Learn to compare Bids for Appraisal Reports

In CAM Library, Florida Hurricane Insurance, Insurance Appraisal by Patricia Staebler

If your condominium association is self-managed your board will have to get bids for services like maintenance, roof repairs, pool services etc. without the help of a property management.

One service you will need automatically every three years is the insurance appraisal. Florida Statutes 718.111 requires condominium associations to have an appraisal prepared by an independent appraiser every three years.

First of all, make sure that the appraiser you are requesting a quote from is a State-Certified General Appraiser, because only General Appraisers may appraise structures which contain more than 4 living units. See my blog “Who may prepare an appraisal report?”.

Secondly, get quotes from at least three appraisers and insist on a written quote. When your board assembles, you want to have a written bid to show to your fellow board members.

The quote should contain the price for the appraisal report, the price for an update report, the scope of work for appraisal and update and the information if you are required to sign a contract for annual updates or not.

Many appraisal companies convince the property owner to sign up with their update program, which includes an annual update on the reconstruction value. Florida law requires an update every three years and unless you are shopping for insurance every year, you really do not need these annual updates. If the construction prices change dramatically, you still can get an update upon request.

In most cases the updates do not include a re-inspection; the appraiser firm rather uses the original report, runs the numbers through the construction estimation software and issues an update letter without re-inspecting the property.

Therefore you should require a description of the scope of work for both, the first appraisal report and the subsequent update reports.

An example of the scope of work could read like this:

The scope of work will include:

• Inspection of the exterior
• Inspection of several condo units and the interior common elements
• Two valuations, one for wind/hazard, one for flood insurance
• Verification of measurements with the construction plans
• Photo documentation
• Summary appraisal report compliant with USPAP, Appraisal Institute and Citizens standards
• Digital file and one hardcopy of the report

The scope of work for an update report will include:

• Re-inspection of all property elements, exterior and if necessary interior
• Verification that improvements are unchanged
• New set of photos
• New summary report (not an update letter)
• Digital file and one hardcopy of the report

Updates of the appraisal report should be available upon request without a binding contract, unless desired by the association or the property management.

In my humble opinion, if the association is happy with the work of the appraiser they will rehire the appraiser for the update anyway, so why force the association into a contract which is not necessary?

So learn to do the math and compare bids with annual updates to bids with no update contract and you will see the difference.

Important is to follow the law and make sure that you will have an updated report every three years. By the way, a good appraiser will send you a notification that your report is up for renewal.

As always, thanks for reading my blog, please share with your friends and colleagues and if you have questions, comments, concerns, do not hesitate to contact me.

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