USPAP Standards Rule 1-5 (below) is very specific and for a good reason. The research required can keep the appraiser from unknowingly becoming involved with fraud or an illegal scheme.
The past few months I have had the opportunity to discuss Site Values with both a Sr. Underwriter and a Chief Appraiser (in-house) for a SAMCO client. As most of our appraisers know, SAMCO works just with community banks/credit unions (local lenders), and usually, those local lenders are in rural areas. Just because a neighborhood is rural in character does not mean that an appraiser can disregard Fannie/Freddie appraisal standards or USPAP, though that is often heard. What it does mean is, occasionally, there may be a subject property which will take additional time, thought, and/or effort. But that’s part of our job as appraisers.
How many of you remember the "Green Hornet"? Those of you who remember now know how advanced in age I am and how long I've been around the industry! I thought I was "uptown" because I had an electric typewriter, and now we don't even have a typewriter in the office! It's amazing how technology has simplified life!
Surprises are often part of our day as appraisers; wouldn’t you agree? Occasionally, when the appraiser is on the subject site of a manufactured home, the surprise can be that the HUD plate is gone! Whether it has been removed or covered, it’s not possible to provide a photograph of that red metal plate. You do have some options, however. The information provided below is from the Institute of Building Technology and Safety’s website, You can utilize this site for a Verification Letter whenever the HUD plate is gone. You will need the information from the interior Data Plate, so hopefully that hasn’t been removed. There is a charge which the lender needs to approve first.
Imagine you are driving down the road and your car breaks down. It is towed to the local garage it is the 1st of the month and the mechanic states that he will inspect the motor on the 2nd and call with the estimate. Sounds great! You wait for the telephone call, but it doesn’t come, not on the 2nd, the 3rd, or the 4th. Curious, you call on the 5th leaving a voicemail as the mechanic isn’t in. You call back on the 6th and 7th, leaving additional messages, receiving no call back, with your frustration level increasing. Finally on the 8th the mechanic calls, makes an excuse, and gives you the estimate. You wonder how long it will take for the actual repair!
A client e-mailed me the other day with a very valid question that most lenders and even many appraisers do not understand. To answer the client, I went straight to USPAP for clarification. The e-mail is below in its entirety. The names of the client and appraisal firm as well as dates have been removed.
Hi John,
An interesting email arrived from one of our appraisers the other day. A local bank (the appraiser’s and SAMCO’s client) had sent an appraisal request for 8 acres of a 20 acre parcel. With that request they had supplied the legal description for the 8 acres. The appraiser was concerned and here is their comment; “Please note we can not proceed because we have rules and laws to follow that prevent us from appraising part of a piece of parcel. I can lose my appraisal license for just doing 8 acres of a 20 acre parcel. I am sorry I can not proceed until it has been separately deeded.”
in a report recently sent out by Freddie Mac. The report showed that the low of the residential market was in November of 2010. Today’s numbers still reflect a weak market, and that market has actually declined recently from April to May.
What got my attention was when I saw only 13 states out of 50 (plus D.C.) are now in the stable category!
The states ranking on top are:
Eight of the 50 metro areas tracked also are in their stable range by historical standards. Ranking in the top five:
Years ago, it was typical for appraisers to complete a Cost Approach with every appraisal. When the revised 1004 took the Cost Approach off the second page, right above the Sales Comparison Approach, I wasn’t very happy. I was content completing my appraisals the way I was used to and didn’t like this new idea.
When you receive an appraisal request, the processing staff/loan officer has supplied the customer’s name and the address of the subject property. Many appraisers, when they pull the auditor’s information, will provide what they ‘believe’ is the legal name. Might as well help the processor/loan officer out, right? Wrong.
The name of the customer and address must be as the client/bank has ordered. If there is an obvious typo, then you may place the corrected version in the report, but note in the addenda what was ordered and why you changed it. That goes for the address also.