What is a "Quality" Appraisal?

[USPAP101]

This would be a very interesting, but probably a very telling exercise. I am curious as to your thoughts.

Suppose we took the top 100 experienced posters in this forum and had them all submit an example appraisal with their information redacted. We place them in a pile.

I am pretty confident, that all 100 who submitted would say they have provided a "quality" appraisal.

Now, we take 1/2 of the appraisals and submit them for review to the other 1/2 of the appraisers. With this group, we suggest that "The homes represented in these appraisals are now in foreclosure... Please review".

We take the other 1/2, submit them to the remaining group and merely ask them to perform a review.

What kind of responses would we have??

Since appraisers provide an opinion, and most appraisers are trained by different mentors with different opinions, I wonder which appraiser believes that "their" opinion is the most "accurate"?

Is there such thing as an "accurate" opinion?

Does USPAP demand "accuracy" or "perfection"?

Take the same 100 appraisers, have them all appraise the same home, with NO indication of value, NO tax value on the tax card, NO sales history about the subject and NO current contract, and I bet less than 1/2 of the final opinions of value will be within 5-10% of one another.

Why is it that the only "quality" appraisal seems to be the one that the appraiser puts out themselves??

Quality is subjective. Maybe that is why there is so much confusion in the market. Quality to the buyer, seller and all who receive a commission from the closing of the deal is the appraisal that agrees and makes it happen.

Quality to some appraisers is a 50 page report with interior wall sketches and pretty pretty photos, graphs out the ying yang and more certifications than anyone ever cares to read.

Quality to another appraiser is one who keeps a very concise and to the point appraisal, with no frills and NO BS.

Quality to another appraiser is the report that satisfies their clients needs, therefore they "believe" they are putting out a good report.

What do YOU think quality is??:new_smile-l:

 

[Mike Kennedy]

THE SEVEN PSYCHOLOGICAL LAWS OF EFFECTIVE APPRAISAL STORYTELLING

http://www.aptcnet.com/articles/seven_psychological.htm

 

[Lee Lansford]

...

Quality is subjective.

...

What do YOU think quality is??:new_smile-l:

Many years ago, an old appraiser told me that he never had met an appraiser who did not think that he (she) was "right" in the development and communication of an appraisal.

So, yes, "quality" is subjective, but (there's always that "but"), some opinions are better than others in evaluating what constitutes "quality" .

I refer you to the USPAP, SCOPE OF WORK RULE in its entirety; of interest is line 371: "Credible assignment results require support by relevant evidence and logic."

 

[Terrel L. Shields]

Now, we take 1/2 of the appraisals and submit them for review to the other 1/2 of the appraisers. With this group, we suggest that "The homes represented in these appraisals are now in foreclosure... Please review".

We take the other 1/2, submit them to the remaining group and merely ask them to perform a review.

Most appraisers cannot recognize a bias if it bite them in the butt. They claim they are unbiased. We are quite the opposite and no one should be fooled into thinking A-they are unbiased or, B-that they, not the bias are in control. When you tell the appraiser it went into foreclosure, that bias kicks in.
Read this and weep. You cannot stop yourself.
http://en.wikipedia.org/wiki/Hindsight_bias

the inclination to see events that have occurred as more predictable than they in fact were before they took place.

http://en.wikipedia.org/wiki/Anchoring

describes the common human tendency to rely too heavily, or "anchor," on one trait or piece of information when making decisions.

What we do is a heuristic endevour and if we fail to recognize that very element..i.e- we do this as an experience based, experience reinforced exercise and not a Bayesian calculation (science).

The attempts to make appraising a science, rather than an art, has distorted not only the appraisal process, but the very appraisers themselves. We live by rules of thumbs which each of us develop within ourselves. We report what WE think is important and the state board, the investigator, the reviewer, all share the same sorts of biases but each tailor made for themselves and in direct conflict with every other appraiser in the world. I've commented before on my views on the Zen of Appraising. Frankly, until the whole profession understands these biases and recognized that my logic is not your logic and that does not make one or the other of us "wrong"...well, we get the kind of sh**mess we have in the profession - back stabbing and inscrutible instruction. Like Charlie Tuna, we've mistaken tastes good for good taste.

 

[Rob Baum]

An Appraisal is more than just a number.

A quality appraisal is on that offers support and explanation of the process the appraiser underwent to determine the final opinion of value.

There should be enough explanation that a person that had never seen the subject (or had even visited the area) feels as though they know both the area and the subject well. Also, after reading the report, the reader should either be able to agree with the final opinion, or have specific reasons that they do not agree. A reader who is confused after reading the report indicates that the report is not of high quality.

Notice I said the reader should agree or have specific reasons they do not agree. Hopefully, the client that reads my report will agree with my findings. I will certainly provide enough information for them to agree, or disagree. Reasonable people will have disagreements, and that is fine; better to have a disagreement due to disclosure than have an initial agreement due to misunderstanding - because of a lack of information and explanation.

 

[Terrel L. Shields]

A reader who is confused after reading the report indicates that the report is not of high quality.

Or it means that the reader is a retard or that, the most likely is that the reader expected something besides what they got...ie.- the reader wanted someone who would rubber stamp their own bias and not provided an independent view of the property at hand.

I had an assignment where someone was building a 2300 SF house inside a commercial building and they had nary a clue why the "value" wasn't what they were paying for the building plus the cost to build this dwelling inside the property. The LO didn't want to explain it, so he let the borrower spend a $1000+ dollars to find out the hard way,and of course, the bad guy was ME... "I" rejected the loan. This application should never have left the Loan Officer's desk. He made me do his dirty work.

 

[The Warrior Monk]

Most appraisers cannot recognize a bias if it bite them in the butt. They claim they are unbiased.

Terrel hit on an excellent point. IMHO, one element of being a good appraiser is eliminating the bias, at least as much as is humanly possible. Doing so leads to accuracy. USPAP doesn't require "accurate," but the fact is that if one is accurate, backed up by credible, your life as an appraiser suddenly becomes incredibly easy.

 

[Louis Pompeo]

USPAP tells us that 'Perfection is a goal, not a modus operandi'

USPAP does not espouse Quality. It espouses Credibility, in light of the intended use and intended user of the report.

 

[Mike Kennedy]

Description of credible - American Heritage® Dictionary

ADJECTIVE: 1. Capable of being believed; plausible. credibleness, crediblyDescription of plausible - American Heritage® Dictionary

ADJECTIVE: 1. Seemingly or apparently valid, likely, or acceptable; credible: a plausible excuse. plausibility, plausibleness, plausibly


Credibility refes to the reliability of testimony, based on competence of the witness and likelihood that it is true.
http://definitions.uslegal.com/c/credibility/


versus

Description of accurate - American Heritage® Dictionary

ADJECTIVE: 1. Conforming exactly to fact; errorless. accurately, accurateness

 

[The Argus]

I think that since the inception of the HVCC, many of the companies which provide the "firewall" which is in place to "preserve" appraiser independence, have a much different equation for determining "quality"

Turn times and lowest fee. I have heard of appraisers being let go by AMCs for "quality" issues which often are driven by thier unwillingness to lower their fees or their requests to be given enough time to arrive at a credible result (instead of a 48 hour turn time).

"Quality" surely is a subjective term.