AG_8241_6_B001_PWS_3_Feb_16.pdf

PERFORMANCE WORK STATEMENT

APPRAISAL SERVICES - SINGLE FAMILY HOUSING RESIDENTIAL PROPERTY

February 3, 2016

1. BACKGROUND

USDA Rural Development (RD) provides direct loans to eligible applicants for single family housing residential property. To support this program, USDA Rural Development requires the services of qualified persons or firms to provide appraisal services, in accordance with Title 7 Code of Federal Regulations (CFR) Part 3550 and Handbook-1-3550, Chapter 5, Section 5 “Appraisals” which may be located at: http://www.rurdev.usda.gov/Handbooks.html or http://www.rurdev.usda.gov/SupportDocuments.

2. OBJECTIVE

To determine the market value of single family housing residential properties to ensure the Agency obtains adequate security for its loans.

3. GENERAL

A. The contractor must be licensed in the state of Colorado as a Licensed, Certified Residential or Certified General appraiser, be considered active on the Appraisal Subcommittee website (www.asc.gov) at time of award, and maintain professional insurance coverage in accordance with local and state government requirements. The appraiser shall have the specialized knowledge and experience necessary to be competent to appraise single-family housing. A Trainee may sign the report. If a Trainee signs the report his registration shall be provided to RD and the contractor shall sign as Supervisory Appraiser and personally inspect the subject property. If required, the contractor shall defend the appraisal in court or in Rural Development’s appeals process. Cost associated with the defense of the appraisal, when necessary, will be negotiated under a separate purchase order. Except where noted herein, the contractor shall provide all facilities, materials, supplies, tools, equipment, personnel, and travel to accomplish the performance of the requirements of this contract.

B. Appraisers must be currently registered in the System for Award Management (SAM).

1) There is NO fee to register. The site is https://www.sam.gov/portal/public/SAM/ .

Your CCR username does not work in SAM. You will need a new SAM User Account to register or update your entity records. User guides and webinars are available under the Help tab. You will be required to have a DUNS number.

2) For Current users: If there is a change in e-mail address, designated financial institution, Company name or address, user guides will lead you step by step to update your registration in SAM. SAM will send notifications to the registered user via email 60, 30, and 15 days prior to expiration of the Entity.

AG‐8241‐6‐B001

BPA‐SFH APPRAISAL SERVICE

3) If the SAM registration expires for an appraiser that is currently on the Approved Vendor List, then appraisal requests to that appraiser will cease immediately and will not begin again until the company can update their registration.

C. The appraisal shall comply with the current edition of the Uniform Standards of Professional Appraisal Practice (USPAP) (available at www.appraisalfoundation.org) and Agency requirements as described in HB-1-3550, chapter 5, and in 7 CFR 3550.62a.

D. The appraisal report must be submitted in accordance with USPAP Standards Rule 1 & 2-2 (b), and Rural Development Instruction 1922-A. The appraisal must be completed using one of the following forms: Fannie Mae Form 1004/Freddie Mac Form 70 (March 2005), "Uniform Residential Appraisal Report," for all one-unit, single family dwellings; Fannie Mae form 1004C/Freddie Mac Form 70B (March 2005), “Manufactured Home Appraisal Report,” for all manufactured homes; Fannie Mae Form 1073/Freddie Mac Form 465 (March 2005), “Individual Condominium Unit Appraisal Report” for all individual condominium units; Fannie Mae Form 2055/Freddie Mac Form 2055 (March 2005), "Exterior-Only Inspection Residential Appraisal Report," for all one-unit, single family dwellings for all properties where there is no visual inspection of the interior; or FNMA Form 1004D/Freddie Mac Form 442 (March 2005) , “Appraisal Update and/or Completion Report”, for properties reinspected for completed repairs or completed New Construction.

E. The appraisal report must be Uniform Appraisal Dataset (UAD) compliant.

F. The Contractor shall contact the Ordering Official to coordinate appraisal schedule and obtain additional information to perform the appraisal service. Additional information may include property inspection report, the pest and dry rot report, and the USDA Rural Development required repairs list.

G. The appraiser(s) signing the appraisal report must make a personal inspection of the subject interior and exterior and the exterior of all comparables. The appraiser(s) must indicate that the subject’s interior and exterior and all comparables were personally inspected in the certification page. Readily observable conditions must be noted for the following:

attic space, crawl space, floors, and walls for significant structural failure, moisture damage, evidence of past fire damage; the roof condition for remaining life; the mechanical systems for operability, (unless the utilities are off and/or the property is winterized); and the walls and trim for defective paint surfaces.

H. In the event that access to the subject interior and/or exterior cannot be obtained, the appraiser must report the extraordinary assumption used in the analysis. USPAP Standard Rule 1-2 (F) requires the appraiser to identify any extraordinary assumptions necessary in the assignment. The extraordinary assumption must include detailed disclosure of the assumed condition and the source(s) the extraordinary assumption is based upon.

I. Should Rural Development require repairs, the list of repairs shall be provided by the Ordering Official. The appraiser should include the repair list in the addendum of the appraisal report, as well as the cost to cure the required repairs. The appraiser shall either include in the addendum a copy of the property inspection report shall identify and detail who prepared the report, the date of the report or a statement by the appraiser that such report(s) and information is available if requested in appraiser’s work file.

J. To comply with Standard Rule 1-5 the appraiser is required to analyze all agreements of sale, options, and listings of the subject property current as of the effective date of the appraisal. A complete agreement of sale shall include all disclosures and addendums. The appraiser is required to disclose the details of all complete sale agreements, addendums and disclosures analyzed.

K. All new loan and recapture appraisals for Rural Development will provide Market Value based on the following Market Value definition used by agencies that regulate federally insured financial institutions in Part XI; Fannie Mae Selling Guidelines 205; Definition of Market Value (06/30/02):

“The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.

Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and acting in what he or she considers his or her own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

(5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”

L. Each appraisal should be submitted electronically with authorized digital signature, rather than in hard copy format. Electronic submissions must be emailed to the Ordering Official as indicated on the confirmed Single Family Appraisal Order Form, Purchase Order, or Task Order (SF 1449).

4. APPRAISER DUTIES

A. The appraiser must understand and agree that USDA Rural Development is the appraiser's client, and all reports must be addressed to USDA Rural Development. The user of the report will be USDA Rural Development (and any other intended user specified by the Agency). Any questions relating to the form or substance of the appraisal assignment should be directed to the Ordering Official or Contracting Officer and will not be directed to the property owner or builder/contractor. The Rural Development Agency Appraiser or the Ordering Official are not the Contracting Officer and do not have the authority to take any action, either directly or indirectly that would change the pricing, quantity, and quality, place of performance, delivery schedule, or any other terms and conditions of the contract. Nor does the RD Agency Appraiser or Ordering Official have the authority to direct the accomplishment of any effort which goes beyond the scope of the Statement of Work.

B. When in the opinion of the appraiser, the RD Agency Appraiser or the Ordering Official requests effort(s) outside the existing Performance Work Statement, the appraiser shall promptly notify the Contacting Officer, in writing. The appraiser shall take no action under such direction until the Contracting Officer has issued a modification to the Performance of Work or has otherwise resolved the appraisal issue.

C. A property contact person will be provided by the Ordering Official and ensure the appraiser has access to the subject property for inspection, unless the appraisal was requested as “exterior only”. Appraisal fees or turnaround times must not be discussed with the property contact. The appraiser must notify the Ordering Official immediately if any of the following occurs:

(1) the appraiser cannot gain adequate access to the property, with the exception of “exterior only” appraisals, (2) the appraiser does not receive essential property information in a timely manner, (3) the appraiser has previously appraised or is in the process of appraising the property for another client, (4) the appraiser has any other potential conflict of interest with respect to the assignment.

D. All appraisals must comply with the Fair Housing Amendments Act of 1988. According to the Act, it is unlawful for an appraiser to use factors that are discriminatory on the basis of race, color, religion, sex, disability, familial status, or national origin in the sale, rental, leasing, or financing of housing.

E. The appraiser must keep all information and materials furnished by Rural Development, the owner, and/or property contact regarding the subject property confidential, as required by The Uniform Standards of Professional Appraisal Practice (USPAP) and the Gramm-Leach- Bliley Act (also known as the Financial Services Modernization Act of 1999). The appraiser must agree to prevent the unauthorized disclosure, misuse, or alteration of the confidential information. Any information obtained through public sources is not considered confidential information. Disregard of this privacy requirement will be cause for immediate debarment as a contractor for the federal government.

F. All extraordinary assumptions, hypothetical conditions, and limiting conditions must be clearly and prominently described in a single location near the beginning of the report and in appropriate sections of the appraisal. Extraordinary assumptions and hypothetical conditions also must be discussed with and agreed to by Rural Development prior to completion of the report. General assumptions and limiting conditions that reduce the normal scope of appraisal due diligence are not allowed.

G. The appraiser must be familiar with the general provisions of the Americans with Disabilities Act (ADA) because single-family housing is a property type that may be constructed and/or modified for use by individuals with disabilities. The appraiser must consider what impact (if any) such modifications have on the value of the subject property.

Any impact on value should be supported by market evidence.

H. The appraiser must note any suspected environmental hazards, including issues external to the property that could adversely impact the property's value. Examples of environmental hazards would include damaged asbestos-containing building materials, underground storage tanks, chemical leaks, spills, or staining of ground surfaces, or on-site waste disposal such as sludge, oil, paints, or chemical residues. If the appraiser observes any suspected environmental hazards, he/ she must notify the Ordering Official immediately and refrain from finalizing aspects of the appraisal that could be impacted until resolution of the issue or until instructed otherwise.

I. The appraiser must be familiar with the general provisions of Green Properties in single-family housing. The appraiser shall consider what impact (if any) such factors have on the value of the subject property. Any impact on value should be supported by market evidence.

5. ORDERING OFFICIAL DUTIES

A. The Ordering Official will act as the representative for technical matters, providing technical direction and discussion as necessary with respect to the specification or Performance Work Statement, and monitor the progress and quality of contractor performance. The Ordering Official is not a Contracting Officer and does not have the authority to take any action, either directly or indirectly that would change the pricing, quantity, quality, place of performance, delivery schedule, or any other terms and conditions of the contract. Nor does the Ordering Official have the authority to direct the accomplishment of any effort which goes beyond the scope of the Performance Work Statement in the contract.

B. The Ordering Official will act as or provide a property contact person to ensure the appraiser has timely access to the subject property for inspection.

C. If, after review, the Ordering Official determines that the appraisal is not acceptable, he/she will advise the appraiser and note items that must be completed or corrected to make the appraisal acceptable. Payment will not be authorized until the items are corrected.

6. MINIMUM REQUIREMENTS

The appraisal shall give due consideration for the following:

A. Location of property: Adhere to legal descriptions and surveys for proper location of site to avoid errors such as infringement, encroachment, etc. when appraising a property.

B. Modest dwelling: The property must be one that is considered modest for the area and in a decent, safe and sanitary condition.

C. Use of comparables: Use at least three (3) comparable sales of single family residential properties. Rural Development comparables may be used in this analysis; however, selection of comparables should represent a broad range of financing in the subject area. Contractor to discuss by characteristic, any lack of comparability in the selection of sales, including a discussion of the parameters by which selected. Contractor may, when necessary, widen the search area as well as other parameters and may include up to six sales, as circumstances would indicate.

In selecting comparables for developing opinion of Site Value under Cost Approach Method that involves developed land being sold by Self-Help Grantees, contractor to ensure comparables are selected from the market area and provide a discussion concerning parameters by which selected and/or listing of comparable properties used in developing opinion.

D. Site Value and Reporting: The appraiser must provide an opinion of site value supported by a summary of comparable land sales or other methods used for estimating site value in the Cost Approach. If this is not included in the appraisal report, include a statement by the appraiser that such information is available upon request and in the appraiser’s work file. The land must be valued as though vacant and ready for development. USDA Rural Development 7 CFR Part

3550.56 (b) (1) – states “the site must not be large enough to subdivide into more than one site under existing local zoning ordinances.”

As a special consideration a given land use has an optimum parcel size, configuration, and a land-to-building ratio. Any extra or remaining land not needed to support the specific use based on zoning requirements and typical development in the immediate area may have a different value than the land area needed to support the improvement. The portion of the property that represents an optimal site for the existing improvements will reflect a typical land-to-building ratio. Any remaining land area is either excess land or surplus land. A land/site value and the Highest and Best Use “As Vacant” analysis must be based as if any existing structures on the site do not exist. For the purpose of Rural Development, the determination that a site is large enough to be subdivided must meet only two tests of Highest and Best Use: the site must be legally permissible and the site must be physically possible to be subdivided. The appraiser must report that the site can be subdivided and the site must be valued based on being subdivided.

E. Remaining Economic Life: The remaining economic life must be stated for all properties.

F. Bedroom Requirements: The bedroom room shall have a minimum size as required by the local county/state government enforcement agency for the area of the appraisal origination. In the reconciliation, all comparables that have weight placed in the final analysis must be of a similar bedroom composition. Failing to provide similar bedroom composition comparables signifies the room cannot be counted as a bedroom unless actual paired sales can be provided. The appraiser must confirm the bedroom composition with a direct party to the transaction that all comparables used with bedrooms without closets have been verified. The use of only MLS and county records are an unacceptable form of verification. The appraiser must clearly declare the results of the verification within the appraisal report.

G. Manufactured Homes: In addition, the appraisal report for a manufactured home must also meet the following requirements:

1) Cost Approach: Manufactured Home appraisal reports will require a published cost data service such as the Marshall and Swift Residential Cost Guide calculations or the N.A.D.A. Manufactured Housing Appraisal Guide calculations to be included. The appraiser must take at least one of those values into consideration in arriving at a value conclusion.

2) Sales Comparison Approach: The appraisal report must contain at least two comparable Manufactured Home sales of similar configuration and quality. The appraiser may use either site-built housing or a different type of factory built housing as the third comparable sale if the appraiser explains the reason for selecting the comparable and makes and supports the appropriate adjustments in the appraisal report.

H. Types of Value: The Pricing Schedule Worksheet identifies the type of value required as listed below.

1. New Loan: As Improved/New Construction (also known as “as built”) for New Construction- Loans for planned new construction require an estimate of the as improved value. An “As Improved” value is based on completion per construction plans and specifications that enable the appraiser to estimate the value of the property after development. As improved appraisal may require a re-inspection, per section 7.

DOCUMENTATION C. Re-inspection Certification:.

2. New Loan: As Improved Existing Home With Repairs- When repairs to an existing dwelling or REO property are planned, the appraisal should provide an as improved value. USDA Rural Development will provide copies of repair list(s) as required and repairs shall be reflected in the appraisal process. An As Improved appraisal may require a re-inspection, per section 7. DOCUMENTATION C. Re-inspection Certification:.

Repairs shall be reflected in the appraisal process as follows:

1) State the contributory value of the repairs.

3. New Loan/Existing Home: As-Is (No Repairs)- Loans for existing dwellings (including a new construction dwelling that has been complete at the time of appraisal) requiring no repairs, to support servicing actions, or to determine a disposition plan for Real Estate owned (REO) properties.

4. “Recapture/Receivable/Payoff As Is: The appraiser must complete an “As-Is” value.

The appraiser must note all capital improvements added to the subject property from date of purchase, as provided by the borrower. Each capital improvement must be noted individually. The appraiser must assign the contributory amount of market value, if any, for each capital improvement. Capital Improvements need to be itemized and market value of each improvement is to be listed separately in the appraisal. Items considered to be general maintenance are not considered to be capital improvements. Values shall be supported by market evidence.

Note: For values 1-4 above the following applies: In the event the appraiser observes a deficiency in the property that does not meet minimum requirements for safety or sanitary standards, the appraiser will notify the Ordering Official for a determination of inclusion in the appraisal.

Regardless of the intended use of the appraisal, all appraisals for Rural Development will provide Market Value based on the following Market Value definition used by agencies that regulate federally insured financial institutions in the United States:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

Buyer and seller are typically motivated;

Both parties are well informed or well advised, and acting in what they consider their best interests;

A reasonable time is allowed for exposure in the open market;

Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

(12 C.F.R. Part 34.42(g); 55 Federal Register 34.696, August 24, 1991, as amended at 57 Federal Register 12202, April 9, 1992; 59 Federal Register 29499, June 7, 1994) The Dictionary of Real Estate Appraisal, Fourth Edition, Appraisal Institute, © 2002.

5. As-is: Liquidation/Short Sale/Foreclosure/REO The appraiser must provide an appraisal based upon “liquidation value” (The Dictionary of Real Estate Appraisal, Fourth Edition, Page-167) defined as follows:

“The most probable price that a specified interest in real property is likely to bring under all of the following conditions: (1) Consummation of a sale will occur within a severely limited future marketing period specified by the client; (2) The actual market conditions currently prevailing are those to which the appraised property interest is subject; (3) The buyer is acting prudently and knowledgeably; (4) The seller is under extreme compulsion to sell; (5) The buyer is typically motivated; (6) The buyer is acting in what he or she considers his or her best interest; (7) A limited marketing effort and time will be allowed for the completion of a sale; (8) Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (9) The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”

1) This definition clearly differs from that of market value due to the motivation of the seller and the limited marketing period factors. For the purpose of Liquidation Value a marketing period of 30 days must be utilized. The marketing period and liquidation/foreclosure value definition must be specifically reported in the appraisal report.

2) The agency requires modification of the forms to capture the liquidation value. As part of the appraisal assignment, the appraiser must complete the Market Conditions Addendum to Appraisal Report (Fannie Mae Form 1004MC or Freddie Mac Form

71) to support the value and condition of the property.

3) In the event that the appraiser is unable to gain access for a visual inspection of the interior of the subject property the appraiser must complete the appraisal report on the Fannie Mae Form 2055/Freddie Mac Form 2055 (March 2005), "Exterior-Only Inspection Residential Appraisal Report," and must include, in the report, the extraordinary assumption that there was no visual inspection to the interior and include the details of the sources being used for the interior components and the assumed condition of the interior.

4) The following statements MUST BE INCLUDED in all Liquidation reports:

a. On page 2 on a Fannie Mae Form 1004 and 2055, dated March 2005, or on page 3 on a Fannie Mae Forms 1004C or 1073, dated March 2005, in the Reconciliation section of the report, IN CAPITAL LETTERS, “THIS IS A

LIQUIDATION VALUE APPRAISAL. THIS IS NOT A MARKET VALUE

APPRAISAL.

b. Repeat this language in the addendum section on page 3 on form 1004, or on page 4 on a 1004C, and in the addendum in the 1073 and 1075 forms.

c. Followed by the following statement “Wherever the term Market Value is used must be replaced with the term Liquidation Value”.

d. Then the definition of liquidation value followed by the limited marketing time frame of 30 days statement.

I. Observed Conditions: The appraiser is required to make a property inspection to gather data to support the determination of value. Readily observable conditions shall be noted.

1) For a proposed dwelling to be constructed, the appraiser will only inspect the site for the initial appraisal. No follow-up inspection is required unless otherwise noted elsewhere in this Performance Work Statement. Readily observable conditions will be noted for on and off site hazards, soil contamination, grading, drainage, and access roads.

2) When applicable for existing dwellings, the appraiser will inspect the interior of the building in addition to the site. Readily observable conditions will be noted for the following: attic space, crawl space, floors, and walls for significant structural failure, moisture damage, or evidence of past fire damage; the roof condition for remaining life;

the mechanical systems for operability; and the walls and trim for defective paint surfaces;

3) For uninhabited dwellings where utilities are temporarily disconnected, the contractor will inspect mechanical systems (heating, plumbing, electrical) for observable conditions, but will not be responsible for reporting operability of these systems. Unless otherwise notified, the appraiser may assume operability for valuation purposes.

J. Appraisal Methodology:

1) Sales Comparison Approach: Under this method, the appraiser uses the recent sales prices of properties that are comparable in location and characteristics to the security property in order to estimate a market value for the property.

2) Cost Approach: This method is as specified in Handbook 1-3550, Chapter 5, found at this web address, http://www.rd.usda.gov/files/3550-1chapter05.pdf. Under this method, the appraiser derives an estimate of value using replacement cost estimates for the improvements, less depreciation and an estimate of the site value. The appraiser will identify the source of cost estimates, such as Marshall and Swift, used in the cost approach. The methodology used to estimate depreciation must be stated in the report.

a. The remaining economic life must be stated for all properties.

b. Site Value and Reporting: The appraiser must provide an opinion of site value supported by a summary of comparable land sales or other methods used for estimating site value. As a special consideration a given land use has an optimum parcel size, configuration, and a land-to-building ratio. Any extra or remaining land not needed to support the specific use based on zoning requirements and typical development in the immediate area may have a different value than the land area needed to support the improvement. The portion of the property that represents an optimal site for the existing improvements will reflect a typical land-to-building ratio.

Any remaining land area is either excess land or surplus land. The appraiser must state that the site can or cannot be subdivided.

3. Income Approach: Under this method the appraiser derives a value indication for an income-producing property by converting its anticipated benefits (cash flows and reversion) into property value. This conversion can be accomplished in two ways. One year’s income expectancy can be capitalized at a market-derived capitalization rate or at a capitalization rate that reflects a specified income pattern, return on investment, and change in the value of the investment. Alternatively, the annual cash flows for the holding period and the reversion can be discounted at a specified yield rate. This method may only be used for Agency Non-Program Real Estate Owned Properties.

7. DOCUMENTATION

Documentation supporting the development of the appraisal shall be submitted in accordance with acceptable appraisal methodology and this Performance Work Statement.

The appraisal must be completed using one of the following forms:

For one-unit, single family dwellings: Fannie Mae Form 1004/Freddie Mac Form 70, “Uniform Residential Appraisal Report”.

For manufactured homes: Fannie Mae Form 1004C/Freddie Mac Form 70B “Manufactured Home Appraisal Report”.

For individual condominium units: Fannie Mae Form 1073/Freddie Mac Form 465 “Individual Condominium Unit Appraisal Report”.

USDA Rural Development Single Family Housing Section 502 Guaranteed and Direct Loan Programs adopted the new Fannie Mae and Freddie Mac Uniform Appraisal Dataset (UAD) as of September 1, 2011. This requirement will be mandatory for all appraisals.

Written explanation and documentation to support line item adjustments exceeding 10 percent, net adjustments exceeding 15 percent, and gross adjustments exceeding 25 percent of comparable sale price are mandatory requirements of this Agency and must be submitted with the appraisal. These justifications are in addition to those required under USPAP. Photographs, in all cases, are required of the subject property including views of front, rear, sides, kitchen, living room, all bedrooms and bathrooms, crawl spaces, attic spaces and a street scene. A front photograph of each comparable sale used in the completion of the appraisal taken by the appraiser is required. Photographs shall be high quality, high-resolution color digital (JPEG) images. High quality is defined as images where details are in sharp focus and are properly exposed (details easily seen in highlights and shadows, and intermediate tones between black and white). High resolution for color digital images is acceptable for images not less than between 1536 x 1180 pixels for a 5x7 image.

A. As part of the documentation, identify the market conditions for the area in which the appraisal is being completed i.e., markets with limited sales, little or no new construction, only older homes sold, areas with high inventory housing, or there is high demand for housing. In addition weigh the significance, applicability, and defensibility of the indicated value derived from one or both approach(s).

B. Required Maps/Drawings:

1) All reports must include a location map, flood plain map, land sales map, sales comparables map, plat map, building sketch (including garages and all external buildings).

2) The appraiser shall provide copies of any available plats

3) An appraiser drawn sketch of the improvements, including an area calculation summary and all exterior dimensions of the house to include patios, porches, garages, breezeways and other offsets. Interior dimensions are not required although interior room descriptions are.

4) A street map delineating the neighborhood evaluated to fulfill the requirements of the neighborhood section of the URAR must be provided showing locations of the subject and comparables.

5) For new construction, the appraisal report must include clear original color photographs of the subject’s front, rear, street and street easement (private access), if applicable. In all other appraisals interior colored photographs showing at a minimum each room type, attic and crawl spaces, other non-gross living area (patio/deck/porch/fences) and noted structural, safety and sanitary deficiencies. Also, include photographs of improvement components that have been upgraded to document and support subject’s effective age if different than its actual age. A current appraiser original photograph of each comparable sale and Listing used in the completion of the appraisal is also required.

6) All external buildings must include both front and rear exterior and interior photos of each of the buildings. The external dimensions for each of the external buildings must be included, preferably in the building sketch or identified in the addendum of the appraisal report.

7) All reports must include an estimate of the remaining economic life of the subject.

8) All appraisals of existing properties must include a discussion of deferred maintenance at the subject property. Items of deferred maintenance must be listed, and the cost to cure each item must be estimated.

9) If the property to be appraised is a new property or the improvement is less than one year of age, the Cost Approach to value must be completed to arrive at a value.

All reports must include a written explanation and documentation to support individual line item adjustment exceeding 10% of the comparables sale price or when the net adjustments exceed 15% or the gross adjustments exceed 25% of the comparables sale price. Or, the appraiser must provide a statement that the explanation and documentation to support individual line item adjustment exceeding normal parameters is available for review if requested and located in the appraiser’s work file.

10) As part of the documentation, identify the market conditions for the area in which the appraisal is being completed i.e., markets with limited sales, little or no new construction, only older homes sold, areas with high inventory housing, or there is high demand for housing. In addition, weigh the significance, applicability, and defensibility of the indicated value derived from one or both approach(s).

C. Re-Inspection Certification:

1. If determined by Rural Development (RD), the appraiser may be requested to re-inspect properties to determine if repairs to the home or construction of home were completed. RD shall determine the need for an appraiser to re-inspect a property. Re-inspection services may be included on the order for appraisal services or ordered on a separate contract.

2. On new construction, the appraiser will need to determine if the construction is fully completed. The appraiser shall submit their findings using the Satisfactory Freddie Mac Form 442 or Fannie Mae Form 1004D. The completed report shall be delivered to the ordering official within 7-business days from the date the order was received. The report shall include pictures of completed work.

8. DELIVERY SCHEDULE FOR APPRAISAL

A. The appraiser shall complete and deliver appraisals to the Ordering Official within 10 business days upon receipt and acceptance of the appraisal information from the Ordering Official, unless a different deadline is set by written mutual agreement at the time of order. If corrections and/or amendments to the appraisal are requested by the Ordering Official, the corrections and/or amendments are to be delivered as soon as possible, but not later than 3 business days following the request unless, by written mutual agreement, other arrangements are made. If for any reason, the timely delivery of the appraisal report is delayed for reasons beyond the appraiser's control, the appraiser should contact the Ordering Official and convey the reasons for the delay.

B. Appraisers are responsible for contacting the Ordering Official and Contracting Officer to discuss questions regarding contract extension. Changes to the delivery date shall be approved by the Contracting Officer in writing.

9. QUALITY CONTROL

There are 2 types of reviews conducted for appraisals contracted for by Rural Development --- "Administrative" and "Technical." Administrative reviews will always be conducted and a sufficient number of technical and field reviews will be completed to ensure that the Agency is obtaining quality appraisals. The following defines the type of review and outlines the frequency of reviews, per HB-1-3550, 5.18 - 5.19.

A. Administrative review: The Program Loan Specialist is responsible to complete the Administrative Review within 7-business days of receipt of appraisal to determine whether or not the appraisal presents an appropriate value for market conditions. The administrative reviewer determines whether the appraisal is complete, the mathematics are correct, there is a proper number of current comparables, and that both the cost and comparable sales approaches were used to establish the market value. The administrative reviewer may request a technical review when problems are detected and will forward a copy of the appraisal to the USDA Rural Development Agency Appraiser for Technical Review and comments.

Appraisals not meeting the Acceptable Quality Level shall be required to correct their deficiencies within 3-business days. The Contractor will be notified that the appraisal cannot be accepted and paid until the technical review is complete.

B. Technical review:

1) After the administrative review: The RD Agency Appraiser shall conduct a Technical Review to determine whether the appraisal meets the technical requirements of USPAP and is in full compliance with this Performance Work Statement. The RD Agency Appraiser shall provide comments and findings to the Ordering Official and appraiser within 7-business days. The appraiser shall provide a corrected appraisal within 3-business days after receipt of comments and finding from the RD Agency Appraiser.

2) For newly awarded BPA: Appraisers that have no past performance history with USDA Rural Development are subject to a Technical Desk Audit Review of their initial completed appraisal. At the discretion of the government, additional technical reviews may be ordered if problems are encountered on the first technical review. The government has 7-business days after receipt of appraisals to accept the appraisals being technically reviewed.

3) On-going Quality Control: As part of USDA quality control measures, the RD Agency Appraiser will conduct technical reviews in a random spot-check method established by the State Housing Director.

Note: Payment of the contract is initiated following acceptance of the appraisal under either an administrative or technical review.

Appraisers must be prepared to discuss their analyses, reasoning, opinions, and conclusions and provide additional written support, clarification, and/or corrected appraisal pages or report, if requested. Also, if requested by Ordering Official or Contracting Officer, RD Agency Appraiser will assist to monitor the progress and quality of contractor performance.

10. ATTACHMENTS TO EACH PURCHASE ORDER

The Contracting Officer and/or Ordering Official will provide the appraiser all necessary support information available to the agency.

11. INDIVIDUAL ORDER LIMITATIONS

A. The maximum amount on an individual task/delivery order shall not exceed $3,500.00.

B. The maximum limit on an individual Blanket Purchase Agreement (BPA) is $150,000.00.

C. Each purchase order shall be limited to the amount specified above. Orders in excess of this amount shall not be honored or accepted by the appraiser. Failure to comply with this provision may result in termination of the BPA.

12. INVOICING

Invoices must be submitted electronically with completed property appraisals to the appropriate order office listed in the purchase order. Failure to send a complete invoice containing the required information below may result in a delay of payment. The invoice must state the word “INVOICE” on the document in order to be processed for payment.

A. At a minimum, the invoices shall include the following:

1) Contractor’s Information Date Invoice Number Contractor’s Name Contractor’s Address Blanket Purchase Order Number Tax ID number

2) List of Appraisals for payment Individual purchase order number Borrower’s Name Borrower’s Address Individual award amount

3) Total amount of invoice

B. Invoices will be returned for:

Failing to cite the information listed in the Billing Instructions above Having other payment discrepancies Unacceptable performance

13. COMPLIANCE WITH THE PERFORMANCE WORK STATEMENT

If the appraiser is unable to comply with this Performance Work Statement completely, the Uniform Standards of Professional Practices (USPAP) requires that the appraiser must decline the appraisal assignment.

14. PERFORMANCE ASSESSMEN

The government shall evaluate the contractor’s performance under this contract in accordance with the Quality Assurance Surveillance Plan. This plan is primarily focused on what the Government must do to ensure that the contractor has performed in accordance with the performance standards.

A Government Point of Contact (POC) will monitor the appraiser’s compliance with the Performance Work Statement by conducting appraisal reviews in accordance with the quality control measures and meeting the required delivery dates below.

B. The following standards of performance will be monitored:

Requirement Standard Acceptable Quality Level

Quality Control Review See Section 9 for Administrative, Technical and Field Reviews

90%

Appraisal Delivery Schedule

10-business days 90%

Re-Inspection Certification 3-business days 90%

C. Appraisals not meeting the Acceptable Quality Level shall be required to correct their deficiencies within 3-business days.

D. Failure to meet the Acceptable Quality Level may result in the termination of the BPA.

*PLEASE NOTE: FAILURE TO FOLLOW THIS PERFORMANCE WORK STATEMENT

AND APPRAISAL INSTRUCTIONS CAN RESULT IN DENIAL OR DELAY OF

PAYMENT*