1. Appraisal Issues Reviews Updates Market Change
VRC Staff Meeting 2/6/03
Appraisal Issues
Reviews
Updates
Market Change

2. Review SR – 3 Technical Review SR – 3-1, “how to” review
SR – 3-2, “communicate”
SR – 3-3, certification

3. Review SR 3-1, Development: Scope of review is critical
Scope of work is client driven
Technical aspects ONLY, or
Technical aspects and VALUE
Value section must have independent scope
Value opinions must meet SR-1 requirements

4. Review SR 3-2, Communication Review report must contain Scope of Work
Report may contain new value conclusion
Valuation must have separate Scope of Work
If value is included, must meet SR 2-2b
We don’t know how forms fit the new rules!
Err on the side of caution, better more than less!

5. Updates More questions than answers
Mixed signals among the big players
Intent of ASB is still unclear
Caution may be the best advice

6. Updates Updates are no longer an extension of a prior assignment.
Updates are defined as a new assignment!
VRC will not update work prepared by a non VRC appraiser.
Issues of confidentiality must be observed.

7. Updates Updates must follow one of three options:
New report without incorporation of prior report.
New report with “incorporation by attachment”.
New report with “incorporation by reference”.
Must be done by original firm
Must be for original intended users

8. Updates & Fannie Mae Fannie Mae Specific rules, not USPAP
12 Month limitations
Cannot update a report 12 months old or older
4 Month limitations
Over 4 months old requires new exterior inspection
New market data must be reviewed to assess change
Declining market requires new appraisal
An update changes the effective date
Original appraiser does NOT need to prepare

9. Market Change To Adjust or not to Adjust, that is the question!
Is the issue greater than property value change over time?
What are the tools?
What is our policy?

10. To Adjust or not to . . .
Negative “time” adjustments reflect declining market conditions.
Can surface as dropping list prices, discounts, seller concessions, trick financing
Must be market driven and clearly supported.
Our obligation is to analyze and report!

11. Issue may be more than property value
Do amenities contribute the same value in times of decline?
Are purchasers more sensitive to property issues in times of decline?
Are clients more aggressive in times of decline?
Are extended marketing times coincident with declining values?

12. What are some of the tools?
Listing Analysis
Original list to sales price discount analysis
Analysis of supply and demand relationship
Competitive market analysis
Marketing time (DOM) analysis
Seller concession analysis
Sales confirmations and the right questions

13. What is our policy?
VRC’s policy is no different for time adjustments (negative or positive) than any other valuation question. We thoroughly analyze the market, reach well founded, supportable conclusions, have them reviewed by another appraiser, and deliver the results to our clients with the understanding that their input is important.