2055
311) 2055 for Mixed Use
05/07/08
Dear Henry:
I just received an order to appraise a mixed use property on a 2055 - exterior only inspection report. I have never been asked to do this and frankly I'm having my doubts as whether is is legal.
Thanks
Debra ddilley13@comcast.net
Dear Debra,
There is nothing illegal about using anything you want as an appraisal report. However it does have to comply with the USPAP. There is nothing in the USPAP that requires any inspection of the property. However, the USPAP requires that you make a credible appraisal and this, in turn, requires that you have reliable information about the property.
Also you can't make an appraisal if you believe its purpose is to deceive someone. You need to have a scope of work discussion with the client and try to find out why they want you to use this form and only make an exterior inspection. If you are satisfied with their answer and you think you can do it on the 2055 and they are willing to pay you the fee you require, then I suppose you could do the assignment.
H2
[Editor's Note: Anyone doing appraisals on the 2055 form needs Henry's book on the subject to protect themselves from added liability. Buy now and save $30, click here.]
I just received an order to appraise a mixed use property on a 2055 - exterior only inspection report. I have never been asked to do this and frankly I'm having my doubts as whether is is legal.
Thanks
Debra ddilley13@comcast.net
Dear Debra,
There is nothing illegal about using anything you want as an appraisal report. However it does have to comply with the USPAP. There is nothing in the USPAP that requires any inspection of the property. However, the USPAP requires that you make a credible appraisal and this, in turn, requires that you have reliable information about the property.
Also you can't make an appraisal if you believe its purpose is to deceive someone. You need to have a scope of work discussion with the client and try to find out why they want you to use this form and only make an exterior inspection. If you are satisfied with their answer and you think you can do it on the 2055 and they are willing to pay you the fee you require, then I suppose you could do the assignment.
H2
[Editor's Note: Anyone doing appraisals on the 2055 form needs Henry's book on the subject to protect themselves from added liability. Buy now and save $30, click here.]
125) 2055's and Extraordinary Assumptions
08/30/07
Dear Henry,
Some appraisers say Extraordinary Assumptions are the logical deduction from the instructions on the 2055 Exterior Only Inspection Appraisal form itself that says third party data must be "adequate" to complete the form. However, if all I have is a five-year old MLS sheet, aren't I still making an extraordinary assumption that the house is the same now as 5 years ago? Aren't I still making an extraordinary assumption that the house is owner-occupied?
Are Extraordinary Assumptions like these allowed or not? Your thoughts please.
Melanie Sellers mbsellers@earthlink.net
Dear Melanie,
An extraordinary assumption is used when you have no reasonable reason to believe that it is not true. I think you are looking for trouble when you use five year old data.
Why can't you determine if the house is owner occupied? Did you try to telephone the owner? Did you use a reverse telephone directory to see who is listed as living there? Maybe a voting list would supply the information you need.
The real question is whether you are doing everything reasonable to do a competent job. If you can answer "yes", there is nothing in USPAP that says you can't use five year old data. If I were doing the assignment, I would include information about what steps I took to get better data and why I was unable to do so.
H2
Some appraisers say Extraordinary Assumptions are the logical deduction from the instructions on the 2055 Exterior Only Inspection Appraisal form itself that says third party data must be "adequate" to complete the form. However, if all I have is a five-year old MLS sheet, aren't I still making an extraordinary assumption that the house is the same now as 5 years ago? Aren't I still making an extraordinary assumption that the house is owner-occupied?
Are Extraordinary Assumptions like these allowed or not? Your thoughts please.
Melanie Sellers mbsellers@earthlink.net
Dear Melanie,
An extraordinary assumption is used when you have no reasonable reason to believe that it is not true. I think you are looking for trouble when you use five year old data.
Why can't you determine if the house is owner occupied? Did you try to telephone the owner? Did you use a reverse telephone directory to see who is listed as living there? Maybe a voting list would supply the information you need.
The real question is whether you are doing everything reasonable to do a competent job. If you can answer "yes", there is nothing in USPAP that says you can't use five year old data. If I were doing the assignment, I would include information about what steps I took to get better data and why I was unable to do so.
H2
102) Under Construction Property Appraisal on a 2055?
06/14/07
Can the appraisal of a proposed or "under
construction" property be completed on a 2055 form?
Lisa lds54@comcast.net
Dear Lisa,
I doubt that Fannie Mae or Freddie Mac would accept a 2055 for this purpose.
I suppose that if in your Scope of Work discussion, the client insists you use the 2055 report, there is nothing in the USPAP to prevent you from doing so. However, I think that you are looking for trouble if you do. I suggest that you tell the client they can have a URAR for the same price, which hopefully will be enough to make it worthwhile to do the assignment.
H2
Lisa lds54@comcast.net
Dear Lisa,
I doubt that Fannie Mae or Freddie Mac would accept a 2055 for this purpose.
I suppose that if in your Scope of Work discussion, the client insists you use the 2055 report, there is nothing in the USPAP to prevent you from doing so. However, I think that you are looking for trouble if you do. I suggest that you tell the client they can have a URAR for the same price, which hopefully will be enough to make it worthwhile to do the assignment.
H2