Commercial Grade is a weekly post by John Cicero, MAI who provides commentary on issues affecting real estate appraisers, with specific focus on commercial valuation. Today John talks about the complicate morass of determining a new assignment.
Disclosure: John is a partner of mine in our commercial real estate valuation concern Miller Cicero, LLC and he is, on Thursdays, one of the smartest guys I know. …Jonathan Miller
Twice this past week I was asked to re-address an appraisal that was originally prepared for one client to another. USPAP says that this is a no-no, but that it is OK to accept a “new assignment.” What exactly does that mean?
If I appraise a building as of March 1, 2006 for client A, can Client B (who is holding a copy of my appraisal report in his hand) also hire me to appraise the property as of March 1, 2006? Does this “get around” the re-addressing issue? Assuming that the scope of the appraisal is the same (prepare a USPAP-compliant appraisal), isn’t that essentially the same thing as re-issuing the original report? Or am I not permitted to accept an assignment to do a retrospective appraisal (as of March 1, 2006) for Client B? What am I missing? What exactly constitutes a “new assignment”? Some appraisers interpret this as being able to re-issue an appraisal as long as you charge Client B 100% of the original fee! (For the record, I’m not one of them!)
The rules regarding re-addressing appraisal reports is a moving target, and I have no doubt that the “rules” will change again in a year or so. First you could re-address reports, with the client’s permission; then you could re-address reports only if you said in the report that it was originally prepared for another (so that it is not “misleading”); then you couldn’t re-address the report to anyone that was not an “intended user.” But if they were not an intended user, you could appraise the property as a new assignment.
Of my two re-addressing episodes this week, one client (major financial institution) said that it was fine to have the “new assignment” identical to the original; in a separate incident another client (another major financial institution) said that the date of value had to be different for it to be a “new assignment.”
I’m pretty sure that as soon as this all gets clarified, we’ll get a new rule from our friends at the Appraisal Foundation (USPAP).