When is a Review Required to meet Std 3?

[Joyce Potts]

I did a residential appraisal on a 1004 of a high-end home in my market of Central Florida before Christmas directly for an out-of-state lender (no AMC) for an SBA loan. A day after submitting the report I get an e-mail from an appraiser who also holds the SRA and AI-RRS designations, out of South Carolina who informs me that she was retained by the lender to do a review of my report and in an effort to bring it up to USPAP and lender compliancy, my report required multiple revisions.

There were two typos, my fault, my bad, no problem. She wanted the signed engagement letter included in my report and verbiage added that is required on all SBA loans. No problem.

The above issues certainly fall under 'housekeeping' or what many refer to as a 'technical' review with, but she went on to note the following:

A- Remove verbiage addressing that many homes in this market that were purchased back during the bubble / bust years have still not recovered some of the higher prices paid. In support, I included the subject's MLS listing and sale history that was a perfect example. She claimed that what happened back eight+ years ago is not relevant and told me to remove it.

B- Disagreed with my Cost Approach of site contributions of $55,000. And yes, I included support for my estimated vacant site value via allocation.

C- Disagreed with my commentary in support of how the adjustments were supported in terms of paired / matched sales and/or sensitivity analysis because I failed to show the specific analysis to support the methods I used.

This review was done in e-mail format with numbered paragraphs, no limiting conditions, certifications or other Std 3 review compliancy.

I know my feelings on this subject, but am looking for a discussion as to what point a 'technical' review steps into a Std 3 catagory and was the reviewer non-USPAP compliant?

Because this reviewer is not in Florida, she and/or the lender can turn me into the State, but where's my recourse?

And lastly, and the most ironic, when I got her supervisor or the chief MAI appraiser for this lender involved, he told me not to bother with the revisions because for the sake of time and expediency, they approved the appraisal and the loan. So in writing, did he indicate they made a loan on a non-USPAP compliant appraisal?

 

[J Grant]

Let it go you had an over zealous "reviewer" and sounds like client already decided to ignore her inappropriate changes asked for.

 

[Joyce Potts]

I've already let it go in terms of filing complaints with her state board or the AI. But the discussion as to when a review crosses the thresh hold into a Std 3, needs to be addressed, especially by those holding a review designation, IMO.

 

[Meandering]

B- Disagreed with my Cost Approach of site contributions of $55,000. And yes, I included support for my estimated vacant site value via allocation.

So the reviewer opined a different value for the site?

Does the reviewer have a Florida license, so that she can opine a site value, based upon the benchmark of your site value?


But it sounds like the reviewer has no clue what she is doing, and that the MAI did not tell you that, but instead, has told you to just forget about it.

.

 

[George Hatch]

I did a residential appraisal on a 1004 of a high-end home in my market of Central Florida before Christmas directly for an out-of-state lender (no AMC) for an SBA loan. A day after submitting the report I get an e-mail from an appraiser who also holds the SRA and AI-RRS designations, out of South Carolina who informs me that she was retained by the lender to do a review of my report and in an effort to bring it up to USPAP and lender compliancy, my report required multiple revisions.

There were two typos, my fault, my bad, no problem. She wanted the signed engagement letter included in my report and verbiage added that is required on all SBA loans. No problem.

The above issues certainly fall under 'housekeeping' or what many refer to as a 'technical' review with, but she went on to note the following:

A- Remove verbiage addressing that many homes in this market that were purchased back during the bubble / bust years have still not recovered some of the higher prices paid. In support, I included the subject's MLS listing and sale history that was a perfect example. She claimed that what happened back eight+ years ago is not relevant and told me to remove it.

B- Disagreed with my Cost Approach of site contributions of $55,000. And yes, I included support for my estimated vacant site value via allocation.

C- Disagreed with my commentary in support of how the adjustments were supported in terms of paired / matched sales and/or sensitivity analysis because I failed to show the specific analysis to support the methods I used.

This review was done in e-mail format with numbered paragraphs, no limiting conditions, certifications or other Std 3 review compliancy.

I know my feelings on this subject, but am looking for a discussion as to what point a 'technical' review steps into a Std 3 catagory and was the reviewer non-USPAP compliant?

Because this reviewer is not in Florida, she and/or the lender can turn me into the State, but where's my recourse?

And lastly, and the most ironic, when I got her supervisor or the chief MAI appraiser for this lender involved, he told me not to bother with the revisions because for the sake of time and expediency, they approved the appraisal and the loan. So in writing, did he indicate they made a loan on a non-USPAP compliant appraisal?

I don't know how it went in this situation, but I do know that when I send stips to an appraiser during a review assignment that is not the appraisal review report - it's just a discussion with the appraiser. I do it in writing so I can explain the what/why, and to maintain a paper trail for what we were discussing and how it got resolved prior to me writing my review appraisal report to my client.

Put in USPAP terms, in an email or phone call to the appraiser the user is the appraiser, not the client; and the use is to discuss the various issues and questions, not to render an opinion to the client about the quality of your report. I sometimes CC the lender so they can maintain a paper trail, but I'm not actually interacting with them at that point; I'm interacting with the appraiser.

I don't know, but it's possible the client only received a finished review appraisal report from the reviewer and not the email you received. So I guess what I'm saying is that there might be an SR3 review report out there that you haven't seen. Or not. Maybe that appraiser is doing reviews without documenting them appropriately.

 

[Michigander]

In my opinion, when the review crosses from housekeeping (yes, this is included, no, there isn't commentary related to how adjustments were derived) into opinion, then it needs to meet 3&4. So checkboxes are fine, and saying something is missing is fine, or that there wasn't support provided for something is fine, but when the review forms an opinion about the quality of the work and grades it, then they have stepped into a formal review process. Now I could be wrong and people who are way smarter than me can probably argue circles around me, but it is the act of opining to the quality of the report under review that pushes it there. In this instance it sounds like there was discussion about opinion and also about analysis of adjustments, which sounds like Std 1 to me (not knowing exactly how it went down).

 

[Joyce Potts]

I don't know how it went in this situation, but I do know that when I send stips to an appraiser during a review assignment that is not the appraisal review report - it's just a discussion with the appraiser. I do it in writing so I can explain the what/why, and to maintain a paper trail for what we were discussing and how it got resolved prior to me writing my review appraisal report to my client.

Put in USPAP terms, in an email or phone call to the appraiser the user is the appraiser, not the client; and the use is to discuss the various issues and questions, not to render an opinion to the client about the quality of your report. I sometimes CC the lender so they can maintain a paper trail, but I'm not actually interacting with them at that point; I'm interacting with the appraiser.

I don't know, but it's possible the client only received a finished review appraisal report from the reviewer and not the email you received. So I guess what I'm saying is that there might be an SR3 review report out there that you haven't seen. Or not. Maybe that appraiser is doing reviews without documenting them appropriately.

I get it if the Reviewer is asking for legitmate corrections, blatant ommisions, etc., but when a lic or cert appraiser takes issue with the development of reporting, why is the reviewer not bound by USPAP, George?

This reviewer did not invite discussion, she demanded things be removed on a topic that was germane to my particular market. She's out of South Carolina and not licensed in Florida. She opined to my development and reporting.

Again, why is the Reviewer not bound by USPAP?

 

[KONA]

Reviewer is licensed and reviewed your report..thus is considered a Standard 3, review and must be documented as such. She completed it for a bank, the review becomes part of the loan file (Federal Requirement).

 

[George Hatch]

I am not conveying my point clearly enough.

If I call you on the phone and gripe to you about your appraisal, the user of that phone call is you, not my client; and the use is to get you to address those questions or demands. The appraisal review report I submit after we get done with each other will not be to you and you will not be among the intended users of that appraisal review report.

Same thing if I am discussing it with you in an email. Same thing if we are discussing with each other the value of a property one of us is appraising and there is no review assignment anywhere in sight.

Here's the thing: if during the course of our interaction I have made a mistake on my end and you correct me on it or otherwise persuade me to change my mind then the appraisal review report I submit to my client will reflect what we ended up with, not necessarily what we started with.

My point being I don't see any difference between swapping correspondence between the appraiser and the reviewer via phone, email, text or emoji; that correspondence doesn't amount to the reviewer's workproduct until they get to expressing opinions to their client.

One more tidbit - which is simply a matter of style - when I'm reviewing someone else's work I try to set it up where they send any revisions directly to me - not to their client - until we get to the final version. That way my clients don't have to keep every interim version on file or witness whatever back-n-forth occurs between us. In my view, limiting the submission to the client of the finished version contributes to the credibility of both the appraiser's work and mine because the client isn't seeing how that sausage was made. I want the appraiser to look as good as possible.

 

[Joyce Potts]

I am not conveying my point clearly enough.

If I call you on the phone and gripe to you about your appraisal, the user of that phone call is you, not my client; and the use is to get you to address those questions or demands. The appraisal review report I submit after we get done with each other will not be to you and you will not be among the intended users of that appraisal review report.

Same thing if I am discussing it with you in an email. Same thing if we are discussing with each other the value of a property one of us is appraising and there is no review assignment anywhere in sight.

Here's the thing: if during the course of our interaction I have made a mistake on my end and you correct me on it or otherwise persuade me to change my mind then the appraisal review report I submit to my client will reflect what we ended up with, not necessarily what we started with.

My point being I don't see any difference between swapping correspondence between the appraiser and the reviewer via phone, email, text or emoji; that correspondence doesn't amount to the reviewer's workproduct until they get to expressing opinions to their client.

One more tidbit - which is simply a matter of style - when I'm reviewing someone else's work I try to set it up where they send any revisions directly to me - not to their client - until we get to the final version. That way my clients don't have to keep every interim version on file or witness whatever back-n-forth occurs between us. In my view, limiting the submission to the client of the finished version contributes to the credibility of both the appraiser's work and mine because the client isn't seeing how that sausage was made. I want the appraiser to look as good as possible.

My question remains, did that reviewer step into Std 3 / 4 territory and is she obligated to comply with USPAP. The e-mail that was sent to me comprised her entire review. They were demands based on her non-geo competency of my market as to trends, etc. Good for you, George, and the way you personally conduct yourself when you do 'reviews' or the so-called 'quasi-reviews' that you describe above. But you're NOT answer my basic, fundamental question of Reviewer USPAP compliancy. Where do you draw the line between correspondence, phone calls, emoji's, etc., vs. when a certified appraiser is to comply with Std 3 / 4 USPAP?