Rookie appraiser, Withdrawing from assignment

[wward35634]

Hello. I'm only 5 reports in (rookie).... and I'm withdrawing from an assignment. The SOW is a 2055 for a HML as-is/ARV. Suburban area in LA county.
I get all the data... then analyze. Subject market area is near an active landfill and has about 150 homes within a 0.5 mile area.
I run a 1004mc (even though data is limited) for the immediate market area, then I open up to include nearby similar market areas.
I look at regression charts: 4% decline monthly. Charts are a little messy, with little data.... but I soldier on. HOWEVER.... my most recent comps are from November 2024; and the nearest as-is comp is 2.5 miles away. That was the deal breaker. I withdrew.
I would have had to make 15%+ percent adjustments on all comps, on limited data.
Was I justified in my withdrawal? Yes, I'm sure there are some wizards that could have pulled a rabbit out of a hat (I would love to hear your advice also).

Here was my email to the client BTW:

Determination that a Credible Opinion of Value Cannot Be Made



Insufficient Market Data In accordance with USPAP Standards Rule 1-1, an appraiser must develop an opinion of value that is supported by market data and logical reasoning.

The Scope of Work Rule further requires that the research and analysis be sufficient to produce credible assignment results.

During the course of this appraisal assignment, it was determined that a credible opinion of value could not be developed due to the following factors:

Lack of comparable sales data within a 2 mile radius.

Market conditions with extreme volatility and limited transactions.

Unreliable or Incomplete Property Information

Unavailable site inspection, preventing verification of key attributes.

Given the absence of reliable market indicators, the application of standard valuation approaches (Sales Comparison, Cost, or Income) would not yield supportable results.

Alternative valuation methods would introduce undue speculation, leading to non-credible conclusions.

[hat in hand apologies, etc etc]

 

[Fernando]

From experience, when I do a preliminary research and see few sales I either withdraw and not take the assignment or charge a premium.
Because business is slow, I took such a complex property knowing it would require more work.
Dang, I had to compare what best sales I could get.
My adjustments were like over 25%.
My report went through without much problem.
Month later, client ask why my adjustments were over 25%. I said blah, blah, blah and client was satisfied.

 

[wward35634]

From experience, when I do a preliminary research and see few sales I either withdraw and not take the assignment or charge a premium.
Because business is slow, I took such a complex property knowing it would require more work.
Dang, I had to compare what best sales I could get.
My adjustments were like over 25%.
My report went through without much problem.
Month later, client ask why my adjustments were over 25%. I said blah, blah, blah and client was satisfied.

I see. Thank you for the feedback. I'm sure that you understand that (as a rookie).... i'm not as confident when I see such massive adjustments with limited data.
I just hope that I haven't already burned a bridge with a client that was giving me work.

 

[TerryRohrer]

The bigger problem I would have is estimating as is and as repaired values without an inspection. How are you gauging interior condition?

 

[Tom D]

Nobody here has taken every assignment the are offered. Look at the fee, is the potential existential threat greater than that fee. Remember, value could be right, but the state will still find mistakes to fine you to death. And the odd ones, if they don't like value, hello problems and stips.

I will do one hard once in a while, if i am bored or if i see a learning experience. Early on i went into the city bad lands in the afternoon. OMG, never again. Go as early as possible before the zombies wake up, rainy days are good. You learn that some things are not worth the upcoming pain.

 

[sputnam]

Of course, you can withdraw... and if you don't feel that you are competent to complete the assignment then, you should. If you think you can handle it but it's going to be hard... extra work... I encourage you to soldier on. Maybe get some help/advice from a more experienced appraiser. Defeating the hard ones is one of the best ways to become a better appraiser.

 

[Zoe]

If they have been sending you work, you'll be okay.

To be honest............ you would have been okay if they never had sent you work.

 

[Zoe]

My advice to you rookie. Read this (LOL):

The 10 Animals With the Toughest Skin (and How It Helps Them Survive)

What are the animals with the toughest skin? We've done the research! Jump in to read about which are the animals with the toughest skin!

a-z-animals.com

The moral of the story is get tough skin.

 

[George Hatch]

WRT competency issues, an appraiser who is assuming they can do right by the new-to-them scenario is always at the disadvantage when compared to an appraiser who knows they can can do right in that assignment.
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Going forward you will be running into small datasets for the rest of your days. You might as well get used to it and develop some Plan B alternatives.

One thing SFR appraisers are trained to do is to look for comps from the inside-out, meaning seeking the closest and most similar comps for their SC. This is obviously a crucial and very necessary strategy insofar as finding "most similar". That's also a strategy is completely adequate for the assignment most of the time. So far so good.

But by the same measure SFR appraisers are usually not specifically really trained or practiced at working from the outside-in (from macro to micro), primarily because it's usually not necessary. All of that changes when you're working with really small datasets and are struggling to even identify 3 decent comps. There are a couple solutions for that, one being to start at the macro before even looking at the micro.

The foot bone is connected to the knee bone, the knee bone is connected to the thigh bone and ultimately connected to the fingertips even if its indirectly. Your subject is ultimately connected to every SFR in the neighborhood even if only indirectly. Your neighborhood is connected to every other neighborhood in the community.

My point being that if you know comps will be thin and hard to analyze then start with the neighborhood or even at the community level, to see what the medians for all properties have done over time before breaking those datasets into more discrete subsets. You want to develop some context from the many in order to better understand the trends among the few.
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The CGs work with small and difficult-to-compare datasets all the time. If you ever read a full blown narrative appraisal report you'll see that many of the CGs start with a regional analysis first, then to the community and then to the neighborhood and so on; and they will later run a separate analysis for the subject's market segment which often includes sales from all over the place. They're working from the macro to the micro in order to better understand what's going on with their always-inadequate pool of direct comparables. I almost never have the cluster of really similar properties to work with. And throwing more raw data at the problem just makes things worse. Way worse.

Obviously the big picture analysis is overkill for most of the properties even among the CG assignments so a lot of times they're just including it out of habit and knowing that nobody is going to read it unless the subject is a regionally oriented property type. If their subject is a 4-unit retail property in an urban/suburban area then the macro economic analysis is all-but-irrelevant because what matters is what's happening in that smaller community.

But those appraisers often do need to expand beyond what's happening in the immediate neighborhood. Same as the SFR appraisers will sometimes have to do that. Aim big to miss big prior to aim small to miss small. Lastly, if you realize up from that you're going to add the macro to your process it's better to do that first, before you even start looking at the micro - the whole point of looking at more data is to get a read on the prevailing trends prior to looking at your comps.

 

[Tom D]

Good words George. And how much much was this appraiser being paid for this complex appraisal, a non complex fee. That's the other issue, to do it right how much time will you need.
This is a only 5 reports done appraiser, I think at his experience point it's too dangerous even doing what George has said. This appraiser has no experience reference points. It would be easy to miss something, or to do something wrong unintentionally. That makes it even worse in the states view.