Appraisal Reviewer

[Rhonda Black]

I received a copy of a reviewer's report and it stated that I adjusted too low in several areas (all) of adjustments and that I did not adjust on lot size when I should have.

I live in a pretty large urban community and was 'taught' that lot sizes in the city typically do not require adjustments because land values in the city are not great and we're not dealing with more than 1/4 of an acre with any of the lots.

How do I respond to this? Was I wrong? I think I know the city pretty well and am satisfied with the adjustment values I use.

 

[Steve Wyrick]

Does the reviewer only want you to increase the adjustments that would increase your value?

Who's report is it yours or the reviewers. Ask the reviewer to justify their adjustments with facts and data.

Rhonda - is the reviewer reviewing for the mortgage broker who wants you to refund for those appraisals that did not make value. If it is then it looks to me as if the reviewer has been caught in the spider net also.

 

[Jungle Boy]

Could you give a few examples of the adjustments you are talking about.

 

[Richard J. Glesser]

All adjustments are extracted from the market via matched pairs or based upon contributory value of each item. That said, we now move into realistic appraising in the real world where the lender wants the completed appraisal immediately after you receive the request (and sometimes sooner when they've forgotten to send the request). We rely upon our market knowledge of varying values. Here's my rule of adjustments which I use and have always taught: Be sure any adjustment made could be proven through accepted appraisal valuation methods in court, if necessary. We don't have time to do that on each appraisal for every line adjustment every day, but we should be able to if called upon.

That's my approach and here's my answer to your question. The reviewer has as much responsibility to prove their adjustments as you do. Many times the reviewer is not even from your market area. Generally, the reviewer did not have the benefit of an interior inspection. All these factors weigh in your favor to prove your adjustments. But that reviewer must be held accountable to prove you are wrong, not just accuse you of such. In my market area, we have a couple companies who use the review process to try to force out the competition. The sad thing is that I have to waste my time rebutting a poor review from these firms. Never lost, but a waste of valuable time. I'm considering turning them into the state for their blatant inaccuracies, but that's another matter. Like I said, request he prove his adjustments and then, if he can, you have the same right. If you both can do so, that's why it's called an "estimate of value". :usa:

 

[Carnivore]

Rhonda,

I am going play devils advocate. I do a lot of reviews. I beg for them, because I am doing my little part by going after the Skippy's, Vic's and swamp dog's of the appraisal world.

FTR, I am always geographically competent for any assignment I accept. All reviews are per the applicaple USPAP edition.

Try to remember that reviews are more than just picking on you. Many times lenders use these reviews for normal QC of operations. Often they are called for on questionable loans with atypical real estate. Fact is reviews have always been here and will never go away. They are an important part of our profession and a wonderful cash flow enhancer and time efficiency tool(you fit them in between appointments) for the fee appraiser.

Take some time and read thru USPAP 2003 standard rule 3. You will quickly realize that developing a review requires legitimate modified compliance with standard rules 1 & 2. In simple terms the reviewer is preparing an appraisal on the subject while confirming the hard work that went into your report.

I did note that in your post you only seemed to be upset about some of the reviewers results. Apparently you liked the things she agreed too, but not well enough to mention it in your post. Should, could or will a reviewer disagree with your reports or portions thereof? The answer is maybe, yes, sometimes, not all the time, some of the time and occasionally. Will you occasionally have a run in with a reviewer? Yes! Do you always know when your reviewed? A resounding No!

So was the review appraiser wrong about her analysis? You can not say that with certainty, because this is not an exact science and we even disagree with ourselves days after we deliver a report! The reviewer gave her opinion. She does not owe you any explanation because you are not her client. That pesky USPAP even applies to us.

So whats my advice. I would review my data and confirm my original findings and analysis. I would review my report and see if I inadvertently left something out. Once I was satisfied I would report the results of your QC action to the Client and stand firm on your report.

Eating crow is always easier when its still warm.

 

[Mike Garrett RAA]

fax me the appraisal and the review...if you want me to offer an opinion. 719-528-6401.

Adjustments should be supportable and extracted from the market. Remember that reviewers probably appraise in your market and are familiar with what other appraisers are doing.

Ask yourself this....One property has a 6,000 square foot lot. Another has a 9,000 square foot lot. Everything else is EXACTLY the same. Property number two sells for $5,000 more than property number one. What is the lot adjustment?

You are being paid to determine if an adjustment is necessary. Would you pay more if 3,000 square feet of yard? I probably would. Generalities are dangerous. Check with local builders, find out if they are charging a "lot premium" for size...bet they do!

 

[EDWARD BERRY]

What adjustments were too low?

If it is size, bracket if possible, then try different $/sf adjustments.

Does it affect, effect or infect the results?(usually not)

Same thing with other factors.

In our area, lake area sites sell by the tract rather than by size.

Ask them what you should have used, then bracket the comps.

That will usually reveal what is correct.

Been there, ed.

 

[Mike Garrett RAA]

Still waiting for the fax!

 

[Restrain]

I am concerned with the statement

"I live in a pretty large urban community and was 'taught' that lot sizes in the city typically do not require adjustments because land values in the city are not great and we're not dealing with more than 1/4 of an acre with any of the lots. "

That is such a wide blanket statement that it absolutely has to be false. I can show urban site values in Dallas that range from $5000 per lot to $750,000 per lot, same size lot. And these are all residential sites, no commercial potential. You HAVE to examine site values in the market that you are working, even if you use an extraction method from existing home sales. The quick way is to adjust for everything else and see if there's a lot value differential. If you believe from the market that the site size does not equate to value differential, then you should comment in the report that there is no difference based on the market.

I do numerous reviews for various lenders, Fannie and Freddie. The big sin is a blanket statement that "the sales were adjusted based on the various differences between the sales and the subject. All adjustments are considered to be reasonable for the market." And no other support for the adjustments made in the report. If you aren't taking enough time to support the adjustments, why should I as a reviewer believe that you took time to properly consider the adjustments in the first place.

Roger Strahan, IFA

 

[Shirley Yukon]

If there is a pretty significant difference in lot size, I would make an adjustment no matter what just so the lender doesn't come back at you asking why no adjustments were made. If it doesn't really effect value, make a soft adjustment.