Report an Opinion of Value as a RANGE – Yes or No?
Can appraisers report an opinion of value as a range?
Can that be done? The answer is both YES and NO, or as some like to say, “It Depends!”
Here’s an interesting example of YES, involving two commercial properties in Miami Beach (yeah, I know, resi’s, but hang with me here!):
You will notice in the article that the value reported in the appraisals is stated as a RANGE by the appraisers. That is entirely acceptable when appraisals are done under the guidance of USPAP Standard 2. It makes sense to do it that way when appropriate!
OK then, if commercial appraisers can do it, why can’t we residential appraisers also do it? I mean really, how many of us have highly polished crystal balls from which we can opine a value down to a single dollar, as most residential lending clients seem to expect?
The answer comes from mortgage lending requirements, and the associated forms, mandated by the GSE’s, Fannie Mae and Freddie Mac, beginning in 1986 for the original and subsequent URAR (plus others), which have been adopted by HUD/FHA, VA, USDA, national and regional banks, credit unions, and virtually all ‘investors’ who make mortgage loans. ** Nope, nada, no way, Jose… one value only is all you can do for those kinds of assignments. Unfortunately, it’s that precise single value that confounds lots of folks, as if appraisers really do consult their polished crystal ball. Truth be told, more likely the result comes from the liquid surrounding the ice cubes in a hi-ball glass, or in a stemmed glass! (Oh c’mon, just kidding here!)
But wait, there’s more, says the late night infomercial pitchperson disguised as an appraiser writer.
You CAN report a RANGE of value when you do non-mortgage lending assignments. These typically are private party reports for estate, divorce, partial interest, date of death, etc. purposes, when using a NON-GSE form or a narrative report. Or on a napkin, or even verbally. When you do this, as I have, it’s best to state in the report that the RANGE of value is perfectly acceptable per USPAP, because some clients may have only seen a mortgage lending form report with a single value.
If you are doing a formal review report of another appraisal, and are asked to provide a value, USPAP Standard 3 makes no mention of whether a RANGE is permitted, or not. It doesn’t even say a SINGLE value must be reported. It just says, in part, that the review appraiser must
“… summarize any additional information relied on and the reasoning for the reviewer’s opinion of value or review opinion related to the work under review.”
The one caveat on this is if you are reviewing a GSE form report, then you probably should report a SINGLE opinion of value. Most clients expect that. But if you’re reviewing a non-mortgage lending report for a private party, then you are free to report a RANGE if you think that is appropriate.
There. It Depends! And USPAP really is your friend! Now, go polish your crystal ball.
** The predecessor ‘form’ to the URAR was the “Green Hornet” two page appraisal, which also had a single value shown. Its use started a long time before USPAP was even conceived. It was adopted by most of the Savings and Loan Associations across the country. Prior to that most S&L’s had their own local forms that were not designed uniformly.