Where does the requirement to inspect comparable sales from at least the street arise from?

[TerryRohrer]

I thought there was a certification in the preprinted form where it stated what was done, but a quick scan didn't reveal it. Is it in the FNMA selling guide and FHA Handbook 4000.1?

I'm not looking to debate the need or dangers of inspecting comps. I have been all over this county and have likely seen all of them at one time or another, and from a quick perusal of the likely comp candidates will inspect them all anyway when inspecting the subject.

I offered the client an option of an appraisal with subject only inspection and MLS comp photos with no personal inspection, or inspection of both for a higher fee. Of course, they selected the lower fee, but I want to restate our agreement and warn of any consequences that may arise. That essentially would preclude FNMA, Freddie, VA, and FHA if I am correctly guessing this requirement is stated by each. I appraised the purchase by the owner for the same credit union client 2 years ago, so clearly it has been kept inhouse, but I want to be sure they are told the appraisal won't serve those other purpose. Thanks!

 

[TerryRohrer]

Well, shoulda read more carefully! There it is in the Scope of Work section where it belongs! Had to find it in the selling guide under unacceptable appraisal practices!

 

[George Hatch]

I don't think it ever hurts to question exactly where lies the dividing line between what we think is required vs what is actually stated as being required.

You kinda gotta be careful when you do that, though; otherwise you get accused of being disloyal to fee appraisers.

 

[Tom4value]

Inspecting the comps is NOT a USPAP requirement. Think desktop hybrids. The issue is if you attest that you did and didn’t. You found it in the form.

 

[Fernando]

Well, shoulda read more carefully! There it is in the Scope of Work section where it belongs! Had to find it in the selling guide under unacceptable appraisal practices!

Real appraisers would know the necessity to drive by comps as best way to compare to subject's location. That's the flaw with desktop reviewers.
That's the problem with USPAP and lender requirements, appraisers see if not required, it's a pass not to do the necessary appraisal practices.

 

[Terrel L. Shields]

Say it is prepared under standards of the Interagency Guidelines. (IAG). Since I do narratives only, no one is going to try and take one to secondary market. I have a check list of what I did and didn't do, along with commentary.

 

[Bob Ipock]

Inspecting the comps is NOT a USPAP requirement. Think desktop hybrids. The issue is if you attest that you did and didn’t. You found it in the form.

See FAQ 192. It indicates you must comply with the form certifications.

 

[TerryRohrer]

Another question arises, if nothing more than to ensure that this isn't a completely useless thread. The 1004 form states that "This appraisal report is subject to the following scope of work, intended use, intended user, definition of market value, statement of assumptions and limiting conditions, and certifications. Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted. The appraiser may expand the scope of work to include any additional research or analysis necessary based on the complexity of this appraisal assignment. Modifications or deletions to the certifications are also not permitted. However, additional certifications that do not constitute material alterations to this appraisal report, such as those required by law or those related to the appraiser’s continuing education or membership in an appraisal organization, are permitted."

Some contend that the "are not permitted" phrase is absolute, and can't be modified if using this form, and by extension, the scope of work can only be expanded. I disagree. It is a requirement, in FHA assignments, to include a statement that FHA is an intended user of the report, but FHA is not the lender/client identified as the intended user by the form. The changes in the reporting of neighborhood trends, etc, with the introduction of the 1004MC also changes the usage of the form from its intended usage. I am sure there are others, including the changes implemented during Covid, that I haven't used, am not thinking of, or never heard of. But my position is that any part of the preprinted form can be overridden with agreement of the client and the necessary disclosure in the report, although I usually see the "FHA is an intended user" phrase without any qualification or recognition of the discrepancy created by that requirement. In other words, common usage of the form since its inception has been to modify the report to override preprinted verbiage as warranted, which negates any notion that the preprinted verbiage is absolute.

 

[TerryRohrer]

See FAQ 192. It indicates you must comply with the form certifications.

Thanks for that. I agree with that based on the Question, which includes "The assignment conditions require me to comply with this statement (personally inspected comps from the exterior). However, in the case where the appraiser and the client have agreed that is not an assignment requirement, I don't agree that you must comply with form requirements (as opposed to certifications). See my post immediately after yours.

Edit: Note to self...read before posting! FAQ 192 further says, "You must either inspect the sales or change your report to indicate that you did not inspect the sales." Seems iron clad!

 

[ucbruin]

Like so many other things of modern life....
So many old rules when there was little to no technology....