Blind Squirrel and Acorns

[Michigan CG]

..............Then AMCs took over and made it impossible to deal with their round peg assignment conditions. No matter how many of their conditions you met, they would come up with more impossible conditions to be met for each oddball property..........

That is exactly why I quit doing AMC work. A lot of the stuff they would send me was odd ball properties and a "review" would come back asking why no sold properties were within two miles or what is the negative affect of the surrounding vacant land.

I always include two aerial maps in my reports, one close up of the subject and one where the map shows a couple miles surrounding the subject. I have often referred the "reviewer" to the maps which they never bothered to look at.

I know many appraisers who hate their jobs anymore because it has become checking boxes or finding a sale that really isn't comparable just so a property can be "bracketed".

If all I had was AMC work I would have left the industry by now. I am fortunate that I don't do AMC work at all now and anyone who has the same opportunity is avoiding all AMC work because it is not at all fulfilling.

 

[Scott Kibler]

I have seen a few appraisals come across my desk where the appraisal development is sorely lacking, but I have a difficult time contesting the value conclusion. This leaves me in a quandary. Is there anything gained by going through the review process, request changes from the appraiser, when there is no change in value? As a fee appraiser, are you as accepting of an appraisal review where there is no value change, or do you just think the reviewer is justifying their own pay?

In many higher density markets, coming up with a reasonable value estimate is very often not a difficult task. Define your neighborhood and broad property characteristics, plug it into your MLS search engine, get a list of sales, pick three that sold at prices close together, throw in a couple black box adjustments and bingo. Sales transactions are even simpler. The majority of the time the sales price was arrived at in an honest manner and is reasonable thus hitting the target results in a reasonable value. Easy peasy. Filling in the form is the hard part, especially if you have to make phone calls or physically go places to look at maps and such to collect facts that won't change your value, or so you think.

Throw an unusual property or market variable into the mix and the wheels come off the bus.

I've had occasion to review hundreds and hundreds of appraisals over my career, particularly over the past 10 years. After time you see patterns. 9 times out of 10 an appraisal report riddled with inaccurate data and poorly developed analysis still has a value estimate within 10% of my own independently derived one. Inaccurate data is often what an end user might consider innocuous; wrong census tracts, wrong legal, wrong site dimensions, made up zoning class, etc. Meanwhile, every single way off the mark appraisal also has inaccurate data and poorly developed conclusions.

If I were in your position, I would not accept work from someone reporting inaccurate data or poorly developed analysis. That's the guy who will eventually get me fired.

 

[DTB]

In many higher density markets, coming up with a reasonable value estimate is very often not a difficult task. Define your neighborhood and broad property characteristics, plug it into your MLS search engine, get a list of sales, pick three that sold at prices close together, throw in a couple black box adjustments and bingo. Sales transactions are even simpler. The majority of the time the sales price was arrived at in an honest manner and is reasonable thus hitting the target results in a reasonable value. Easy peasy. Filling in the form is the hard part, especially if you have to make phone calls or physically go places to look at maps and such to collect facts that won't change your value, or so you think.

Throw an unusual property or market variable into the mix and the wheels come off the bus.

I've had occasion to review hundreds and hundreds of appraisals over my career, particularly over the past 10 years. After time you see patterns. 9 times out of 10 an appraisal report riddled with inaccurate data and poorly developed analysis still has a value estimate within 10% of my own independently derived one. Inaccurate data is often what an end user might consider innocuous; wrong census tracts, wrong legal, wrong site dimensions, made up zoning class, etc. Meanwhile, every single way off the mark appraisal also has inaccurate data and poorly developed conclusions.

If I were in your position, I would not accept work from someone reporting inaccurate data or poorly developed analysis. That's the guy who will eventually get me fired.

What I find interesting is that the easy part is what requires the appraisers expertise while the "hard" part can be outsourced to support staff.

 

[Scott Kibler]

Reasonable is easy, at least as viewed from a distance; accurate not so much. The OP obviously is dealing with reasonable. Checking accuracy would require so much local competency and work that he'd be better off just doing the appraisals himself, an unrealistic expectation.

 

[J Grant]

In many higher density markets, coming up with a reasonable value estimate is very often not a difficult task. Define your neighborhood and broad property characteristics, plug it into your MLS search engine, get a list of sales, pick three that sold at prices close together, throw in a couple black box adjustments and bingo. Sales transactions are even simpler. The majority of the time the sales price was arrived at in an honest manner and is reasonable thus hitting the target results in a reasonable value. Easy peasy. Filling in the form is the hard part, especially if you have to make phone calls or physically go places to look at maps and such to collect facts that won't change your value, or so you think.

The standard is not reasonable, the standard is accurate and adequately supported. (It's at the top of each URAR form, as the purpose of the appraisal) . The above description about how to arrive at a "reasonable" value is not how an appraiser would approach the assignment.

 

[Scott Kibler]

A guy 1,000 miles away without local market expertise can't see accurate. With readily available data sources, he can see reasonable. He (or her) knows what the form requires but can't always determine if the data in the form meets those requirements. If he was sure the data met the requirements, this question becomes moot.

 

[Scott Kibler]

In many higher density markets, coming up with a reasonable value estimate is very often not a difficult task. Define your neighborhood and broad property characteristics, plug it into your MLS search engine, get a list of sales, pick three that sold at prices close together, throw in a couple black box adjustments and bingo. Sales transactions are even simpler. The majority of the time the sales price was arrived at in an honest manner and is reasonable thus hitting the target results in a reasonable value. Easy peasy. Filling in the form is the hard part, especially if you have to make phone calls or physically go places to look at maps and such to collect facts that won't change your value, or so you think.

The standard is not reasonable, the standard is accurate and adequately supported. (It's at the top of each URAR form, as the purpose of the appraisal) . The above description about how to arrive at a "reasonable" value is not how an appraiser would approach the assignment.

Obviously this is not how a competent appraiser approaches any assignment. I thought that did not need to be emphasized here. My apologies. It is, however, the way many practitioners do operate in the real world. Maybe not as prevalent now as in years past but, yeah, it's still out there.

 

[J Grant]

The description you gave on how to develop a reasonable value is a map for Skippies! (I hope it was not meant to be advice lol). A reviewer from afar would have to work doubly hard to figure out accurate. If all the client wants is that the appraisal meet some rough percent off what the reviewer considers reasonable, that is between them.

The origination appraisal value opinion mandate is to be accurate and adequately supported, whatever the cursory review standard is for the review product at that level.

 

[Scott Kibler]

That's the rub. You got folks in central offices looking at appraisals from all over the place trying to figure out what's good and what's BS. Don't like it? Get a review! Ok so now is the review any better? F it lets out source to an AMC. Ok so now is this AMC's reviewer's any more knowledgeable than the bank's guy? Instead of 1,000 miles aways he's 500 miles? None of these people can do more than cursory reviews as they aren't locally competent to do anything else. The system sucks but you have to work within it so what do you do? Step one is to fact check everything you can. Errors of fact are a giant red flag. You report R-1 Residential for zoning and the municipality has no such classification you are hereby removed. Screw up the easy stuff and I have no faith on the difficult.

 

[J Grant]

I have probably made a few errors on zoning or other particulars over the years....I try to be careful but am human...am super vigilant about sales data and comp selection and market analysis....I doubt an appraiser is removed form a panel for an occasional error, the client would not have many left to work with, but if that is their standard removal after one error, so be it (I don't think my clients are that draconian).

There are errors that overall don't' affect value or overall soundness/reliability of important data from errors that at the end of the day are not going make much difference...hopefully reviewers, whether far or near can tell the difference.