McKissock - General Report Writing and Case Studies
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McKissock
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McKissock
McKissock - General Report Writing and Case Studies
Appraisal
"(noun) The act or process of developing an opinion of value. an opinion of value; (adjective) of or pertaining to appraising and related functions such as appraisal practice or appraisal services."1
Report
any communication, writt...
McKissock - General Report Writing and Case Studies
Appraisal
"(noun) The act or process of developing an opinion of value. an opinion of value;
(adjective) of or pertaining to appraising and related functions such as appraisal practice
or appraisal services."1
Report
any communication, written or oral, of an appraisal or appraisal review that is
transmitted to the client or a party authorized by the client upon completion of an
assignment. 2
Client
"The party or parties who engage, by employment or contract, an appraiser in a specific
assignment.Comment: The client may be an individual, group, or entity, and may
engage and communicate with the appraiser directly or through an agent."3
Date of the Report
The date that the appraiser completed and transmitted the appraisal report to the client.
It is usually - but not always - different from the effective date of value stated in the
appraisal report.
Effective Date
The date to which the value applies. It can be current, prospective, or retrospective. The
effective date of value establishes the viewpoint from which the appraiser viewed the
appraisal problem.
Intended use
"the use(s) of an appraiser's reported appraisal or appraisal review assignment results,
as identified by the appraiser based on communication with the client at the time of the
assignment."4
Intended User
"the client and any other party as identified, by name or type, as users of the appraisal
or appraisal review report by the appraiser, based on communication with the client at
the time of the assignment."5
Personal Property
"Identifiable tangible objects that are considered by the general public as being
'personal' (e.g., furnishings, artwork, antiques, gems and jewelry, collectibles,
machinery and equipment; all tangible property that is not classified as real estate."6
Real Estate
"An identified parcel or tract of land, including improvements, if any."7
Real Property
"The interests, benefits and rights inherent in the ownership of real estate".8
This often is referred to as the "bundle of rights" associated with owning real
estate. These rights include:
The right to sell the property;
The right to lease or rent the property;
The right to use the property;
The right to give the property away;
The right to enter or leave the property; and
The right to refuse to do anything with the property.
,To determine the appropriate scope of work for the individual assignment, the
appraiser must:
-Rely on the information gained in the first step of the appraisal process. Proper
identification of the problem is essential.
-Ensure that he or she has the knowledge, experience, and competency to accomplish
this assignment.
-Determine the client's expectations for this type of assignment.
-Not allow the assignment conditions to limit his or her ability to arrive at a credible
opinion of value, given the intended use of the appraisal.
-Be able to support the decision for the level of work to be accomplished.
-Be prepared to defend the research and analysis he or she decided was not required
for this assignment's credible opinion of value.
Ethics Rule of USPAP
"An appraiser must promote and preserve the public trust inherent in appraisal practice
by observing the highest standards of professional ethics. An appraiser must comply
with USPAP when obligated by law or regulation, or by agreement with the client or
intended users. In addition to these requirements, an individual should comply any time
that individual represents that he or she is performing the service as an appraiser."1
Among the requirements, USPAP states:
"In reporting the results of a real property appraisal, an appraiser must communicate
each analysis, opinion, and conclusion in a manner that is not misleading.
Comment: STANDARD 2 addresses the content and level of information required in a
report that communicates the results of a real property appraisal.
STANDARD 2 does not dictate the form, format, or style of real property appraisal
reports. The form, format, and style of a report are functions of the needs of intended
users and appraisers. The substantive content of a report determines its compliance.
Each written or oral real property report must include:
-clearly and accurately set forth the appraisal in a manner that will not be misleading;
-contain sufficient information to enable the intended users of the appraisal to
understand the report properly; and
-clearly and accurately disclose all assumptions, extraordinary assumptions,
hypothetical conditions, and limiting conditions used in the assignment."2
Standard Rule 2-2
(a) The content of an Appraisal Report must be consistent with the intended use of the
appraisal and, at a minimum:
(i) state the identity of the client, unless the client has specifically requested otherwise;
state the identity of any intended users by name or type;
(ii) state the intended use of the appraisal;
(iii) summarize information sufficient to identify the real estate involved in the appraisal,
including the physical, legal, and economic property characteristics relevant to the
assignment;
(iv) state the real property interest appraised;
(v) state the type and definition of value and cite the source of the definition;
Standard Rule 2-2 Cont:
(vi) state the effective date of the appraisal and the date of the report;
(vii) summarize the scope of work used to develop the appraisal;
,(viii) summarize the information analyzed, the appraisal methods and techniques
employed, and the reasoning that supports the analyses, opinions, and conclusions;
exclusion of the sales comparison approach,
(ix) state the use of the real estate existing as of the date of value and the use of the
real estate reflected in the appraisal;
(x) when an opinion of highest and best use was developed by the appraiser,
summarize the support and rationale for that opinion;
Standard Rule 2-2 Cont II:
(xi) clearly and conspicuously:
state all extraordinary assumptions and hypothetical conditions; and
state that their use might have affected the assignment results; and
(xii) include a signed certification in accordance with Standards Rule 2-3.1
FIRREA Market Value Definition Developed by Federal Regulatory Agencies:
Market value means the most probable price which a property should bring in a
competitive and open market under all conditions requisite to a fair sale, the buyer and
seller each acting prudently and knowledgeably, and assuming the price is not affected
by undue stimulus. Implicit in this definition is the consummation of a sale as of a
specified date and the passing of title from seller to buyer under conditions whereby:
-buyer and seller are typically motivated;
-both parties are well informed or well advised and acting in what they consider their
own best interests;
-a reasonable time is allowed for exposure in the open market;
-payment is made in terms of cash in U.S. dollars or in terms of financial arrangements
comparable thereto; and
-the price represents the normal consideration for the property sold unaffected by
special or creative financing or sales concessions granted by anyone associated with
the sale.
Exposure time is defined in USPAP as:
EXPOSURE TIME: estimated length of time that the property interest being appraised
would have been offered on the market prior to the hypothetical consummation of a sale
at market value on the effective date of the appraisal. (Comment: Exposure time is a
retrospective opinion based on an analysis of past events assuming a competitive and
open market.1)
Which of the following describes or explains what is meant by "the effective date
of value" of an appraisal?
The date the appraisal report was completed
The date the appraiser affixed his/her signature to the report
The date that the opinion of value applies to
The date the appraisal was tendered to the client
The date that the opinion of value applies to
Many experienced appraisers and industry participants have expressed a belief
that a Restricted Appraisal Report takes the place of the __________ type of
appraisal that was used in the past.
Summary appraisal
Complete appraisal
, Letter opinion of value
Investor's analysis
Letter opinion of value
Which of the following is ALWAYS an intended user of an appraisal report?
The client's attorney
Mortgage lenders
Tax assessor
The client
The client
Which of the following defines the intended use of an appraisal report?
The explanation of the appraisal problem to be solved
the uses of an appraiser's reported appraisal or appraisal review assignment
results as identified by the appraiser based on communication with the client at
the time of assignment
The explanation of the appraiser's scope of work
The definition of market value included within the appraisal report
the uses of an appraiser's reported appraisal or appraisal review assignment results as
identified by the appraiser based on communication with the client at the time of
assignment - The intended use of an appraisal report is the uses of an appraiser's
reported appraisal or appraisal review assignment results as identified by the appraiser
based on communication with the client at the time of assignment (Introduction)
Which of the following describes what is meant by the date of the appraisal
report?
The date the appraisal report was received by the client
The date that the opinion of value applies to
The date the property being appraised was inspected by the appraiser
The date the appraisal report was completed
The date the appraisal report was completed
Client vs Appraisal Management Company
It is important to remember that, according to USPAP, the one who engages the
appraiser is the "client" which means that if the AMC "engaged" the appraiser, then the
AMC is the client not the lender. The exception to this rule is that if the AMC, in the
engagement documentation, identifies itself as acting as an agent for the lender as the
named "client," then the lender would be the client. Thus, absent from that disclosure of
agency, the AMC is the client of the appraiser, not the lender who is an intended user.
Basic elements for the appraiser's consideration Standards Rule 1-2
-Identify the client and any additional intended users.
-Determine the intended use of the appraiser's opinions and conclusions.
-Identify the type and definition of value.
-Determine the effective date of the appraiser's opinions and conclusions.
-Identify the property type and all of its relevant characteristics.
-Identify any extraordinary assumptions for the assignment.
-Identify any hypothetical conditions of the assignment.
Which of the following pieces of information is NOT specifically required by
USPAP to be included within an appraisal report?
The identity of the client and other intended users
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