Smart Appraisers Make Dumb Mistakes?

[Carnivore]

How can any appraiser quote a fee to review an appraisal before seeing the actual appraisal? Half the time no new comparables are required, I end up not accepting the adjustments or wanting my own adjustments, resulting in a value conclusion inconsistent with the one put forth in the appraisal under review.

Yes, indeed I understand your question. Standard question in your mind when being asked to quote: Uh Oh... ? I say this because they give you an address. If your like me you look it up quick ...then grab some comps YOU would probably use.... If it looks relatively easy, then an alarm bell goes off in my head. I think "number or contract Hitter' then I think OK, he/she had to go outside a mile circle; older than 6 months; condition issues; line adjustments wild; blah blah and tried to explain it in one sentence,

Here is an actual example: "The comparable were the best available." That's it! LOL What was even worse; the dummy put that on a separate legal length Page all by itself. Nothing else. Didn't even take the time to Title the Page except at the top left corner; "Addendum" He did this and left Page three URAR BLANK!

 

[Mark K]

How can any appraiser quote a fee to review an appraisal before seeing the actual appraisal?

I always quote review fees as a two-stage assignment. If the report is credible or semi-reasonable, the fee is X. If the report is so off base that I have to essentially write a new report AND explain why the original has no basis in reality, the fee is 2X. I have only a couple of banks that send me reviews and they're OK with this fee structure. Others that request reviews tend to scoff at this structure and, since I don't like doing them anyway, I encourage them to contact a competitor; let them deal with it.

As far as the OP, its called Human Nature; you can't do anything to change it. At best, hopefully, you can recognize that it exists.

Its like proofreading your own 60 page narrative report. You read what you meant to say, not necessarily what you typed.

 

[J Grant]

There is a difference between intelligence and arrogance . The article scratched the surface of a complex subject. His contention that "smart" people are more prone to bias because they get used to being right is not true, it is the arrogant people who think they are right. The "really" smart people have enough self awareness to question themselves, at least in the professional realm. What someone does in their personal life is another matter.
That said, any appraiser can make a mistake or worse, be "off" in their opinion. One assumes the smarter/ more competent appraisers see that happen far less often.

 

[Terrel L. Shields]

"smart" people are more prone to bias because they get used to being right is not true

He is drawing this from a book "The Intelligence Trap", and the author does make a cogent argument that it is, in fact, true. Not so smart people can know their limits and dial back. My old partner in appraising was a woman with a modest education, who never took on an assignment she couldn't handle. She never tested her limits once she was on her own. It wasn't worth it to her. Too complex, too distant, or a squirrely client and she rejected the assignment. That is true "smarts" - knowing your limits and staying in your lane. That was smarter than me when I took some extremely difficult assignments I should have passed on.

 

[J Grant]

He is drawing this from a book "The Intelligence Trap", and the author does make a cogent argument that it is, in fact, true. Not so smart people can know their limits and dial back. My old partner in appraising was a woman with a modest education, who never took on an assignment she couldn't handle. She never tested her limits once she was on her own. It wasn't worth it to her. Too complex, too distant, or a squirrely client and she rejected the assignment. That is true "smarts" - knowing your limits and staying in your lane. That was smarter than me when I took some extremely difficult assignments I should have passed on.

I'm sorry, I disagree. My experience with dumb people in appraising ( and out ) is they may not know their limits and even if they do, are prone to influence and rote regurgitation.
Mid range intelligence is fine for appraisals. Being dumb is a drawback, and the truly smart people- they become doctors and astro physicists...(why would they choose appraising lol ). That said, people in the higher range of intelligence who gravitate toward appraisal might get an MAI or run a firm, though some may coast and use it to pay bills. Part of success is drive and ambition.

Imo far more problematic is mental and emotional make up. Some people are damaged/have substance abuse problems, or a brittle ego ( masked as arrogance) which interferes with their ability to function.

I believe in appraising, assuming a modicum of intelligence, results are more of a character issue. An appraiser has to be good at multi tasking and doing many things well, rather than one thing well to the exclusion of others.

 

[glenn walker]

George Dell is a super nice guy and educated but suffers from PTSD from Vietnam, he fell a sleep in one class I was taking about 15 years ago. His article was interesting but I am having a hard time processing it. Everyone I know has some bias which can cause the appraiser to make poor judgement calls. The cause of most mistakes is either arrogance or laziness and it doesn't matter if they have an-IQ of 80 or 140. This was very common years ago when old MAI'S were literally never challenged by a lender or there reviewer or underwriter. It was a common understanding that they were above reproach and to be treated like the staff attorney or CPA. So in those cases arrogance replaced intelligence although most were at best average IQ'S. The Loan Production Staff Appraisers mad tons of mistakes and errors because they were simply form fillers. So when do highly educated guys like me that have a Mensa level IQ make mistakes ? It's extremely rare except when to much self confidence or undeserved arrogance takes over my ability to question what the hell I am doing : ) LOL

 

[Elliott]

Terrell said, 'My old partner in appraising was a woman with a modest education, who never took on an assignment she couldn't handle. She never tested her limits once she was on her own. It wasn't worth it to her. Too complex, too distant, or a squirrely client and she rejected the assignment. That is true "smarts" - knowing your limits and staying in your lane. That was smarter than me when I took some extremely difficult assignments I should have passed on.'

She had a very good and successful business plan. I would add, "Don't take assignments from a client who you are not comfortable with when they describe the assignment or their demeanor makes you feel uncomfortable."

I've gotten to the point where I will do the preliminary research, print out the data, and then decide if I want to take on some land assignments. And I occasionally say, "I'm sorry, there is just not enough data that I can find which would be the basis for an appraisal. You might want to try calling so and so ." On the assignments I take, I've already done most of the research. Spending the extra time doing preliminary research is always worth it.

 

[J Grant]

He is drawing this from a book "The Intelligence Trap", and the author does make a cogent argument that it is, in fact, true. Not so smart people can know their limits and dial back. My old partner in appraising was a woman with a modest education, who never took on an assignment she couldn't handle. She never tested her limits once she was on her own. It wasn't worth it to her. Too complex, too distant, or a squirrely client and she rejected the assignment. That is true "smarts" - knowing your limits and staying in your lane. That was smarter than me when I took some extremely difficult assignments I should have passed on.

Everyone ( smart or not ) is an individual - the above, imo is more about being practical than being "smart"- though we should not underestimate practical - it keeps people out of trouble. I will say that some smart people can be less practical - they get bored easily/have ADD or like a challenge and thus can get in over their head. Then again who else is supposed to take on the hard ones-the dummies?

I believe a mid range intelligence is ideal for appraisal coupled with practicality, curiosity, and strong character...add in being good at the business end is not the same thing as being good at appraising.

 

[Joe Flacco]

What qualifies as a dumb mistake anyways?

 

[J Grant]

What qualifies as a dumb mistake anyways?

I don't know, any mistake that affects results is "dumb", but nobody is perfect. There is a big difference between making an occasional mistake vs being tone deaf to the market, not understanding how to analyze or reason. The first is curable because usually a review/ software/QC check can catch it . The second can infect reports because it is not about mistakes as it is about lack of reasoning or ability to think through a problem / mis identifying the problem. It might not matter in some assignments, but can matter a great deal in others . An assignment need not be "complex" for it to matter .