Competency Rule

[Peteopia]

I received a Desk Review today from an appraiser located in the State of Georgia. I'm located in Washington State???? The reviewer wanted to know why I didn't use three more recent and more proximate sales which they provided. Two of the sales are distressed fixers and one is non conforming property with two homes on the same parcel which is illegal use according to the city zoning code. My subject was an extensively updated home.

What gives, isn't this a USPAP violation since this Review Appraiser obviously doesn't have the competency within this market or access to reliable data sources?

 

[Mike Kennedy]

STANDARD 3: APPRAISAL REVIEW, DEVELOPMENT AND REPORTING

In performing an appraisal review assignment, an appraiser acting as a reviewer must develop and report a credible opinion as to the quality of another appraisers work and must clearly disclose the scope of work performed.

Comment: Appraisal review is the act or process of developing and communicating an opinion about the quality of all or part of the work of another appraiser that was performed as part of an appraisal, appraisal review, or appraisal consulting assignment. The reviewers opinion about quality must encompass the completeness, adequacy, relevance, appropriateness, and reasonableness of the work under review, developed in the context of the requirements applicable to that work.

The COMPETENCY RULE applies to the reviewer, who must correctly employ those recognized methods and techniques necessary to develop credible appraisal review opinions and also avoid material errors of commission or omission. A misleading or fraudulent appraisal review report violates the ETHICS RULE.

Appraisal review requires the reviewer to prepare a separate report setting forth the scope of work performed and the results of the appraisal review.

Appraisal review is distinctly different from the cosigning activity addressed in Standards Rules 2-3, 5-3, 6-8, 8-3, and 10-3. To avoid confusion between these activities, a reviewer performing an appraisal review must not sign the work under review unless he or she intends to accept the responsibility of a cosigner of that work.

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If only questioning (as posted) i.e. " The reviewer wanted to know why I didn't use three more recent and more proximate sales which they provided. - no.

The one line response you typed above suffices as a written professional response to Review Inquiry.

 

[Tawfik Ahdab]

Funny you should bring this up.

Just now, I fired off a response to my client who , based on a desk review, had problems with my appraisal of a complex lake-view property.

This is a portion of my reply, which will be incorporated with the formal complaint I will file against the reviewers with my State Board:

"This appraiser has no objection to having his work reviewed. In fact, his reports are written with that probability in mind. However, as a professional, he has every right to expect the review to be conducted by someone competent to do so both professionally and geographically. Being familiar with the local market area permits the reviewer to make educated judgements about the ranking in importance of value-influencing factors affecting the subject property rather than drawing conclusions from an underwriting checklist Having access to the appraiser’s same data sources such as the local MLS would aid the reviewer in understanding the rationale for the selection of comparables as well as the market conditions present in the local market.

This leads this appraiser to observe that the reviewer of the appraisal report is an appraiser trainee in Texas, and that his co-signing supervisory certified appraiser is located in New York. There is nowhere in the certifications they both signed a statement that they are geographically competent to undertake a review of a complex Oregon residential property, or what steps they both have taken to become geographically competent in order to do so."

Oh, and Mike beautifully quoted the pertinent passage in USPAP.

There's no wiggle room for incompetence.

 

[Lee Lansford]

I received a Desk Review today from an appraiser located in the State of Georgia. I'm located in Washington State???? The reviewer wanted to know why I didn't use three more recent and more proximate sales which they provided. Two of the sales are distressed fixers and one is non conforming property with two homes on the same parcel which is illegal use according to the city zoning code. My subject was an extensively updated home.

What gives, isn't this a USPAP violation since this Review Appraiser obviously doesn't have the competency within this market or access to reliable data sources?

"Just thinkin' out loud" at this point, but, is there more to this than you being asked why you did not include three sales in your appraisal? If that is all there is to it, we don't know if the reviewer is offering any opinion as to the quality of your work.

 

[xm72mhd]

"Just thinkin' out loud" at this point, but, is there more to this than you being asked why you did not include three sales in your appraisal? If that is all there is to it, we don't know if the reviewer is offering any opinion as to the quality of your work.

Lee needs a diagram.

To denegrate the review process with incompetence is dangerous to the profession. Congrats to Mike, Tawfik and Peter. This cannot be tolerated. If we are gong to drag this profession out of its side show status, we cannot allow this blatant abuse of the review process by appraisers and clients.

Keep fighting back, and try turning that nit wit into somebody if you can find someone who cares and claims jursidiction.

 

[Fred]

What gives, isn't this a USPAP violation since this Review Appraiser obviously doesn't have the competency within this market or access to reliable data sources?

Where is the part of USPAP that says one appraiser cannot ask another why “three more recent and proximate sales” were not used?

we don't know if the reviewer is offering any opinion as to the quality of your work.

Exactly.

Oh, and Mike beautifully quoted the pertinent passage in USPAP

A passage that did not include the word “geographic,” a passage that doesn’t explain why the question asked was inappropriate.

MIke didn’t quote the part that says one is supposed to disclose the scope of work. Perhaps the most significant part of the work is the determination of which nearby sales get weight and which ones don’t.

In fact, his reports are written with that probability in mind

If you are expecting to be reviewed, then why not identify the “three more recent and more proximate sales” and say they are fixer uppers and non-conforming. In the original post, it sounds like he left the kind of red flag that someone doing a limited scope review is almost sure to see flapping.

 

[Tawfik Ahdab]

Limited in scope or not, the competency rule applies to reviews when USPAP applies.

If the reviewer is an appraiser, the Competency Rule applies in all cases, and in connection to all standards, including Standard 3.

 

[Terrel L. Shields]

This leads this appraiser to observe that the reviewer of the appraisal report is an appraiser trainee in Texas, and that his co-signing supervisory certified appraiser is located in New York.

Both appraisers likely need turned in.

 

[Restrain]

From the other side:

In this time of declining values, high known appraisal fraud, and companies failing because of bad loans, you better just begin to expect such letters.

Don't whine and don't complain. The review appraiser is pulling up data from various sources, and there is data that may indicate a problem. For example, a home, where all three sales were from another subdivision, when data from sources indicates that the value is a third less. Further, on a complex appraisal, don't be surprised that you get a note, especially if you are light on the comments.

You may have done a great job. However, there's a lot out there that are not doing a great job. You pay the price for their actions.

 

[xm72mhd]

If you are expecting to be reviewed, then why not identify the “three more recent and more proximate sales” and say they are fixer uppers and non-conforming. In the original post, it sounds like he left the kind of red flag that someone doing a limited scope review is almost sure to see flapping.

This from the guy who would sometimes appraise by selecting only one comp or simply rank them. Will you explain in your report why you chose not use every other possible comp? I doubt it. An appraiser should not be required to explain every comp he did not include in his analysis, particularly in a summary report, to say nothing of limited scope.

The reviewer should be looking for support in the report for the conclusions drawn. If the issue is the comps trhen get a second appraisal instead 0f hiring an "enhanced", or what ever it is called this week, review from somebody in Timbuktu.

Who knows what data base this reviewer is getting his information from in order to ask the question. They certainly are not all equal. I suggest the reviewer who asks such a dumb question should be required first to explain his source of information and analyze the market from which they are draw in addition to explaining in detail why he thinks they are appropriate for consideration and the appraiser should be required to answer his questions. It wasn't that long ago somebody on here got slammed with reviewer data from something called realquest. How is this different from AMCs cowboys reviewing? If a reviewer deems it necessary to second guess or even question the comps selection of the appraser, the reviewer needs basic geo competency in the area of the appraisal or not take the assignment.

That is competency of which geocompetency is only a part, but an important one. If the reviewer can't appraise any particualr subject due to incompetency then he can't review there either.

We've been down this road before and here we go again. Review is being treted far too casually for my tastes and for the improtance that it has for the profession. It really is the front line of our accountability and it should not be practiced by those who are at a distance, unfamiliar with the subject market and inaccesible to reliable data concerning the subject market. The next step is like the guy on here last week who is in Nevada appraising a "difficult" property in Colorado. This practice is not improving the profession and never will.

Turn down those review assignments that are out of your depth. Know your own limitations (competence) and if you couldn't complete the appraisal yourself don't take it for any reason and least of all to make money.

I see the reviewer is being defended and the appraiser damned. Screw the reviewer, he should be able to insist that his three comps are superior or keep his distance. "Why these three comps were not used?" Busy work to run up fees. Pure and simple nonsense.