Most everything changes. If you don’t believe that look in the mirror. Appraisers were very concerned when the new Fannie Mae appraisal forms initially hit the street and now after three years most appraisers utilize them routinely without much consideration. There are times these preprinted forms are not appropriate and should be avoided.
Intended User - The Appraisal Foundation and the Association of Appraisal Regulatory Officials (AARO) have indicated that in order to set forth the appraisal in a manner that will not be misleading; the appraiser must provide a clarification with regard to the intended users. This needed clarification is a result of Certification #23 which indicates a host of others that may rely on the appraisal report.
Although Fannie Mae indicates you can not add, change, delete or modify their certification or limiting conditions, they don’t mention clarifying. In Fannie Mae’s Revised Appraisal and Property Report Forms – FAQs dated 11/1/05 they indicate that they would accept the following statement when the appraiser believes the client is the only intended user.
“The Intended User of this appraisal report is the Lender/Client. The Intended Use is to evaluate the property that is the subject of this appraisal for a mortgage finance transaction, subject to the stated Scope of Work, purpose of the appraisal, reporting requirements of this appraisal report form, and Definition of Market Value. No additional Intended Users are identified by the appraiser.”
Intended Use - The preprinted forms also indicate the intended use is for mortgage finance transactions, so without any change to this form, utilizing it for any other reason would create a misleading report. How many of you appraise real property for owners thinking of selling their property, pending divorces, estates, etc? THERE IS NOT A MORTGAGE FINANCE TRANSACTION as you are stating by signing the certification and limiting conditions. Use a different form, a narrative report format, a brown paper bag, just not the Fannie Mae preprinted 1004 form!
Most software companies offer a substitute form such as ACI’s General Purpose Appraisal Report commonly known as the GPAR.
Keep an open mind for a moment. Think outside the “check” box. If you have been hired by a homeowner thinking of marketing their home, do they really need a picture of their own home? Do they need a floor plan they walk every day, a copy of a map, or a copy of their deed? They probably have the original deed. How about providing them what they need - a credible, ethical, unbiased professional opinion.
Think for a minute about when you go to the doctor with an aliment. What happens? Perhaps there is a discussion of the problem, an examination, maybe an ex-ray? Then it’s off to the lab for some blood work. Then you go home and wait by the telephone. When the doctor calls with the results do you say, “Wait! I want a 43 page written report!” Of course not, you accept their professional diagnosis or opinion via the phone.
Remember the appraisal and the appraisal reports are two different things. The Appraisal Development is covered under Standard 1 while the Appraisal Report is under Standard 2. There are four report options consisting of three written and one oral. Whether you prepared a Self-Contained, Summary or Restricted Use they can be narrative or form reports.
A Restricted Use report option is most often overlooked by appraisers but very often is the perfect option for many clients. Consider providing options for different clients who have different problems that need to be solved instead of forcing a URAR down their throat.
Regardless of which option you choose, beware of using the Fannie Mae preprinted forms as a catch all. They were not intended for that reason.
AUTHOR: Bryan S. Reynolds is a Certified General Real Property Appraiser and an AQB Certified USPAP Instructor. Mr. Reynolds serves as an adjunct faculty member of The Columbia Institute, and is an approved appraisal instructor in 30 states.
Reynolds is the owner of Reynolds Appraisal Service in Owensboro, KY, providing various residential and commercial valuation services, consulting and litigation support services throughout the area. He can be contacted at (270) 929-3088 or by email at email@example.com .