• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Are Appraisals Still Adequate for today’s needs?

Do you think clients should be asking for the "Second Appraisal Risk" analysis?

  • Yes

    Votes: 2 66.7%
  • No

    Votes: 1 33.3%

  • Total voters
    3

guru45

Thread Starter
Freshman Member
Joined
Mar 26, 2012
Professional Status
Certified General Appraiser
State
California
The Appraisal Institute's Guide Note 12 explains there is a "Second Appraisal Risk". What does everyone think about a possible solution mentioned in the blog? Click Here
 
Last edited:

Red Flint

Member
Joined
May 15, 2005
Professional Status
General Public
State
Michigan
Here is the paragraph from the guide note. Overall guide note is analyzing market trends. Would imagine possible solutions to the secondary risk are tied to intended use(s), and also those risks are likely dependent on market forecasts and/or future property rights change(s).
"
Reconciliation
There are two risks inherently associated with any appraisal that are of particular concern to the intended user. The first is the risk that the reliability of the value conclusion may be adversely impacted by a lack of quality data. The second is the risk that the value might not be sustainable over time. A well thought-out and clearly presented reconciliation process can assist the intended user with these risks.
In the reconciliation process, the appraiser must consider the quality as well as the quantity of data, and how those factors might have impacted the quality of the value opinion. In a slower market with fewer transactions, there are fewer sales available for analysis in the sales comparison approach. Also, when there are fewer transactions, there is less market evidence available for selection of capitalization and discount rates.
The reconciliation process may indicate that more research is needed or that new analyses must be performed. It may reveal conflicts or unresolved questions that need to be answered.
When necessary, the appraisal report should include a discussion of evidence that the value conclusion may not be sustainable into the foreseeable future. This is potentially a controversial and challenging conversation to have with one’s client, but it may
be a critical issue to highlight."
 

Lee in L.A.

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
We used to do an extra form called Adverse Factors Summary.
It was one page and went in front of the appraisal.
Basically I copied the relevant comments, usually some kind of ob, from the appraisal to this page.
It also had 4 check boxes for overall risk rating.
Seemed like a useful thing for the underwriter.
Ahh, the good old AFS. :leeann2:
 
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks