants to talk to me. "sure as long as you provide in writing a release of liability" says I. "What??, why are you being so difficult?" I pointed out the small type titled Confidentiality Agreement that appears on every order they send me and asked if they had ever read it? "Ohhh" :wink:
 

jtrotta

Senior Member
Joined
Jan 16, 2002
Blue 1

according to your statement you did the original appraisal in May; final is being done in Sept. (120 marker :?: ) and the LO states the final cost has increased, due to upgrades.

Case closed; an update of the original report is required, along with the final inspection - you did the right job 8O :lol: and it required the "update fee & final" - but I might have, as LeeAnn put it-charge a slightly less fee for the combination. It IMHO, cannot be done on an addendum.


8)
 
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