507) Certified Level Required
Dear H2,
In California, you now have to have your Certified license level to do appraisals or an Associates degree. As of Oct 1st, of 2009 FHA will also require a Certified Level. I will be out of business come October. I worked hard as a single mother to get my Appraisal License working two jobs, while training under another appraiser and am still working two jobs to try and keep my business going. Now they are going to take it all away from me! What can be done? How unfair!
Thanks in advance for any suggestions.
DEBBIE GARALDE deb_g@sbcglobal.net
Dear Debbie,
It is not a petty picture. The FHA seems determined to implement the new requirements as of 10/1/09, leaving little time for many appraisers to meet them. My only suggestion (which is a long shot) is to write to the FHA and ask for an extension, and then send a copy of your letter to you congressional representative(s) asking them to help you get the extension. In the long run, if you want to continue getting FHA work you are going to have to take the courses and pass the required exam in order to become a certified residential appraiser.
H2
Editor's note: Due to countless requests, Henry and his colleague Burton Lee have updated his 1001 Questions & Answers book and are producing three new exam prep books in the next month to help appraisers pass the revised exams. To pre-order your book, click on the link below.
In California, you now have to have your Certified license level to do appraisals or an Associates degree. As of Oct 1st, of 2009 FHA will also require a Certified Level. I will be out of business come October. I worked hard as a single mother to get my Appraisal License working two jobs, while training under another appraiser and am still working two jobs to try and keep my business going. Now they are going to take it all away from me! What can be done? How unfair!
Thanks in advance for any suggestions.
DEBBIE GARALDE deb_g@sbcglobal.net
Dear Debbie,
It is not a petty picture. The FHA seems determined to implement the new requirements as of 10/1/09, leaving little time for many appraisers to meet them. My only suggestion (which is a long shot) is to write to the FHA and ask for an extension, and then send a copy of your letter to you congressional representative(s) asking them to help you get the extension. In the long run, if you want to continue getting FHA work you are going to have to take the courses and pass the required exam in order to become a certified residential appraiser.
H2
Editor's note: Due to countless requests, Henry and his colleague Burton Lee have updated his 1001 Questions & Answers book and are producing three new exam prep books in the next month to help appraisers pass the revised exams. To pre-order your book, click on the link below.
506) Photos with People
06/28/09 Keyword: photographing
Greetings H2,
I’ve been told that it’s against Fannie/Freddie appraisal guidelines to depict a person in any photo included in an appraisal. Can you confirm if this is true and, if so, can you provide the actual citation in Fannie/Freddie guidelines?
Many thanks!
Catherine Coy catherinecoy@charter.net
Dear Catherine,
I am not aware of any such requirement. However, you can contact Fannie Mae directly at 1-888-326-6438 and ask them for their requirements. You can also email them at: resolutions@fanniemae.com
H2
I’ve been told that it’s against Fannie/Freddie appraisal guidelines to depict a person in any photo included in an appraisal. Can you confirm if this is true and, if so, can you provide the actual citation in Fannie/Freddie guidelines?
Many thanks!
Catherine Coy catherinecoy@charter.net
Dear Catherine,
I am not aware of any such requirement. However, you can contact Fannie Mae directly at 1-888-326-6438 and ask them for their requirements. You can also email them at: resolutions@fanniemae.com
H2
505) No Inspection
06/27/09 Keyword: inspection
Hello H2,
I have a situation. I showed up at a 4-unit property for my inspection. Inspecting 3 units went fine, but I had no answer at the 4th unit which is apparently a mirror image of the unit it is attached to that I was just inside. I called the owner and she came to the property to try to let me in; however apparently the locks were changed as her keys did not work on the unit.
Question:
1. Do I contact the client and ask if they would like me to proceed with the extraordinary assumption that the unit I did not get inside is considered similar to the other unit?
2. Do I just proceed that way with my report and deliver it to the client without contact first.
or
3. Do I contact the lender and decline assignment.
What is the best way to handle this?
Thank you,
Steve Brinks mnbvcv2004@yahoo.com
Dear Steve,
There is nothing in the USPAP that requires you to inspect the property or comparable sales. However, Fannie Mae, Freddie Mac and the FHA have inspection requirements. My recommendation is that you contact the lender/client and ask them what you should do. If it is still okay with the lender after you have made them aware of the Fannie Mae, Freddie Mac and the FHA requirements, then you should proceed -- making whatever assumptions you feel are most likely to be correct and base your appraised value upon these assumptions being correct. Of course, you will have to include them as extraordinary assumptions.
H2
I have a situation. I showed up at a 4-unit property for my inspection. Inspecting 3 units went fine, but I had no answer at the 4th unit which is apparently a mirror image of the unit it is attached to that I was just inside. I called the owner and she came to the property to try to let me in; however apparently the locks were changed as her keys did not work on the unit.
Question:
1. Do I contact the client and ask if they would like me to proceed with the extraordinary assumption that the unit I did not get inside is considered similar to the other unit?
2. Do I just proceed that way with my report and deliver it to the client without contact first.
or
3. Do I contact the lender and decline assignment.
What is the best way to handle this?
Thank you,
Steve Brinks mnbvcv2004@yahoo.com
Dear Steve,
There is nothing in the USPAP that requires you to inspect the property or comparable sales. However, Fannie Mae, Freddie Mac and the FHA have inspection requirements. My recommendation is that you contact the lender/client and ask them what you should do. If it is still okay with the lender after you have made them aware of the Fannie Mae, Freddie Mac and the FHA requirements, then you should proceed -- making whatever assumptions you feel are most likely to be correct and base your appraised value upon these assumptions being correct. Of course, you will have to include them as extraordinary assumptions.
H2
504) Counting Rooms
06/26/09 Keyword: new
construction
Dear Henry,
I am doing the second appraisal in a new home purchase. They have decided that the other appraiser was more correct than I was because he matched the builder's sketch for all of the rooms noted on the sketch. The total above grade rooms are 13 according to the other appraiser.
The first floor includes: Foyer, Living room, Dining Room, Conservatory, Half bath, Den, Family room, Kitchen, Sunroom, Breakfast room, Laundry room
The second floor includes: 5 Bedrooms
He is somehow counting either the breakfast room (which is an open area that is really part of the kitchen) and either the laundry room or the foyer as a room. I only count 7 rooms on the first floor. I also never count sitting rooms as they are an integral part of a bedroom.
Who is correct?
Robert O'Brien obrienconsultants@hotmail.com
Dear Robert,
There is no single national standard about how to count rooms that is widely accepted. The best thing is to use whatever is customary in your market area. Often a local MLS system will have rules about counting rooms. The FHA has some guidelines too.
H2
I am doing the second appraisal in a new home purchase. They have decided that the other appraiser was more correct than I was because he matched the builder's sketch for all of the rooms noted on the sketch. The total above grade rooms are 13 according to the other appraiser.
The first floor includes: Foyer, Living room, Dining Room, Conservatory, Half bath, Den, Family room, Kitchen, Sunroom, Breakfast room, Laundry room
The second floor includes: 5 Bedrooms
He is somehow counting either the breakfast room (which is an open area that is really part of the kitchen) and either the laundry room or the foyer as a room. I only count 7 rooms on the first floor. I also never count sitting rooms as they are an integral part of a bedroom.
Who is correct?
Robert O'Brien obrienconsultants@hotmail.com
Dear Robert,
There is no single national standard about how to count rooms that is widely accepted. The best thing is to use whatever is customary in your market area. Often a local MLS system will have rules about counting rooms. The FHA has some guidelines too.
H2
503) Repeat Appraisals
06/13/09 Keyword: USPAP
2008-2009
Dear Mr Harrison:
I am writing to you to see if you can help me with this situation that I'm in the middle of: I completed an appraisal in January 2009, and in May of 2009 the lender sent me a new assignment for the same property because the underwriter could not accept an appraisal over 90 days. I completed the new assignment on May 22, 2009.
Today, I received a new assignment for the same property because the same underwriter will not accept an appraisal under 6 months time after the first one. Can I keep doing appraisals on the same property without having problems with my FHA license? Also another client sent me an assignment yesterday for a property I did in April 2009 because the FHA case number was canceled. Can I do another appraisal so soon after the original one?
In all cases, the appraised value has been lower due to the continuing drop in prices in the area -- but how long can I continue this?
Sincerely,
Jay Jaytheappraiser@aol.com
Dear Jay,
Currently there is nothing in the USPAP to prevent you from appraising a property as many time as you want except the Confidentially rules which don't seem to apply in your situation. The new 2010-11 USPAP which goes into effect 1/1/2010 contains some additional requirements about repeat appraisals, including additional disclosure requirements. Right now the USPAP requires a new appraisal every time the effective date of the appraisal changes and whenever the lender/client changes. There are no limits on how many times you can appraise the same property. One of the best assignments I had when I was an active appraiser was from a New York Trust Company who hired me to appraise a mansion in New Haven that was in Trust and was used by a member of the family who was on the Yale faculty. I did a full narrative appraisal of this large mansion every year for over 10 years and they never questioned my fee.
H2
I am writing to you to see if you can help me with this situation that I'm in the middle of: I completed an appraisal in January 2009, and in May of 2009 the lender sent me a new assignment for the same property because the underwriter could not accept an appraisal over 90 days. I completed the new assignment on May 22, 2009.
Today, I received a new assignment for the same property because the same underwriter will not accept an appraisal under 6 months time after the first one. Can I keep doing appraisals on the same property without having problems with my FHA license? Also another client sent me an assignment yesterday for a property I did in April 2009 because the FHA case number was canceled. Can I do another appraisal so soon after the original one?
In all cases, the appraised value has been lower due to the continuing drop in prices in the area -- but how long can I continue this?
Sincerely,
Jay Jaytheappraiser@aol.com
Dear Jay,
Currently there is nothing in the USPAP to prevent you from appraising a property as many time as you want except the Confidentially rules which don't seem to apply in your situation. The new 2010-11 USPAP which goes into effect 1/1/2010 contains some additional requirements about repeat appraisals, including additional disclosure requirements. Right now the USPAP requires a new appraisal every time the effective date of the appraisal changes and whenever the lender/client changes. There are no limits on how many times you can appraise the same property. One of the best assignments I had when I was an active appraiser was from a New York Trust Company who hired me to appraise a mansion in New Haven that was in Trust and was used by a member of the family who was on the Yale faculty. I did a full narrative appraisal of this large mansion every year for over 10 years and they never questioned my fee.
H2
502) REOs and Short Sales as Comps
Dear H2,
It is getting increasingly difficult to locate recent comparable "market" sales when engaged in an assignment to determine the "market value" of a property. A search of comparable sold properties in just about any location now includes "short" and "REO" sales. My interpretation of the definition of market value would preclude me from considering these as comparable sales to determine market value since these sales, by definition, do not represent market value. Am I off base with this point? It is my opinion that the 1004 MC is intended to show what is happening in the market place, and is not intended to indicate the market value of a property or an indication of value for a property. An example is the sale of a bank owned property that has been through foreclosure and has been listed in MLS at a price. My determination of market value (for this or any other property) has nothing to do with the sale price, but rather, its market value, correct? So, in my search for sales, only sales that are true market sales can be used, correct? I have been told that these bank & short sales are the ones to use because they are what is taking place in the market. I disagree and call their attention to the DEFINITION OF MARKET VALUE as preprinted in every report and further that NO MODIFICATIONS ARE PERMITTED.
Who is correct? These are very trying times for appraisers. Thanks for all that you do for us in the trenches. You are the man!!!
David Bramuchi David@BramuchiAppraisals.com
Dear David,
The definition of Market Value that is printed on the URAR pertains to the value of the subject property and not to the comparable sales. You must consider everything that is going on in the market area, which includes such things as future development, employment trends, etc., etc. Therefore you must consider all known sales and listings, both present and historical. Most clients require that you display at least three comparable sales in the report. These are supposed to be the best comparables in your opinion. The USPAP says that it is solely up to the appraiser to determine which comparables to select, what adjustments to make, and how much weight each should be given. Short sales and REOs affect each market area differently. A big consideration is whether they are competing with the subject property and if so, what effect this competition will have on the value of the subject property. The 1004MC/72 is another matter. This requires additional factual information that Fannie Mae, Freddie Mac and others ask as part of their scope of work requirements to help them make underwriting decisions. How much weight you give this data is still up to you.
H2
It is getting increasingly difficult to locate recent comparable "market" sales when engaged in an assignment to determine the "market value" of a property. A search of comparable sold properties in just about any location now includes "short" and "REO" sales. My interpretation of the definition of market value would preclude me from considering these as comparable sales to determine market value since these sales, by definition, do not represent market value. Am I off base with this point? It is my opinion that the 1004 MC is intended to show what is happening in the market place, and is not intended to indicate the market value of a property or an indication of value for a property. An example is the sale of a bank owned property that has been through foreclosure and has been listed in MLS at a price. My determination of market value (for this or any other property) has nothing to do with the sale price, but rather, its market value, correct? So, in my search for sales, only sales that are true market sales can be used, correct? I have been told that these bank & short sales are the ones to use because they are what is taking place in the market. I disagree and call their attention to the DEFINITION OF MARKET VALUE as preprinted in every report and further that NO MODIFICATIONS ARE PERMITTED.
Who is correct? These are very trying times for appraisers. Thanks for all that you do for us in the trenches. You are the man!!!
David Bramuchi David@BramuchiAppraisals.com
Dear David,
The definition of Market Value that is printed on the URAR pertains to the value of the subject property and not to the comparable sales. You must consider everything that is going on in the market area, which includes such things as future development, employment trends, etc., etc. Therefore you must consider all known sales and listings, both present and historical. Most clients require that you display at least three comparable sales in the report. These are supposed to be the best comparables in your opinion. The USPAP says that it is solely up to the appraiser to determine which comparables to select, what adjustments to make, and how much weight each should be given. Short sales and REOs affect each market area differently. A big consideration is whether they are competing with the subject property and if so, what effect this competition will have on the value of the subject property. The 1004MC/72 is another matter. This requires additional factual information that Fannie Mae, Freddie Mac and others ask as part of their scope of work requirements to help them make underwriting decisions. How much weight you give this data is still up to you.
H2
501) AS IS Appraisals
06/11/09 Keyword: as is
Hi Henry,
I have a lender that is doing a FHA 203k loan for a property with roof damage. He sent me a proposal from a roof company with the estimated cost for a new roof, but he wants a "subject to" appraisal report with a comment in the addenda explaining the "as is" value of the property without the repair of the roof. Is that legal?
Thanks in advance for your advice.
Lele coriale4@comcast.net
Dear Lele,
There is nothing in the USPAP to prevent you from doing what the lender/client wants, provided you follow the USPAP requirements. The problem is that you have to comply also with the FHA requirements for 203K loans. The lender/client is asking for two different values. Therefore you are going to need two definitions of value and you need to take the steps necessary for what amounts to two separate appraisals. You cannot report an appraisal of "as is" value using the URAR without making serious changes to the form. This is a common problem and I suggest you talk to your FHA Regional office and see what forms they want you to use in this situation.
H2
I have a lender that is doing a FHA 203k loan for a property with roof damage. He sent me a proposal from a roof company with the estimated cost for a new roof, but he wants a "subject to" appraisal report with a comment in the addenda explaining the "as is" value of the property without the repair of the roof. Is that legal?
Thanks in advance for your advice.
Lele coriale4@comcast.net
Dear Lele,
There is nothing in the USPAP to prevent you from doing what the lender/client wants, provided you follow the USPAP requirements. The problem is that you have to comply also with the FHA requirements for 203K loans. The lender/client is asking for two different values. Therefore you are going to need two definitions of value and you need to take the steps necessary for what amounts to two separate appraisals. You cannot report an appraisal of "as is" value using the URAR without making serious changes to the form. This is a common problem and I suggest you talk to your FHA Regional office and see what forms they want you to use in this situation.
H2
500) Appraising Partial Interest
06/10/09 Keyword: partial
valuation
Good Morning, H2:
How do you approach an appraisal in which the lender asks you to include only a portion of the tract of land for an appraisal on new construction? I have a 120 acre tract of land where the lender wants only 25 acres valued. I am of the understanding that the appraiser is now required to include an entire tract of land in the report. Can the lender provide me a description of the land for the purpose of the report, or do I have to value the 120 acres as a whole?
Have a Great Day!
Shawn C. Neer sneer@centurytel.net
Dear Shawn,
There is nothing in the USPAP that requires you to appraise the whole tract of land. The USPAP does have requirements as to what you do when you do not appraisal the whole tract in terms of the legal description, etc.. Fannie Mae and Freddie Mac do require that you appraise the whole tract in such a situation.
H2
How do you approach an appraisal in which the lender asks you to include only a portion of the tract of land for an appraisal on new construction? I have a 120 acre tract of land where the lender wants only 25 acres valued. I am of the understanding that the appraiser is now required to include an entire tract of land in the report. Can the lender provide me a description of the land for the purpose of the report, or do I have to value the 120 acres as a whole?
Have a Great Day!
Shawn C. Neer sneer@centurytel.net
Dear Shawn,
There is nothing in the USPAP that requires you to appraise the whole tract of land. The USPAP does have requirements as to what you do when you do not appraisal the whole tract in terms of the legal description, etc.. Fannie Mae and Freddie Mac do require that you appraise the whole tract in such a situation.
H2
499) 1004MC & Mobile Homes
06/09/09 Keyword: 1004MC
Dear H2,
No one seems to know if the 1004 applies to mobile homes.
Baron Kahle appraisalquick@hotmail.com
Dear Baron,
Good question! However, if you are using a Mobile Home form from Fannie or Freddie or FHA, we think the answer is YES, as it is required for all 1-4 family residences and a mobile home that would meet Fannie/Freddie underwriting requirements would meet that definition.
H2
No one seems to know if the 1004 applies to mobile homes.
Baron Kahle appraisalquick@hotmail.com
Dear Baron,
Good question! However, if you are using a Mobile Home form from Fannie or Freddie or FHA, we think the answer is YES, as it is required for all 1-4 family residences and a mobile home that would meet Fannie/Freddie underwriting requirements would meet that definition.
H2
498) HVCC rumors
06/08/09 Keyword: HVCC
Dear H2,
The grapevine is saying that mortgage brokers and some banks are going to use small lists of appraisers for rotation instead of HVCC mandated AMCs. These small lists supposedly consist of "preferred" appraisers that in the past that have "not offended", if you know what I mean. Doesn't this go against the whole intent of the HVCC?
Name withheld by request
Dear Friend,
This is just one of the many rumors that are floating around. A major unknown now is what will happen as a result of the pending HVCC law suits.
H2
The grapevine is saying that mortgage brokers and some banks are going to use small lists of appraisers for rotation instead of HVCC mandated AMCs. These small lists supposedly consist of "preferred" appraisers that in the past that have "not offended", if you know what I mean. Doesn't this go against the whole intent of the HVCC?
Name withheld by request
Dear Friend,
This is just one of the many rumors that are floating around. A major unknown now is what will happen as a result of the pending HVCC law suits.
H2
497) Financial Segregation
06/01/09 Keyword: agricultural
property
Dear H2:
Subject Property is a 78 acre hay farm & pasture ground with a small owner occupied home in Oregon. A bank has provided a "financial segregation" legal description from the local title company for a 9 acre parcel including the home and buildings to be appraised for a conventional refinance. The legal description involved reads "For Lender Use only" and is not being recorded. What is your viewpoint? . Can I appraise the 9 acre parcel in the legal description hat has been provided to me? I am concerned that it may not be a valid legal description since it is not being recorded and did not go through any County Planning & Zoning Review. I have heard that some title companies will not do these so-called "financial segregations" because of possible legal issues.
brent bainbridge bwbainbridge@cableone.net
Dear Brent,
You can do this appraisal providing you do a few things. First, during your required scope of work dialogue with the lender/client you should advise them that most likely this loan will not be acceptable to Fannie Mae or Freddie Mac. Your appraisal must prominently disclose that it was based on the description of the property provided to you by the lender/client which you have not verified and which you assume to be correct. Finally, you must be satisfied that this assignment is not being done to deceive anyone.
H2
Subject Property is a 78 acre hay farm & pasture ground with a small owner occupied home in Oregon. A bank has provided a "financial segregation" legal description from the local title company for a 9 acre parcel including the home and buildings to be appraised for a conventional refinance. The legal description involved reads "For Lender Use only" and is not being recorded. What is your viewpoint? . Can I appraise the 9 acre parcel in the legal description hat has been provided to me? I am concerned that it may not be a valid legal description since it is not being recorded and did not go through any County Planning & Zoning Review. I have heard that some title companies will not do these so-called "financial segregations" because of possible legal issues.
brent bainbridge bwbainbridge@cableone.net
Dear Brent,
You can do this appraisal providing you do a few things. First, during your required scope of work dialogue with the lender/client you should advise them that most likely this loan will not be acceptable to Fannie Mae or Freddie Mac. Your appraisal must prominently disclose that it was based on the description of the property provided to you by the lender/client which you have not verified and which you assume to be correct. Finally, you must be satisfied that this assignment is not being done to deceive anyone.
H2
496) Describing Distance
05/28/09 Keyword: guidelines
Dear H2,
Where does it state in appraisal guidelines that comparable distances are reported "as the crow flies"
jean raitt jeannineraitt@gmail.com
Dear Jean,
I know of no such source. However, for legal purposes it is my understanding that distances are measured as a straight line on a map between two places. I am not aware of appraisers doing it otherwise, with a few exceptions -- such as the distance to schools, highway entrances, and shopping facilities when there is a big difference between the straight line distance and the distance to drive or walk there.
H2
Where does it state in appraisal guidelines that comparable distances are reported "as the crow flies"
jean raitt jeannineraitt@gmail.com
Dear Jean,
I know of no such source. However, for legal purposes it is my understanding that distances are measured as a straight line on a map between two places. I am not aware of appraisers doing it otherwise, with a few exceptions -- such as the distance to schools, highway entrances, and shopping facilities when there is a big difference between the straight line distance and the distance to drive or walk there.
H2
495) Lack of Data for 1004MC
05/27/09 Keyword: 1004MC
Dear H2,
I received your newest guide on the Market Conditions Addendum. I appreciated your comment about needing at least 18 items to basically make sense of the statistics. I live in an area where in each neighborhood there are usually 1 or 2 comparable properties, and often none at all. Because there were only 42 total sales in our entire county last year, I decided to do the market conditions addendum for the entire county and commented on it. Also, our MLS doesn't provide most of the information required. Any suggestions for me on how I should provide this information? Basically, I state at the end that this market conditions addendum is not relevant to our area, because of the lack of available data, but underwriters, obviously, don't like that comment. Any suggestions on how to complete the report for my area would sure be appreciated!
Holly A. Harwig holly@northofnorth.com
Dear Holly,
Your complaint is being expressed by many appraisers. The instructions on the form make it clear that you are expected to provide only what is available. However, as part of the Scope of Work, as stated on the form, you must provide an explanation of what you did to try and get the data and further state why you were unsuccessful. Do not be afraid to use the word "unknown" and an asterisk in boxes leading to a comment that there was not sufficient data available to provide the asked for trend, average etc. I don't recommend that you comment that the whole form is not relevant as this is probably not true. Most likely you will have provided some information and explanations about what you did and found that may be relevant to an underwriter.
H2
I received your newest guide on the Market Conditions Addendum. I appreciated your comment about needing at least 18 items to basically make sense of the statistics. I live in an area where in each neighborhood there are usually 1 or 2 comparable properties, and often none at all. Because there were only 42 total sales in our entire county last year, I decided to do the market conditions addendum for the entire county and commented on it. Also, our MLS doesn't provide most of the information required. Any suggestions for me on how I should provide this information? Basically, I state at the end that this market conditions addendum is not relevant to our area, because of the lack of available data, but underwriters, obviously, don't like that comment. Any suggestions on how to complete the report for my area would sure be appreciated!
Holly A. Harwig holly@northofnorth.com
Dear Holly,
Your complaint is being expressed by many appraisers. The instructions on the form make it clear that you are expected to provide only what is available. However, as part of the Scope of Work, as stated on the form, you must provide an explanation of what you did to try and get the data and further state why you were unsuccessful. Do not be afraid to use the word "unknown" and an asterisk in boxes leading to a comment that there was not sufficient data available to provide the asked for trend, average etc. I don't recommend that you comment that the whole form is not relevant as this is probably not true. Most likely you will have provided some information and explanations about what you did and found that may be relevant to an underwriter.
H2
494) Percentage of Ownership for FHA
05/23/09 Keyword: FHA | ownership
percentage
Dear H2,
I built a 10 unit condo building and kept two to rent out. Now an owner is trying to sell his unit. His buyer is going FHA and the owner tells me for him to get an FHA mortgage, I cannot own more than 10% of units. Is this true? Obviously, I own 20% at this time.
Scott Buckingham buildone101@aol.com
Dear Scott,
I am not an FHA expert and do not keep current on the ever-changing FHA regulations. On page D-88 of the current edition of FHA Handbook 4150.2 there is a requirement that the appraiser report "if a single entity owns more than 10% of the units." I suggest you contact the FHA Regional Office for your area and ask them to help you. They are usually quite responsive.
H2
I built a 10 unit condo building and kept two to rent out. Now an owner is trying to sell his unit. His buyer is going FHA and the owner tells me for him to get an FHA mortgage, I cannot own more than 10% of units. Is this true? Obviously, I own 20% at this time.
Scott Buckingham buildone101@aol.com
Dear Scott,
I am not an FHA expert and do not keep current on the ever-changing FHA regulations. On page D-88 of the current edition of FHA Handbook 4150.2 there is a requirement that the appraiser report "if a single entity owns more than 10% of the units." I suggest you contact the FHA Regional Office for your area and ask them to help you. They are usually quite responsive.
H2
493) 1004MC Condo
Dear H2,
On the new 1004MC -- the first one I'm doing is a condo. Should I leave the top completely blank and fill out just the condo section?
Diane Graham dgraham295@comcast.net
Dear Diane,
As I explain in my book, Harrison's Illustrated Guide: How to Fill Out the Market Conditions Addendum to an Appraisal (1004MC-71), for a condo or co-op project you must complete the whole form.
H2
Editor's note: To order your copy of the FHA Handbook, click here.
On the new 1004MC -- the first one I'm doing is a condo. Should I leave the top completely blank and fill out just the condo section?
Diane Graham dgraham295@comcast.net
Dear Diane,
As I explain in my book, Harrison's Illustrated Guide: How to Fill Out the Market Conditions Addendum to an Appraisal (1004MC-71), for a condo or co-op project you must complete the whole form.
H2
Editor's note: To order your copy of the FHA Handbook, click here.
492) Interior Sketch
05/21/09 Keyword: 1004MC
Dear H2,
I was just looking through your guide to completing the 1004MC form and the condominium guide. On page CS-32 you have a sketch of improvements which shows the interior walls and the rooms are labeled. I was under the impression that you only did room sketches and room labels if there is a functional obsolesence. Am I wrong in my thinking?
Thank you,
Don W Dillard dillardappraisal@aol.com
Dear Don,
The USPAP is silent on this subject. Different lender/clients have their own rules about what kind of exhibits are required. You need to determine this as part of the scope of work dialogue. Our sample appraisal contains many things that some lender/clients may or may not require.
H2
I was just looking through your guide to completing the 1004MC form and the condominium guide. On page CS-32 you have a sketch of improvements which shows the interior walls and the rooms are labeled. I was under the impression that you only did room sketches and room labels if there is a functional obsolesence. Am I wrong in my thinking?
Thank you,
Don W Dillard dillardappraisal@aol.com
Dear Don,
The USPAP is silent on this subject. Different lender/clients have their own rules about what kind of exhibits are required. You need to determine this as part of the scope of work dialogue. Our sample appraisal contains many things that some lender/clients may or may not require.
H2
491) 1004MC Sale
05/17/09 Keyword: 1004MC
Hello Henry,
I purchased your guide on How to Fill Out a Market Conditions Addendum to the Appraisal Report. Per your instructions, in order to come up with the Median Sale Price as % of List Price, we should divide the Median Comparable Sale Price by the Median Comparable List Price of Unsold Listings. However, the eFannieMae.com 1004MC training video reports that we should divide the Median Comparable Sale Price by the Median Comparable List Price of only the closed settled comparable sales. This was also confirmed in an email sent to me by Mark Rattermann, who presented the 1004MC training video.
Frank Zappia fzappia@realvaluations.com
Dear Frank,
You and Mark Rattermann are correct. This was one of the clarifications Fannie Mae made when they issued the 3/09 version of the form. For a complete update on the new version of the form, with analysis and comments, go to our Update page at: www.revmag.com/1004MCupdate.
H2
I purchased your guide on How to Fill Out a Market Conditions Addendum to the Appraisal Report. Per your instructions, in order to come up with the Median Sale Price as % of List Price, we should divide the Median Comparable Sale Price by the Median Comparable List Price of Unsold Listings. However, the eFannieMae.com 1004MC training video reports that we should divide the Median Comparable Sale Price by the Median Comparable List Price of only the closed settled comparable sales. This was also confirmed in an email sent to me by Mark Rattermann, who presented the 1004MC training video.
Frank Zappia fzappia@realvaluations.com
Dear Frank,
You and Mark Rattermann are correct. This was one of the clarifications Fannie Mae made when they issued the 3/09 version of the form. For a complete update on the new version of the form, with analysis and comments, go to our Update page at: www.revmag.com/1004MCupdate.
H2
490) Desktop Valuation Reports
05/16/09 Keyword: USPAP
Dear H2,
Recently a long time client (an AMC) started to order "Desktop Valuation Reports". This is a one page report where they expect an opinion of value without any inspections. They want 3 comparable sales listed and a value opinion. I am very uncomfortable with this request. I have spoken to several appraisers in my area and some are completely against these DVRs, and some are performing them. These requests are for equity lines of credit only. HELP! I have declined these requests; however I would like to know where you stand on these assignments. Thank you in advance for your opinion.
Christine cfrench.appraisals@cox.net
Dear Christine,
The USPAP states that whenever you render an opinion of value you must make a complete appraisal that meets all the USPAP requirements for an appraisal. However, there is nothing in the USPAP that requires you to inspect the subject property or the comparable sales. The USPAP does not specify what type of report you and the lender/client choose to use. There are three different types of reports permitted by the USPAP with requirements for each type of report. Most likely, you would make a Summary Appraisal Report. Making it on one page would be next to impossible but you did not state that the lender/client does not permit you to add pages.
I can understand why you are uncomfortable with this type of assignment, but I think you could comply with the USPAP as long as there was some flexibility in the Lender/Clients reporting requirements.
H2
Recently a long time client (an AMC) started to order "Desktop Valuation Reports". This is a one page report where they expect an opinion of value without any inspections. They want 3 comparable sales listed and a value opinion. I am very uncomfortable with this request. I have spoken to several appraisers in my area and some are completely against these DVRs, and some are performing them. These requests are for equity lines of credit only. HELP! I have declined these requests; however I would like to know where you stand on these assignments. Thank you in advance for your opinion.
Christine cfrench.appraisals@cox.net
Dear Christine,
The USPAP states that whenever you render an opinion of value you must make a complete appraisal that meets all the USPAP requirements for an appraisal. However, there is nothing in the USPAP that requires you to inspect the subject property or the comparable sales. The USPAP does not specify what type of report you and the lender/client choose to use. There are three different types of reports permitted by the USPAP with requirements for each type of report. Most likely, you would make a Summary Appraisal Report. Making it on one page would be next to impossible but you did not state that the lender/client does not permit you to add pages.
I can understand why you are uncomfortable with this type of assignment, but I think you could comply with the USPAP as long as there was some flexibility in the Lender/Clients reporting requirements.
H2
489) 1004MC Form
05/15/09 Keyword: 1004MC
Dear H2,
Do we need to do the 1004MC for all drive bys or drive bys with interior inspections?
DAN CU.APPRAISAL@PACBELL.NET
Dear Dan,
Fannie Mae and Freddie Mac require a 1004MC/71 Market Conditions Addendum for "all mortgage loans delivered to them for one to four unit properties." If the loan is not going to be for delivered to Fannie Mae or Freddie Mac, it is up to the lender/client to tell you what type of report they need.
H2
Do we need to do the 1004MC for all drive bys or drive bys with interior inspections?
DAN CU.APPRAISAL@PACBELL.NET
Dear Dan,
Fannie Mae and Freddie Mac require a 1004MC/71 Market Conditions Addendum for "all mortgage loans delivered to them for one to four unit properties." If the loan is not going to be for delivered to Fannie Mae or Freddie Mac, it is up to the lender/client to tell you what type of report they need.
H2
488) WATER TURNED OFF
05/10/09 Keyword: water
problem
Dear H2,
When appraising a vacant single family that has been winterized (water turned off) can the the appraisal be made "as is", subject to the extraordinary assumption that subject's plumbing is in working order and that the overall condition will not change after water utility is turned back on?
D.Tozeski stozeski@aol.com
Dear D.,
Your lender/client would have to agree to your using this extraordinary assumption as part of the required scope of work dialogue. All extraordinary assumptions must be reasonable and they cannot be used if you think the lender/client might use them to deceive someone.
H2
When appraising a vacant single family that has been winterized (water turned off) can the the appraisal be made "as is", subject to the extraordinary assumption that subject's plumbing is in working order and that the overall condition will not change after water utility is turned back on?
D.Tozeski stozeski@aol.com
Dear D.,
Your lender/client would have to agree to your using this extraordinary assumption as part of the required scope of work dialogue. All extraordinary assumptions must be reasonable and they cannot be used if you think the lender/client might use them to deceive someone.
H2
487) Trustee Deed Sales
05/09/09 Keyword: USPAP
Dear H2,
I was taught to never use a trustee deed sale as a comparable. But in my area, it is becoming increasingly hard to find comparables that aren't trustee sales. Do you have any advice? Would I be wrong to start using some of these as comparables as long as I notate them as such? In some areas of our city, the trustee sales outnumber the other comparables 9:1.
name and email address withheld.
Dear Friend,
The USPAP says that only the appraiser can decide which comparable sales to use. From your description, it appears that trustee deed sales are a large factor in the market. You should always use the best comparable sales available based on your analysis of the market data.
H2
I was taught to never use a trustee deed sale as a comparable. But in my area, it is becoming increasingly hard to find comparables that aren't trustee sales. Do you have any advice? Would I be wrong to start using some of these as comparables as long as I notate them as such? In some areas of our city, the trustee sales outnumber the other comparables 9:1.
name and email address withheld.
Dear Friend,
The USPAP says that only the appraiser can decide which comparable sales to use. From your description, it appears that trustee deed sales are a large factor in the market. You should always use the best comparable sales available based on your analysis of the market data.
H2
486) USING the 2055 FORM
05/08/09 Keyword: 2055
Dear H2,
Can we still do an appraisal report on the "short form", the drive-by 2055 Form with no interior inspection?
Sondi Eden sondieden@hotmail.com
Dear Sondi,
The USPAP does not address what appraisal form to use. Fannie Mae, Freddie Mac, FHA and ERC have different requirements depending upon at variety of things. As of April 1st, Fannie Mae, Freddie Mac and FHA all require the new 1004MC Market Conditions Addendum form for any appraisal with a effective date starting 4/1/09. For each appraisal assignment you take on, the USPAP requires that you have a scope of work dialogue with the client. One of the subjects that should be covered is what form the appraisal will be made on. Remember that no matter what form you use, a full appraisal is required that complies with all the USPAP requirements for making an appraisal.
H2
Can we still do an appraisal report on the "short form", the drive-by 2055 Form with no interior inspection?
Sondi Eden sondieden@hotmail.com
Dear Sondi,
The USPAP does not address what appraisal form to use. Fannie Mae, Freddie Mac, FHA and ERC have different requirements depending upon at variety of things. As of April 1st, Fannie Mae, Freddie Mac and FHA all require the new 1004MC Market Conditions Addendum form for any appraisal with a effective date starting 4/1/09. For each appraisal assignment you take on, the USPAP requires that you have a scope of work dialogue with the client. One of the subjects that should be covered is what form the appraisal will be made on. Remember that no matter what form you use, a full appraisal is required that complies with all the USPAP requirements for making an appraisal.
H2
485) 1004MC Backup
05/07/09 Keyword: 1004MC
Dear H2,
Where do I find the facts on having to submit a graph or worksheet showing the data used in the new 1004mc form? Is it required along with the 1004mc form in the body of the appraisal report that is being submitted to a lender? Thanks!
Lisa lhippard@wisperhome.com
Dear Lisa,
The USPAP does not address what appraisal form to use or what must be reported. Fannie Mae, Freddie Mac, FHA and ERC have different requirements depending upon the overall assignment. Fannie Mae, Freddie Mac and FHA require the new Market Conditions Addendum form for any appraisal with a effective date starting 4/1/09. I am not aware of any requirement to include in the report the data used to fill out the report. For each appraisal assignment you take, the USPAP requires that you have a scope of work dialogue with the Lender/Client. One subject you should discuss is what backup data they require.
H2
Where do I find the facts on having to submit a graph or worksheet showing the data used in the new 1004mc form? Is it required along with the 1004mc form in the body of the appraisal report that is being submitted to a lender? Thanks!
Lisa lhippard@wisperhome.com
Dear Lisa,
The USPAP does not address what appraisal form to use or what must be reported. Fannie Mae, Freddie Mac, FHA and ERC have different requirements depending upon the overall assignment. Fannie Mae, Freddie Mac and FHA require the new Market Conditions Addendum form for any appraisal with a effective date starting 4/1/09. I am not aware of any requirement to include in the report the data used to fill out the report. For each appraisal assignment you take, the USPAP requires that you have a scope of work dialogue with the Lender/Client. One subject you should discuss is what backup data they require.
H2
484) Condo vs SFR
Dear H2,
In my neighborhood, there are many multi-families that have been converted to condos. I actually have a single family, but there are very few other single family comps in my neighborhood. Though it is technically a single family, it is attached on both sides and is really more comparable to a condo. My question is, would an appraiser ever use other condos in the neighborhood as comps? Or, since it is technically a single family, would they only look at other single families? Thanks much for your help!
Michelle O'Meara michelle112575@hotmail.com
Dear Michelle,
According to the Uniform Standards of Professional Appraisal Practice (USPAP), the final decision as to what are the best comparable sales to use and what weight to give them, as well as what adjustments to make, is always up to the appraiser. From your description, your home is a "townhouse" style single family residence. A condo is actually not a "style" at all, but rather, a form of ownership. The fact that adjacent townhouses are condos may significantly affect their value, and render them unsuitable as comparables to your home in fee simple ownership, despite their similar appearance to your home. That is something the appraiser would have to research, consider and comment on in their appraisal. It is a rare neighborhood where you cannot find any single family house sales (except in Moscow, Russia). I suggest that you expand the area where you are searching for comparable sales.
H2
In my neighborhood, there are many multi-families that have been converted to condos. I actually have a single family, but there are very few other single family comps in my neighborhood. Though it is technically a single family, it is attached on both sides and is really more comparable to a condo. My question is, would an appraiser ever use other condos in the neighborhood as comps? Or, since it is technically a single family, would they only look at other single families? Thanks much for your help!
Michelle O'Meara michelle112575@hotmail.com
Dear Michelle,
According to the Uniform Standards of Professional Appraisal Practice (USPAP), the final decision as to what are the best comparable sales to use and what weight to give them, as well as what adjustments to make, is always up to the appraiser. From your description, your home is a "townhouse" style single family residence. A condo is actually not a "style" at all, but rather, a form of ownership. The fact that adjacent townhouses are condos may significantly affect their value, and render them unsuitable as comparables to your home in fee simple ownership, despite their similar appearance to your home. That is something the appraiser would have to research, consider and comment on in their appraisal. It is a rare neighborhood where you cannot find any single family house sales (except in Moscow, Russia). I suggest that you expand the area where you are searching for comparable sales.
H2
483) Comparable Sales
05/02/09 Keyword: comps
Dear H2,
For refinance purpose, how am I supposed to choose comparable sales that fit the USPAP guidelines where 95 percent of the homes in the neighborhood are non arms-lengh transactions? It's impossible to find comps within 3 months in our market area that are not distress sales. Please advise. Thank you.
Amy angiel99@yahoo.com
Dear Amy,
The USPAP says it is up to the appraiser, not anyone else, to determine which comparable sales provide the best indication of the value of the subject property. The USPAP says nothing about what period of time they should be in, where they should be located, and whether or not they are foreclosure or REO sales, etc. It is a rare property where no comparable sales are available. The appraiser selects the best ones, adjusts them if possible based on market data, and uses them to provide an indication of the value of the subject property. The lender/client cannot dictate which comparable sales are to be used. However, they can require an explanation as to why you selected the ones you did.
H2
For refinance purpose, how am I supposed to choose comparable sales that fit the USPAP guidelines where 95 percent of the homes in the neighborhood are non arms-lengh transactions? It's impossible to find comps within 3 months in our market area that are not distress sales. Please advise. Thank you.
Amy angiel99@yahoo.com
Dear Amy,
The USPAP says it is up to the appraiser, not anyone else, to determine which comparable sales provide the best indication of the value of the subject property. The USPAP says nothing about what period of time they should be in, where they should be located, and whether or not they are foreclosure or REO sales, etc. It is a rare property where no comparable sales are available. The appraiser selects the best ones, adjusts them if possible based on market data, and uses them to provide an indication of the value of the subject property. The lender/client cannot dictate which comparable sales are to be used. However, they can require an explanation as to why you selected the ones you did.
H2
482) Remaining Economic Life
05/01/09 Keyword: economic
life
Dear H2,
A house was built in 1970, and the remaining economic life is 21 years. The borrower is doing a 30 year fixed loan, but with the remaining economic life noted on the appraisal, the lender will not do the loan. Please advise if anything can be done about this. What do you recommend?
David L. Waller dlwall1@mchsi.com
Dear David,
It is not up to the appraiser to try and make a mortgage work. However, it is also not clear how you could come up with exactly a 21 year remaining economic life. It sounds like you may have used some mathematical formula, which is not an acceptable way to do this. The estimate of remaining economic life should be based on your judgment about the condition of the improvements, and what you find in your market. If you add the existing age of 39 years to your 21 year remaining economic life estimate, you get a total economic life of 70 years for similar houses in your market area. Is this true based on your observations?
H2
A house was built in 1970, and the remaining economic life is 21 years. The borrower is doing a 30 year fixed loan, but with the remaining economic life noted on the appraisal, the lender will not do the loan. Please advise if anything can be done about this. What do you recommend?
David L. Waller dlwall1@mchsi.com
Dear David,
It is not up to the appraiser to try and make a mortgage work. However, it is also not clear how you could come up with exactly a 21 year remaining economic life. It sounds like you may have used some mathematical formula, which is not an acceptable way to do this. The estimate of remaining economic life should be based on your judgment about the condition of the improvements, and what you find in your market. If you add the existing age of 39 years to your 21 year remaining economic life estimate, you get a total economic life of 70 years for similar houses in your market area. Is this true based on your observations?
H2
481) Multi-Family & 1004MC
04/28/09 Keyword: 1004MC
Dear H2,
Does the market conditions report have to be used on a multi-family?
Thank you
Cindy Grantham clgappraisals@forestranch.com
Dear Cindy,
Yes, as of April 1st, the 1004MC/71 form must be used for all Fannie Mae, Freddie Mac and FHA multi-family appraisals.
H2
Does the market conditions report have to be used on a multi-family?
Thank you
Cindy Grantham clgappraisals@forestranch.com
Dear Cindy,
Yes, as of April 1st, the 1004MC/71 form must be used for all Fannie Mae, Freddie Mac and FHA multi-family appraisals.
H2
480) Update Requests
04/25/09 Keyword: additional
information
Dear H2,
I have been having a problem where the lender comes back weeks, and in the current case, 2 months after the appraisal has been finished and delivered, asking for additional comparables, or for me to research comparables supplied by the lender. How long after the report has been delivered is an appraiser obligated to respond to these requests?
Dale R. Thompson Thompsapp@comcast.net
Dear Dale,
The first thing to consider is whether the lender/client is asking you to reconsider the value you have estimated or just to supply additional data. If they are asking you to reconsider the value, then you must make a new appraisal. However, this does not mean that you cannot use much if not most of the data that was in the original appraisal. Often a great deal of the original appraisal is reusable. If you are just supplying additional data, and not analyzing it, and the effective date of the appraisal is the same, then how much additional work you are willing to do depends only on what you have previously agreed to with the lender/client. If a client often makes requests for additional work, you should make it clear in your USPAP-required scope of work dialogue what you will do for the agreed upon fee, and charge for extra work. As far as I know there are no time limits except those imposed by the lender/client.
H2
I have been having a problem where the lender comes back weeks, and in the current case, 2 months after the appraisal has been finished and delivered, asking for additional comparables, or for me to research comparables supplied by the lender. How long after the report has been delivered is an appraiser obligated to respond to these requests?
Dale R. Thompson Thompsapp@comcast.net
Dear Dale,
The first thing to consider is whether the lender/client is asking you to reconsider the value you have estimated or just to supply additional data. If they are asking you to reconsider the value, then you must make a new appraisal. However, this does not mean that you cannot use much if not most of the data that was in the original appraisal. Often a great deal of the original appraisal is reusable. If you are just supplying additional data, and not analyzing it, and the effective date of the appraisal is the same, then how much additional work you are willing to do depends only on what you have previously agreed to with the lender/client. If a client often makes requests for additional work, you should make it clear in your USPAP-required scope of work dialogue what you will do for the agreed upon fee, and charge for extra work. As far as I know there are no time limits except those imposed by the lender/client.
H2
479) Condemnation Appraisal
04/21/09 Keyword: condemnation
Dear H2,
I have a condemnation situation where the leased fee interest was valued at $755,000. The fee simple interest was valued at $850,000. Contract rent is less than market rent. Is the condemning authority required to pay the $755,000 or $850,000?
Name withheld by request
Dear Friend,
The rules as to what a condemnation authority pays depends upon where the property is located and who is condemning the property (federal government, State government, Redevelopment Agency, School District, etc., etc.) The most common method is that the property is appraised based on the market rent, a leasehold appraisal is made to determine if there is any leasehold interest, and the money received is divided between the two interests.
H2
I have a condemnation situation where the leased fee interest was valued at $755,000. The fee simple interest was valued at $850,000. Contract rent is less than market rent. Is the condemning authority required to pay the $755,000 or $850,000?
Name withheld by request
Dear Friend,
The rules as to what a condemnation authority pays depends upon where the property is located and who is condemning the property (federal government, State government, Redevelopment Agency, School District, etc., etc.) The most common method is that the property is appraised based on the market rent, a leasehold appraisal is made to determine if there is any leasehold interest, and the money received is divided between the two interests.
H2
478) Comps in Neighborhood
04/18/09 Keyword: comps
Dear H2,
When doing a residential appraisal in a gated community or any development, do you have to include at least 1 comparable sale from another development or could all the sales come from the subject development?
JOHN LYNCH johnkantonrealty@comcast.net
Dear John,
The USPAP says it is up to the appraiser to select which comparable sales to use in an appraisal. When possible, using data from the same development is common.
H2
When doing a residential appraisal in a gated community or any development, do you have to include at least 1 comparable sale from another development or could all the sales come from the subject development?
JOHN LYNCH johnkantonrealty@comcast.net
Dear John,
The USPAP says it is up to the appraiser to select which comparable sales to use in an appraisal. When possible, using data from the same development is common.
H2
477) Comps on 1004MC
Dear H2,
How should both sections of the 1004MC be filled out in relation to condos? I have a lender that has rejected the form as I have filled it out. They are requesting the the top portion be filled out to reflect all comps in the neighborhood and the bottom filled out to reflect only the comparables from the specific development. Is this correct?
Marlene Deason marlenepacheco@sbcglobal.net
Dear Marlene,
Yes - the lender is correct. Of course, even in the upper section of the form, only sales that are comparable to (competitive with) the subject property should be use.
H2
How should both sections of the 1004MC be filled out in relation to condos? I have a lender that has rejected the form as I have filled it out. They are requesting the the top portion be filled out to reflect all comps in the neighborhood and the bottom filled out to reflect only the comparables from the specific development. Is this correct?
Marlene Deason marlenepacheco@sbcglobal.net
Dear Marlene,
Yes - the lender is correct. Of course, even in the upper section of the form, only sales that are comparable to (competitive with) the subject property should be use.
H2
476) Cell Tower
04/12/09 Keyword: scope of
work |
disclosure
Dear H2,
I'm appraising a bank-owned home (for a new borrower) on acreage that has an existing Cell Phone Tower. Per the title company, there was a long term lease signed with the prior owner and a lease was recorded. They have lost the home but the tower remains and is even a potential source of significant income for this residential zoned home. The bank/owner and Cell company will not talk to me, citing privacy concerns. Any thoughts on whether this is non-conforming or just a residential house with extra income potential?
Thank you much!
Shane Rivers shane@thevision.net
Dear Shane,
As part of your scope of work dialogue you need to discuss with the lander/client what you should do. Most likely you will make some kind of assumption about the tower and its potential income. As long as the assumption is reasonable and not intended to deceive anyone, it is permitted by the USPAP. No matter what you do, you must disclose that the tower exists and what you did to obtain information about it.
H2
I'm appraising a bank-owned home (for a new borrower) on acreage that has an existing Cell Phone Tower. Per the title company, there was a long term lease signed with the prior owner and a lease was recorded. They have lost the home but the tower remains and is even a potential source of significant income for this residential zoned home. The bank/owner and Cell company will not talk to me, citing privacy concerns. Any thoughts on whether this is non-conforming or just a residential house with extra income potential?
Thank you much!
Shane Rivers shane@thevision.net
Dear Shane,
As part of your scope of work dialogue you need to discuss with the lander/client what you should do. Most likely you will make some kind of assumption about the tower and its potential income. As long as the assumption is reasonable and not intended to deceive anyone, it is permitted by the USPAP. No matter what you do, you must disclose that the tower exists and what you did to obtain information about it.
H2
475) Settled Sale
Dear H2,
First - Thanks for publishing the How to Fill Out a Market Conditions Addendum guide. I have purchased the book and am filling out my first 1004MC form for a new construction condo appraisal. Can I find out what the term "settled" sale means? I'm not familiar with the term. Does it mean closed sales only, or pending and closed, or other? Thank you.
By the way -- I have purchased many of your earlier guides and have found them helpful in many cases. Thank you for writing them!
Sandra L. Pike sandrapike@appraisenow.com
Dear Sandra,
A settled sale is one that has closed (the closing has been completed). Thanks for the kind words about my books. I am very glad you've found them helpful.
H2
First - Thanks for publishing the How to Fill Out a Market Conditions Addendum guide. I have purchased the book and am filling out my first 1004MC form for a new construction condo appraisal. Can I find out what the term "settled" sale means? I'm not familiar with the term. Does it mean closed sales only, or pending and closed, or other? Thank you.
By the way -- I have purchased many of your earlier guides and have found them helpful in many cases. Thank you for writing them!
Sandra L. Pike sandrapike@appraisenow.com
Dear Sandra,
A settled sale is one that has closed (the closing has been completed). Thanks for the kind words about my books. I am very glad you've found them helpful.
H2
474) Prior Transfer
04/05/09 Keyword: USPAP
Dear H2,
There is a USPAP requirement and a place on the 1004 URAR form to consider and analyze "prior sales or transfers of the subject property" within the 3 years prior to the effective date of the appraisal. I have a current FHA 203K valuation where there was a transfer for $0 from the current owner to the current owner. I simply placed this information in the line regarding it as a transfer in the past 3 years for $0 and noted it was a non-arms' legnth transfer. The underwriters are demanding that I remove this transfer from my report. That would not confrom to USPAP. Should it remain on my report or should I remove it?
Bob O'Brien obrienconsultants@hotmail.com
Dear Bob,
AO 1 in the 2008-2009 USPAP makes it very clear as to what you are required to do. Clearly, you have to comply with the USPAP and in my opinion not to report this sale or provide reasons why you are not reporting it would be a violation of the USPAP. I think you should show them AO - 1; and I agree that you should refuse to withhold the information.
H2
There is a USPAP requirement and a place on the 1004 URAR form to consider and analyze "prior sales or transfers of the subject property" within the 3 years prior to the effective date of the appraisal. I have a current FHA 203K valuation where there was a transfer for $0 from the current owner to the current owner. I simply placed this information in the line regarding it as a transfer in the past 3 years for $0 and noted it was a non-arms' legnth transfer. The underwriters are demanding that I remove this transfer from my report. That would not confrom to USPAP. Should it remain on my report or should I remove it?
Bob O'Brien obrienconsultants@hotmail.com
Dear Bob,
AO 1 in the 2008-2009 USPAP makes it very clear as to what you are required to do. Clearly, you have to comply with the USPAP and in my opinion not to report this sale or provide reasons why you are not reporting it would be a violation of the USPAP. I think you should show them AO - 1; and I agree that you should refuse to withhold the information.
H2
473) 1004MC Listing Periods
04/03/09 Keyword: 1004MC
Dear H2,
1004MC Form question: Should only the listings that came onto the market during the specific time range be included in the form? Or should the cummulative listing be included?
Davis M. Watson davisw@centurytel.net
Dear Davis,
A listing that was active during the period (current to 3 months, prior 4 to 6 months and prior 7 to 12 months) should be included in each period on the 1004MC/71 form. For example, a listing that came on the market 10 months prior to the effective date of the appraisal and was still active and unsold on the effective date of the appraisal should be shown in all three periods.
H2
1004MC Form question: Should only the listings that came onto the market during the specific time range be included in the form? Or should the cummulative listing be included?
Davis M. Watson davisw@centurytel.net
Dear Davis,
A listing that was active during the period (current to 3 months, prior 4 to 6 months and prior 7 to 12 months) should be included in each period on the 1004MC/71 form. For example, a listing that came on the market 10 months prior to the effective date of the appraisal and was still active and unsold on the effective date of the appraisal should be shown in all three periods.
H2
472) Inter Family Sales
04/01/09 Keyword: comps
Dear H2,
Can an appraiser use a comp that is a family to family transaction that falls within the value range of subject and other similar comps in the neighborhood?
Bernice Rice-Baker bhrb@cox.net
Dear Bernice,
Only the appraiser can determine which comparable sales are the best indicators of the value of the property being apprai
Can an appraiser use a comp that is a family to family transaction that falls within the value range of subject and other similar comps in the neighborhood?
Bernice Rice-Baker bhrb@cox.net
Dear Bernice,
Only the appraiser can determine which comparable sales are the best indicators of the value of the property being apprai