When is Effective, Retrospective

[Renee Healion]

There are several reasons for the "why":

For a lender client, we previously appraised a property for a purchase transaction. About a year later the property was being sold again, and the same lender was needing another appraisal completed. They asked if we could use the same inspection/effective date so that no new market analysis would have to be performed to save on the fee. It was argued that it would still be considered "Current" market value as sometimes, say in condemnation appraisals, that the inspection/effective date may be months apart and are still considered "Current". (I have no idea if this is true as I am unfamiliar with that type of appraisal problem).

As this previous appraisal was one year prior, I believed using that previous inspection date for an effective date would mean the value would be considered "Retrospective". USPAP FAQ #155 stated above that significant change in property characteristics or market conditions would mean it is not "Current". For the intended use of a mortgage lending decision, is it even appropriate to use a Retrospective date? Would this in any way be misleading to the intended users? Any input is appreciated.

Ignacio, if you have their instructions in writing, maybe post them. As I understand your posts:

I think you are getting turned around on concepts: effective date and report date. And maybe, after talking to that client, appraisal and report.
The effective date can be any date that is agreed upon between you and a client. That agreed date for the assignment is your effective date. (For lending, it expected to be the inspection date. But that is a client condition--a legit one.)
The report date is the date you, the appraiser, transmit the report. You cannot sign in the past or future, can you? Nothing about your report signature alone makes the appraisal opinion current.

The appraisal is the results of your development. The report is how you communicate it. Appraisal is as of an effective date. Report is transmitted on a specific date by you.

If what they are asking for is what you described, then they are asking for an appraisal with an effective date the same as your last appraisal, which you delivered a year ago. The effective date is not current.
If you did that today, you would be delivering a report today but that does not make the appraisal current by any means.

It is not unreasonable for a prospective client to request an appraisal with an effective date in the past and of course you would sign such a report when you transmit it in the present time. If you, Ignacio, accept the described assignment, you would of course look at everything ANEW in that time period. It is a new assignment and deserves proper development and reporting. Why they would ask for "no new market analysis" is what sets off bells. That is improper, totally not legit. They sound cheap or misinformed (not saying they can't be both).

If you wish to continue this negotiation with that client, then you should send them a quote which compensates you for your effort to do the above free from any improper instruction. You would explain that it is a new assignment, and think to yourself it is not for the rental of your signature. Then, they could either pay you, or pay someone else, for an appraisal properly developed.

How they or someone else likens this to condemnation appraising makes no sense to me. And I cannot guess why they want a new report date on the appraisal they already have but perhaps someone else can divine that. So, worry about what they are asking you to accept, because it is your license. USPAP binds you, not them.

If they threaten you with loss of future work because you will not comply, when they could order an appraisal as of any date from you or anyone else without improper instructions, then they are a client who is not worth keeping. If you do want to talk to them, just have the concepts straight in your head, so they cannot turn you around on them.

 

[Mark K]

......still be considered "Current" market value as sometimes, say in condemnation appraisals, that the inspection/effective date may be months apart and are still considered "Current". (I have no idea if this is true as I am unfamiliar with that type of appraisal problem).

No it is not true. I do a lot of eminent domain appraising and often appraise for the courts as a court-appointed appraiser in condemnation cases.

In the instructions to the appraisers from the court, the parties will agree on the effective date which is referred to as the 'date of take' and that is the retrospective date for the appraisers. Sometimes it a few months back, other times it a year or more, but in any case, its retrospective.

As far as your other questions....I think others are providing sufficient direction. Just keep one thing in mind, no good deed goes unpunished and this type of 'favor' for a lender or client is exactly the type that will come back and bite you in the azz.