A Simple USPAP Question On An " Appraisal Report"

[Elliott]

If you only have the appraiser's workfile (it should include the report, the data, analysis, etc.....according to USPAP) should any appraiser, a state real estate board, or a forensic appraiser be able to duplicate the report and its data, adjustments, and conclusions of value to meet USPAP requirements. Please include consideration of the standards of your peers, as provided by USPAP.

Pretty simple question. And if they can't should your appraisal license therefore be revoked?

 

[Terrel L. Shields]

If you only have the appraiser's workfile (it should include the report, the data, analysis, etc.....according to USPAP) should any appraiser, a state real estate board, or a forensic appraiser be able to duplicate the report and its data, adjustments, and conclusions of value to meet USPAP requirements.

No, that makes no sense...

 

[hastalavista]

I'm answering from home so I don't have the USPAP here to directly reference (this will be an interesting post, since I'm fairly quick to quote the USPAP when I think others are misinterpreting or misquoting it. So, what's good for the goose is good for the gander....)

Since a true copy of the report is part of the workfile, what is required to be retained in the work file is the data necessary to recreate the report. Some of this data (a lot of the analysis, perhaps) is going to be in the report. Some of the data (like, all the sales I analyzed as part of my analysis) is going to be in the workfile.

If you are an investigator and you have a question about the analysis in the report and it isn't answered in the report, you should be able to go to the workfile and find the data I used.
For example, for my residential assignments, I state that I've verified the sales comparables with at least two of the three following sources:
A. A party to the transaction
B. MLS
C. 3rd party property data
D. County Recorder website

I do not print out these documents and put them into the report. But they are contained in the workfile (including the notes or emails summarizing the agent/broker interviews).
Likewise, if I do the cost approach, I will include the data I used for the RCN in the report. But if I didn't, then that data would be expected to be in the workfile.

So, all the data necessary for me to replicate the report is in the workfile. And all the data that is referenced in the report and used for the analysis is in the workfile for you to look at (this is why if I say "paired sales analysis" and I don't include it in the report, I better have that data in the workfile I referenced).
But are you (my peer) going to be able to take the data and replicate the report exactly how I did it? I highly doubt it. And that isn't the requirement as I see it.

 

[Elliott]

Denis, the opinion of a peer,

"An appraiser’s value opinion can be in the form of a range, a single number, or even as seemingly innocuous as providing some home sales that we think are “comparable.” The Uniform Standards of Professional Appraisal Practice (USPAP) says that appraiser work files must contain information about the client and users, copies of the appraisal reports, summaries of oral reports, signed certifications, and, “…all other data, information, and documentation necessary to support the appraiser’s opinions.” Here is a list of some items that are important for an appraiser to have in their work file:

1. A copy of the signed engagement letter.

2. Appraisal inspection notes and photos.

3. Documentation of correspondence with the client.

4. Support for highest and best use.

5. Comparable search results, including land sales.

6. Documentation of data verification or other correspondence.

7. Support for or lack of adjustments, including market conditions.

8. Cost estimate data.

9. Copies of public and other data accessed online.

10. A copy of the completed written appraisal report or summary of oral report and certifications.

An appraiser’s work file (electronic or paper) should have sufficient documents that a peer could review the appraisal report and work file, follow the appraiser’s steps, and reasonably come to the same value conclusions. Having a sound work file keeps appraisers out of trouble with regulators, helps to defend appraisers in court, and encourages a high level of public trust as a profession. Without a detailed professional work file, appraisers would merely be fortunetellers.

Above is exactly what the 2014 thru 2015 USPAP Ethics says about the appraiser’s work file in the Record Keeping Rule."

http://www.aqualityappraisal.com/Ten+Things+a+Real+Estate+Appraiser+Should+Have+in+Their+Work+File

 

[Terrel L. Shields]

An appraiser’s work file (electronic or paper) should have sufficient documents that a peer could review the appraisal report and work file, follow the appraiser’s steps, and reasonably come to the same value conclusions.

Being able to arrive at a similar value would depend entirely upon the quality and quantity of data. In an inefficient market like ranchland, recreational property, and commercial or upscale estate homes (especially rural) property a substantial difference of opinion could result. I get "Open Fences" a sales rag for upscale ranches, similar sized ranches can vary by $5,000,000 or more listed by same agency.

A ranch listed near La Veta, CO lists for $4,000,000 but a 100,000 acre wildfire burned over the area. Wanna value that now? Values are opinions. Sales are facts. Hindsight is 20/20.

 

[hastalavista]

While there are some things I agree with on the list (besides the obvious/required... like client identification), and I do note it says "should", there are some things that may not be necessary.

I'm not sure I'd agree with the way this is worded:

An appraiser’s work file (electronic or paper) should have sufficient documents that a peer could review the appraisal report and work file, follow the appraiser’s steps, and reasonably come to the same value conclusions.

You may not come to the same value conclusion. You may interpret the data differently.
But if you ask me a question, I can show you where the data is (it is either in the report or in the workfile), I can show you how it supports the analysis and conclusions, and I can take that data and reproduce the report and I'm going to come to a similar value conclusion (you might conclude something else).

 

[hastalavista]

I think the following would suffice for a typical workfile (let's say a residential property completed on the 1004):

1. A true copy of the report (this is going to have much the the required documentation, including client, etc.).
2. Anything I say in the report is in the workfile, it better be there.
3. The data that supports what is in the report, so that it can be re-analyzed to replicate what I did.
4. You should be able to ask me, "Hey, Denis... you summarize this in your report... do you have the data you summarized (assuming it isn't in the report)?" To which I answer, "Yes... here it is."
5. You say, "Using the data in your report and workfile, I cannot get to where you did!" I say, "Let me take this data and show you then."

If I can do all of the above, I have a compliant workfile.

 

[Meandering]

You don't need all the data - as hard copies in the work file - if the data analyzed was MLS data, you can just reference the data that way,
ABC MLS #223236 XCY MLS #55445, but if you put it all in your report to start with, you are down to a copy of the appraisal and the letter of engagement, and maybe possibly your field notes, if you actually go out into the field to look at any properties, if you are doing a bi-f appraisal, you most likely need to keep the notes the AMC sends you from their field inspector, because it is data you used,

or,

you might get away with referencing it as the data of the AMC, to which they and their photographer hold copyright on the photos, so you did not keep them. After all, storage is their issue, for their data.



It's going to interesting.

 

[jay trotta]

While there are some things I agree with on the list (besides the obvious/required... like client identification), and I do note it says "should", there are some things that may not be necessary.

I'm not sure I'd agree with the way this is worded:


You may not come to the same value conclusion. You may interpret the data differently.
But if you ask me a question, I can show you where the data is (it is either in the report or in the workfile), I can show you how it supports the analysis and conclusions, and I can take that data and reproduce the report and I'm going to come to a similar value conclusion (you might conclude something else).

Agreed;
IMO, as appraiser's we are independent and unbiased, but I do not believe we all interpret data in the same manor - my peers think differently, it's what allows them to be independent and therefore, their theory to conclusion may vary from mine, but that should be expected, in order to be USPAP compliant.

 

[Elliott]

What aspect does the inspection of the subject and comparables play? If the 'peer review' of the report, at a minimum shouldn't it inlude an inspection? Or should the work file be so complete that a "white room" reading the workfile should be sufficient to come to the same conclusions?

And should the report file so complete that a non-appraiser, state board investigator be able to come to the same conclusion?