Pacific Island Appraisals: 2016

Ask George Harrison

Q. Hi George - If there is no legal number for a condominium, what do you put in the "unit #" area? Someone told me to put "-" and it would be ok. Thanks for your help.

A. I went to one of our UAD specialists, John Dingeman, MNAA. John responded the following.

George. It is in the Nov 2013 UAD Appendix D (Effective 2012). If there is no unit number the appraiser is supposed to include a hyphen.

"During the appraisal process if an appraiser determines that a unit number is not available

for a property known to be a condominium, the appraiser must put a "-" in the unit number field. The "-" symbolizes that the appraiser has researched the property address and was unable to identify a unit number for the given condominium unit. This is only likely to be necessary in a limited number of instances. This format option is allowable for both the subject property and the comparable properties. The address and unit number must be provided consistently for the subject property throughout the appraisal. "

Q. I am a homebuilder and I build and remodel homes. In most cases I include "green-building" features. Unfortunately, many appraisers don't recognize the value in so much of these features. I know that the lender must hire the appraiser, but isn't there something I can do to get an appraiser who understands the value of green:

A. Well, this is not a simple question. It is true that in many areas appraisers are struggling with dealing with green. Some items, such as photovoltaic panels-whether owned or leased-have enough sales to be able to reach a credible conclusion. This is not always the case. It's important to remember that cost of a feature does not necessarily contribute the same or more amount to the market value.

Assuming that you are in an area where appraisers still struggle to reach a credible contributory value conclusion, you may want to do some searching. You may find an appraiser who has done a lot of work with green and has developed a reliable competence. In such a case, you may go to the lenders and convince them that the appraiser has a higher level of competence. The lender may be willing to place the appraiser on its approved list and use him/her as a specialist.

Q. This may sound foolish, but I have had a question for some time, and wondered what you thought about this. Most of my business is for AMCs, and some time back I was given an assignment to appraise a property that I had appraised for that same AMC less than three years before. I know that I am supposed to reveal the prior services, but in that case I didn't see any point in it. Well, I have another one, and I wonder if you think I should say something.

A. I can understand your concern, and glad you inquired. Yes, there is no exception to the requirement that you reveal your prior service even if it is for the same client. Hopefully, if you deal with the same person all the time he or she will understand the requirement. Don't' forget also, to decline the assignment If you were asked to keep the prior assignment confidential.

Many years ago, before these USPAP requirements, I was asked to appraise some raw land in a nearby county. I had an idea what the client thought it was worth, and as I was researching the data I realized that nothing had sold on a per acre price in the whole county to meet his expectations. I called and told him what I had found and he asked me to forget about it and come by his office and he would pay me for what I had done. As he paid me, he said again to "just forget about the whole thing."

About two years later he called and asked me to appraise it again. Well, had he previously asked me to "keep it confidential"? I think so, so today I would have to decline the assignment.

Q. I was in class not long ago and we got into a discussion about highest and best use and the form 1004. Some said that there should be a discussion in an addendum, describing what highest and best use is, ie, physical, financial, etc. Many of us don't do that and haven't really had much trouble with clients. What is your experience?

A. I think I understand both sides here. This all falls back on USPAP, and SR 2 provides that we should summarize and support our conclusion of highest and best use. In most of the typical residential appraisals this falls on the principle of conformity. That is, the highest and best use is determined by comparing the subject to surrounding properties. In such a case, the conclusion may simply "based on the use of surrounding properties."

Of course, in more complex cases you should spend a little extra time. I am thinking of a townhome subdivision in Dallas that was developed in the '70s. Many of the townhomes are 3-2-2/2 car etc., but some aren't typical. Some are 3-2 1/2 with only a one-car garage. I would think that the highest and best use of these are as rental property. Many would rent one, but not many would want to buy it to live in.

Good Luck and Happy Appraising,

George

Do you have a questions for George? Email george@columbiainstitute.org.

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