Being Asked To Testify Regarding My Appraisal

[Kelly S]

I completed an appraisal in May for a lender. The assignment type was "internal asset review/loan servicing". In July, I was asked by the client to sign a declaration for US Bankruptcy Court regarding my appraisal. I did so after making a few revisions.

I am now being asked to testify in court regarding my appraisal. The initial email from the paralegal had attachments of a different appraisal on the same property (2055 completed by someone else in April) and my declaration. They finally sent my appraisal and declaration, asking me to confirm that they were the documents I prepared. The email stated, "This property is involved in a bankruptcy case and we have been asked by the Judge to secure the appraiser, who completed the attached, to appear as a witness and testify as to the facts you have laid out in the attached as a part of the evidentiary hearing." It asked what compensation I required.

I asked for more clarification regarding what I would be asked to testify about. "You will be asked questions regarding your experience as an appraiser and about the appraisal you prepared for the subject matter property. We will be obtaining a third party appraisal shortly and it will basically be your job to explain to the Court why your appraisal is an accurate representation of the fair market value of the property and the other sides appraisal is not."

It seems like those are two different things - being asked to testify to the facts of my appraisal vs. defending my appraisal against a different one. For what it's worth, the 2055 appraisal they mistakenly sent me was completed before mine and came in $400,000 lower than mine.

I know if they subpoena me, I have to appear, but I have zero interest in testifying in the above situation, even for a fee. I testified once regarding one of my appraisals after being subpoenaed and that was enough for me!

What would you do in this situation? Thanks!

 

[DWiley]

Since you askd - I would quote a fee and testify I have been to bankruptcy court many times, and of all the testifying an appraiser might have to do, it is by far the easiest. Questions tend to be VERY basic. They are generally in a hurry, and the cases (and questions) tend to be very simple. YMMV.

 

[CindyR]

What would you do in this situation? Thanks!

Call my E & O provider

 

[Terrel L. Shields]

Questions tend to be VERY basic

Sometimes they are not.

Often if the property value isn't really being contested, it can be a nightmare. I was examined by an idiot once. He started a long winded question and I was leaning forward trying to understand what he asked and he finally said, "Oh...forget that. I forgot what I was going to ask..." I looked at the judge and he looked dumbfounded. You can guess which side won.

Yep, charge a flat fee - make it simple. No need to call the E & O.- but you might ask that the lawyers provide you a transcript of your part of the testimony for your work file.

 

[Kelly S]

Since you askd - I would quote a fee and testify I have been to bankruptcy court many times, and of all the testifying an appraiser might have to do, it is by far the easiest. Questions tend to be VERY basic. They are generally in a hurry, and the cases (and questions) tend to be very simple. YMMV.

We will be obtaining a third party appraisal shortly and it will basically be your job to explain to the Court why your appraisal is an accurate representation of the fair market value of the property and the other sides appraisal is not.

Maybe I'm overthinking it, but this doesn't sound basic to me! Would they give me the appraisal in advance to review or spring it on me?

 

[CindyR]

Sometimes they are not.

No need to call the E & O.- but you might ask that the lawyers provide you a transcript of your part of the testimony for your work file.

With all due respect Terrell I think it is critical to contact the E & O provider. My policy has a provision that if I don't notify them within 60 days of a possible claim then they will not cover that claim if it ever does turn into a claim. And with all these lawyers involved someone could surely sue someone over something in this scenario.

 

[CindyR]

We will be obtaining a third party appraisal shortly and it will basically be your job to explain to the Court why your appraisal is an accurate representation of the fair market value of the property and the other sides appraisal is not."

And even this very first preliminary question is troubling. The reference to 'fair market value' typically means the IRS definition. Did you prepare your appraisal with that definition of value or the typical lender version of market value? You are already behind the 8 ball.

To quote my esteemed colleague, "RUN FOREST RUN" (and call your E&O provider!)

 

[Pittsburgh Pete]

If you don't have faith in your report, by all means try to get out of it. If you have faith in your report, you are passing up some easy money. Ask for $150-$200 per hour, door to door.

 

[Deleted member 77547]

No need to call the E&O carrier. You're not being sued for wrongdoing. You are going to court to present the reasonings and methods you used to develop your value opinion. They'll have two other reports and the others will be doing the same. The other appraisers will likely be out of the courtroom while you present your testimony. Through a series of questions presented by the attorneys, they are going to determine which report is the most credible and use that one for the bankruptcy. If you can stand by your report, you have nothing to worry about. Answer the questions succinctly and directly. Avoid unnecessary long explanations of appraisal theory. This has been my experience anyway.

I have attorney clients who hire me to go over appraisals to see if they are reasonable and appropriately executed. I do not provide a value opinion nor do I opine on the value opinion reached by the appraisal I'm going over. I'm simply going down each section of the form and indicating if the information is accurate and not misleading and if the appraisal was appropriately executed. (Basically, USPAP standards 1 and 2.) In a narrative format I state whether the sections were done appropriately or what was inconsistent. Based on this report, the attorney then can decide his/her course of action in court. The value doesn't matter because if there are enough issues down the path that was taken to get to the value, then the report is deemed not credible and the value doesn't matter. Some reports I have gone over were well done while others were egregious. Its a consulting assignment that requires no value opinion and my favorite type of work.

 

[Randolph Kinney]

What will happen, in court, is presenting the opinions of value represented by the various appraisals. Each side will try to impeach the other side's appraisal as not credible. The judge will decide since the bankruptcy court is being used to reduce the amount owed. Is the a chapter 13 bankruptcy?