exterior-only inspection

Ask Henry

Exterior-Only Appraisal of a Duplex

Good Afternoon Henry,

I am at a loss. I've been asked to do an exterior appraisal of two duplexes. My client has a second mortgage on the two properties and needs to know the value of each property. No rental information is required. Public data is rather sketchy. My problem is that my software provider has no form for such an assignment. Would it be possible to use the FNMA 2055? Or, how would you suggest I proceed? Thank you in advance for your help.

Best regards,
Bob (Bear) Klingensmith
Georgia Certified Residential Appraiser

Dear Bob,

Since this appraisal is not going to Fannie Mae or Freddie Mac you can use any form you and your client agree upon. You can use the 2055 but you must be careful to correctly modify it. In this type of situation, the form is really just a cover sheet and you should plan to use an addenda to present any information you need to explain what assumptions you will be making. These will have to be extensive as you will not inspect the interior of either property nor do you have any rental or expense information. Keep in mind that it is up to you to feel comfortable that you are making a "credible appraisal' as required by the USPAP.  Many appraisers would not be confident that they could make a credible appraisal under these conditions.


Ask Henry

Exterior Only Inspection Question

Dear Henry,

First, thanks for the resources on your web site!

I have been asked to do an exterior-only inspection of a home on a 65 acre site in a rural location for loss mitigation. I have the assessor cards on the property, so I have some basic information, but their last inspection was several years ago. The property is behind locked gates and not at all visible from any point. I have asked to have this assignment upgraded to a full report, but the lender also does not have access and wants to proceed with a driveby only. Can I effectively do this using extraordinary assumptions with so many unknowns?

Tom Trojnar

Dear Tom,

This is a judgment you have to make.The USPAP requires that you make a credible appraisal. I would tell the client (preferably in writing) what extraordinary assumptions will need to be made to do this assignment, and get their pre-approval (again preferably in writing). Keep in mind that this appraisal may lead to a variety of problems and the lender may blame them on you. You need to ask yourself if it s important enough to your business relationship with the client to expose yourself to possible future trouble that may occur. Finally, the type of report does not have any effect on what you have to do to make a credible appraisal.
Good luck!


Ask Henry

FNMA Form 1075 (Drive-by Condo Report)

Dear Henry:

On page one of the FNMA 1075 form is a section titled "Project Site". At the conclusion of this section, the following question is asked of the appraiser: "Are there any adverse site conditions or external factors (easements, encroachments, environmental conditions, land uses, etc.)?". Question: If the subject of the appraisal is located on the perimeter of the condo complex and fronts onto a traffic street, while a majority of the remaining units are located within the interior of the complex and are not impacted by any traffic noise, is the answer to this question "yes" or "no"? In the past, I've always looked upon this section of the report as focusing more on factors that would "impact the complex as a whole", for example, an easement for high power lines that run through a complex (EMFs), or a complex that was built upon a site that has an abnormally high water table and resultant wet basements.

Dennis J. McCarthy
CA State Certified Res. Appraiser

Dear Dennis,

In my opinion, when in doubt about anything that might be adverse to a property, you have to report it. In this case, there are some problems that affect part of the site where your subject unit is located. You should report this, and then go on to explain how the problem specifically affects the subject unit you are appraising, in terms of desirability and competition in the market.

As far as "Yes" and "No" answers go you must be very careful about checking the "No" box. It is much safer to check the "Yes" and indicate with a asterisk that in the comments section or the addenda there are comments that explain why you checked the "Yes" box. Here you can explain what effect (if any) what you are reporting has on the value of the subject property.