has the new AI Reports™!

Leland Trice, chair of the AI Reports™ Project Team, commented on what appraisers can expect: “AI Reports™ is a series of appraisal report formats being created by the Appraisal Institute. Designed by appraisers for appraisers, these formats are intended to be very flexible. The Summary Appraisal Report – Residential - AI Reports™ is our first completed effort. It’s the product of a lot of hard work by the Appraisal Institute and our AI Reports™ Project Team.” The Appraisal Institute has arranged distribution of the form through a number of appraisal software companies, who have agreed to include the form in their product lines.”*

Jeff Bradford, President of Bradford Technologies, said “Given the new USPAP regulation regarding Scope of Work and Intended Use and User, these forms will provide a way for appraisers to easily address the guidelines without modifying the Fannie Mae forms. They are a great solution for non-mortgage related appraisals.”

Appraisers will like the flexibility of the new AI Reports™. “A lot of users will like the ability to add pages within the report. This is different from the standard Fannie Mae forms, which are fairly set in stone,” said Francisco Duran, Bradford Technologies’ Chief Forms Designer. “A lot of appraisers have been asking for this, so it’s obvious that the Institute really listened.”

Because of our efforts in helping the Appraisal Institute Reports Committee develop these forms, some changes were made after their initial release. So ClickFORMS users will be getting the improved, Version 2 of the forms. Along with the Residential Report, ClickFORMS users will be receiving the Land and Restricted Reports.

Jeff Bradford, President of Bradford Technologies, comments: “We’ll have the new (version 2.0 version) AI Forms in ClickFORMS on March 15th. It’s in beta testing right now, and that’s going very well.”

“We’re pleased with how well the relationship with the Appraisal Institute is going. We’ve been working together for as long as I can remember, and it just seems to get better and better. Our participation in the creation of the new AI Form is indicative of that,” said Jeff Bradford.

* Leland Trice’s comments are courtesy of AppraisalBuzz and are reprinted with permission.

Valuation - The Appraisal Institute Magazine - New Appraisal Forms from AI Reports

Interview with Leland B. Trice, SRA –
chair of the AI Reports™ Project Team for the Appraisal Institute

Buzz: There has been a lot of “buzz” about the AI Reports™ project.
Can you fill us in on what it’s all about?

Trice: Certainly. AI Reports™ is a series of appraisal report formats being created by the Appraisal Institute. Designed by appraisers for appraisers, these formats are intended to be very flexible. The Summary Appraisal Report • Residential. AI Reports™ is our first completed effort. It’s the product of a lot of hard work by the Appraisal Institute and our AI Reports™ Project Team. The Appraisal Institute has arranged distribution of the form through a number of appraisal software companies, who have agreed to include the form in their product lines. The form is scheduled to be available from these companies around January 1, 2006.

Buzz: Why now….why has the Appraisal Institute tackled this issue?

Trice: For a number of years now, the Appraisal Institute has been encouraging its residential members in particular to “think outside the box” and look beyond mortgage lending work.
To that end we saw a need for report formats that would better address such assignments.
We also recognized that the new Fannie Mae / Freddie Mac forms are clearly for use in mortgage transactions only. So in July 2004 a project team was formed and charged with developing a protocol under which alternative forms could be developed for a variety of appraiser assignments. To fulfill the needs of a variety of appraisal assignments, the project team pursued a design of a baseline primary report that would prove to be both flexible and “use/user neutral.”

Buzz: Who made up this project team?

Trice: In addition to myself, those on the project team are Jay Delich, SRA; Ron Box, SRA; Karen Oberman, SRA; William King; Joseph Guerry, SRA; Sara Schwarzentraub, SRA; Dave Park, SRA; Sherryl Andrus, SRA; Danny Wiley, SRA; and Stephanie Coleman, MAI, SRA.

Buzz: You refer to the AI Reports™ format as ‘flexible’….can you elaborate?

Trice: We tried to think through the appraisal process and develop a format that can be used in most residential appraisal assignments. The first two pages outline Scope of Work and Assignment Parameters, which seemed to us the logical place start to any appraisal assignment. From there we deal with analysis of Market Area, Site, Highest and Best Use and Physical Improvements. But in all of those “standard” areas, we included items that are “value centric” and eliminated items that are specific to mortgage lending. From there we move to Approaches to Value. Each methodology, including Site Valuation, encompasses a single letter-size page. That’s another noticeable thing about the AI Reports format: we used a letter-sized format, which conveys a more professional look and clearly differentiates our product from other traditional formats.

During the exposure draft period, we received feedback expressing concern that the report was too long or involved. However, keep in mind that any form is an outline of the most common characteristics that should be considered for data collection and analysis. While each section of the AI Reports™ includes an increased range of data elements collected, there is also ample space for comments allowing the appraiser to add whatever is applicable to the assignment. The appraiser must determine the analysis and report that are appropriate for the intended use/user.

For example, if an appraiser deems the Cost Approach or Income Approach relevant, we wanted to provide a format to allow the appraiser to develop these methods completely.
Should the property have a very high land-to-value ratio, it might be appropriate to develop the Site Value independently—it’s not necessary but it’s a desirable option. I again want to stress flexibility—appraisers can outline in their Scope of Work what they will and will not do and then include whatever they think is appropriate and necessary for the assignment.

Buzz: You mentioned an exposure period….who was involved with this?

Trice: The project team presented the initial design of the form to a group of SRAs for a “first look” last spring. After incorporating their comments and resulting enhancements, we sent the revised form out to all 18,000 Appraisal Institute members for an exposure draft period of 30 days. Based on the feedback we received, the project team further revised the design and issued the Summary Appraisal Report * Residential.

Buzz: What other reports are you including in the AI Reports™ format?

Trice: We will soon be finishing:

Restricted Use Appraisal Report
Multi-Family Appraisal Report
Land Appraisal Report
Appraisal Review Report

And Supplemental Addenda for:

REO Properties
Sale & Marketing
Litigation
Insurance
Mortgage Finance

Buzz: Why the addenda pages?

Trice: The basic reports are designed to be “use neutral.” But there are certain intended uses/users that appraisers deal with constantly. These addenda can be used in conjunction with any of the Primary Reports to tailor the assignment to a specific intended use.

Buzz: This sounds great….when will the forms be available?

Trice: As I indicated earlier, the Summary Report • Residential is being completed by the software vendors and should be released shortly. We plan to follow quickly with the other Primary Reports. We are currently consulting various users of appraisal services for the “use specific” addenda. Buzz readers can “stay tuned” to further developments by going to our AI Reports page on the Appraisal Institute Web site (http://www.appraisalinstitute.org/resources/aireports). A more detailed look at elements of the form appears in an article in the 4th Quarter issue of Valuation Insights & Perspectives magazine, which comes out this month [December]. The magazine is distributed to the majority of licensed and certified appraisers, so I suggest Buzz readers watch for the issue.