Rules of Engagement
Recently a particular engagement letter format has been circulating amongst residential appraisers from several nationally chartered banks. Aside from the usual intended use and exposure time boilerplate requirements there are several new problematic inclusions.
All personal property transferring in a purchase transaction must be described in the appraisal whether or not it was listed in the sales contract.
Any client is free to ask for a shopping list of tchotchkes, but if an appraiser is appraising an abandoned residence with piles of junk laying everywhere…they couldn’t afford my time to sift through it all like in an episode of Storage Wars.
Personal property, if it has any value in Illinois, is dealt with through a bill of sale.
If sales without personal property aren’t available, appraiser should make negative adjustments to sales for value of items included in each. If personal property has value to (a) typical purchaser, appraised value should be reconciled below actual sale price. It is not acceptable for appraisers to simply state that fully furnished units are common for the area without adjusting for the personal property.
The only time I ever had to back-out personal property in a residential appraisal was in 1987 when a builder sold a fully furnished model home.
For a bank, any bank to insist that an adjustment must be made, even when the market won’t support it…is something the FDIC needs to examine with that bank.
Check utilities during inspection and comment whether or not ALL utilities were operable during the time of inspection, including electricity and water.
Unless you have an active, Illinois Home Inspection license…you’re not checking to see if anything is operable.
Not to mention the epic liability you’ll face if you damage any system that you’re “checking”.
Any additions (to the improvement) must be described. If they are permitted, they are to be included in the GLA. If they are not permitted, the appraiser must address whether they impact the property’s legality under the zoning and quality of construction.
Most appraisers aren’t lawyers.
I don’t know. A $350 fee doesn’t seem to be enough to justify having an appraisal license, home inspection license, and a law license.
Maybe I’m just out of touch with the market.
Sounds like these banks are.
By Lee Lansford – Illinois Appraiser Newsletters – Volume 7, Issue 3