Incorrect Comments in Multi-Family Report
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I have in my possession an appraisal for a DUPLEX (2 family residence) on a FNMA 1025/FrMac 72 form, commonly called the ‘1025 Form’ which was done by a Certified Residential Appraiser licensed for 8 yrs, 6 months.
Items “observed” in the report:
- UAD rating numbers are used for Quality and Condition. 1025 forms are not UAD coded, so why are these used? Please don’t tell me “the client said so” because the client is incorrect, and may not be aware. Use the standard wording for those items, and provide a definition description of the standard wording you use.
- The Highest and Best Use statement is questionable. H&BU is paramount (most important) in EVERY appraisal, and is not just a checkbox on the form. Appraisers must give reasoning why they decide and conclude a particular H&BU. In this report, the appraiser’s first explanation sentence is “The appraisal problem did not warrant an intensive highest and best use study.” There are FOUR components to H&BU that need to be examined, with a conclusion drawn from that ‘intensive study’ of those components. There is NO explanation as to why this Duplex is indeed the H&BU for that site.
- In the Addendum, verbiage states info relating to a URAR, the standard SFR 1004. The 1025 form is NOT a URAR as evidenced by the name on the form. The appraiser merely used a regular SFR 1004 form Addendum, and stuck that into the 1025 report, without modifying the info. Appraisers have got to be more careful about proofreading reports and using correct information.
- The statement about Verification of information is incorrect. The appraiser re-uses the MLS listing number in the Verification Source(s) field for each comparable, yet in the Addendum tells the reader that “sales data has been confirmed from two sources”. An MLS listing number is NOT a Verification Source, it is a Data Source. A Verification Source is a PERSON, which should be identified by ‘type’ in the report.
- Again, in the Addendum, the Sales Comparison Analysis Summary, Reconciliation and Conditions of Appraisal statements, reference is made to “URAR – single family residences”, because the appraiser has not modified the Addendum to reflect this multi-family appraisal. Re-read #3 above.
- The report has a statement the report complies with the Professional Ethics and Standards of a professional appraiser organization. I checked; the signing appraiser is not a member of that organization, and neither is another appraiser who works in that same office with the signing appraiser. This statement SHOULD NOT be in the appraisal report. It is deceptive, and unethical, to cause the reader to believe that an appraiser is an appraisal organization member when they are not.
The above sloppiness in this legal document reveals the appraiser’s potential incompetence. However, the rest of the report appears properly done. But sloppiness, and the deception noted in #6, can get appraisers in real trouble if the report is turned over to the state for investigation.