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).
Tags: Soapbox Blog, Commercial Grade
I must confess that I am a fan of theThursday’s blog of one of the smartest men in the world of USPAP even though I read it on Mondays, Tuesdays, Wednesday’s, Friday’s & sometimes Thursday’s as well. My experience in the field of valuation and consulting has been on both sides of the table as both an writer of and a user of appraisals. I have seen the world through the ups and through the down cycles (anyone remember cyclical markets) and am mature enough to know that neither man nor an appraisal can have 2 masters unless both masters agree that they will abide by the conclusion of value. As a former appraiser of a major international bank I can attest to having received re-addressed reports and as a fee appraiser I can claim experience where I have been asked to re-address a report to a second party. The problem comes when questions arise that the original client did not ask or felt were of no concern and where the 2nd client -who did not pay you- insists on posing a whole batch of questions that mey take time and effort to answer-time that you cannot give at that period. Is it your duty to answer the 2nd non-paying client or do you tell him that you will have to charge him for your time? By the same token when receiving a report forwarded by a participant bank that was responsible for engaging the appraisal we were regarded as 2nd class citizens if we had questions pertaining to value. If I was the Czar of USPAP I would make an allowance for this dichotomy recognizing that once you have discharged your obligation on submitting an appraisal to the original client any additional explanatory work should rightfully be compensated as there will be additional time spent to satisfy the demands of a client that you never had any original contact with. Which leads me to ask the following question. As time is so valuable in an appraiser’s life where do all the bloggers at Miller amuel and Miller Cicero get the time to write and read all this chaff that can become an industry in itself? Gentlemen and ladies-this stuff should be fed to the Comedy Central cable channel as it is too jocose to be seen only by dull appraisers.