CoVid-19 Awareness Update #5

Extraordinary Assumptions for CoVid-19

Full Appraisal with No Interior Viewing

In light of the current, rapidly changing real estate landscape in Canada due in large part to the Co-Vid 19 Virus, industry stakeholders have needed to modify how appraisal/lending works gets completed.

Through discussions with several of the national lenders, and AMC’s we have been working on possible solutions for the completion of Appraisal Reports without the appraiser viewing the interior of the subject property.

As you know, there are no requirements in the USPAP for the appraiser to actually view the subject property, but the appraiser must gather sufficient credible information to form their opinion of value.  The information used to generate the appraiser’s opinion of value may come from several sources including the occupant or owner of the subject property, the MLS, Assessment Information Systems, etc.  As we have previously stated in announcements this week, we caution our members to ensure that they fully comply with their contractual obligations when using these various information systems.  Although in some cases the appraiser may be prohibited from including MLS interior photos in an appraisal report, those photos would still be part of the appraiser’s work-file and would be used to formulate the opinion of value.

In cases where, for safety and health reasons, an occupant of a property does not want the appraiser to carry out an interior inspection, or where, again for health and safety reasons, the appraiser does not feel they can complete the interior viewing, the required information may be obtained from the various other sources named above.  Information provided by the occupant may be in the form of current photos taken and sent to the appraiser, the use of technology such as FaceTime/Skype/Zoom Media, etc.

During the conversation/correspondence with the occupant the appraiser should be gathering information pertaining to room count, materials of construction, quality and condition, etc. so that the opinion of value is credible.

In most cases, it would be reasonable for the appraiser to visit the subject property to obtain exterior photos, GLA measurements, information on exterior quality, condition, materials of construction, etc.  It would be prudent for the appraiser to explain this to the contact person associated with the assignment, as well as tenants, etc.

Before an appraiser can complete an appraisal assignment, the appraiser must believe the information provided to them is credible, and representative of the current quality and condition of the subject property.

In these situations, the appraiser must complete the appraisal assignment under an Extraordinary Assumption.  To assist to our members, we have developed some sample Extraordinary Assumptions to deal with these situations.  PLEASE NOTE:  These sample statements should be modified to suit each individual assignment, and the appraiser must ensure the wording is appropriate for each given situation.

Sample Extraordinary Assumption Statements

“This appraisal report has been completed under the Extraordinary Assumption that the information pertaining to the subject property, as supplied by the occupant, is a true and credible representation of the quality and condition of the subject improvements as of the Effective Date of this appraisal report.”

“This appraisal report has been completed under the Extraordinary Assumption that the information pertaining to the subject property, as obtained from the local XxxX  (MLS, Assessment Authority, etc.), is a true and credible representation of the quality and condition of the subject improvements as of the Effective Date of this appraisal report.”

“This appraisal report has been completed under the Extraordinary Assumption that the information pertaining to the subject property, including GLA, Room Count, quality of finishes, and condition of the improvements as supplied by XxxX is a true and credible representation of the quality and condition of the subject improvements as of the Effective Date of this appraisal report.

“At the request of the occupant of the subject property, no interior viewing of the improvements by the Appraiser was permitted.  Therefore this appraisal report is completed under the Extraordinary Assumption  that the information contained in this appraisal report, and in the Appraiser’s workfile was obtained from the XxxX  (occupant, tenant, homeowner, realtor, etc.) and is believed to be a true and credible representation of the quality and condition of the subject improvements as of the Effective Date of this appraisal report.”