Could we do without?

[Webbed Feet]

That is true but the practically ubiquitous mandated use of these forms in their present versions and the lack of flexibility broadly present amongst AMC's and lender clients cause problems that cannot be easily dismissed by pointing out the flexibility that USPAP provides for appraisers.

Unless there are large numbers of appraisers that can attest to being able to negotiate SOW so as to not be required to fill in the $$ on form 2006 in the context of a "review" assignment or not be required to provide an OMV on form 2000 when the "NO" box is checked but rather recommend a new appraisal then that potential flexibility is really not there.

23, you and Brother Hatch are in two parallel, yet coinciding, universes on this one. While Brother Hatch is expounding on good review practices while dealing with these forms, you are saying the forms are crap. You're both right.

Unfortunately, knowing and trying to teach good review practices is never going to make up for the damage to the trade Fannie's poorly thought out forms do to it. The forms broadcast misleading and erroneous mental images of what appraisal services and appraisal practices should be about. They promote misunderstanding at best, and at worst they promote and reinforce inappropriate service demands upon our trade members.

If one didn't know any better, it would be a valid point to say that these forms appear designed to intentionally force fee bidding to the bottom while simultaneously presenting a false image of the actual appraisal service being requested in order to accomplish the fee and turn time pressure they represent.

 

[23Degrees]

Yes, totally agree WF. It would be nice to see those aspects mentioned in post 60 tackled. They might be able to be addressed by form design but some of those things cited could be attributed to operator inadequacy rather than a pure form design problem. One thing some appraisers might forget is that once they fill in the OMV on either of these forms they are now responsible for Standard 1 and Standard 2-2a either via reliance on the original report or via addition if the original report is lacking. So if the original report neglected to develop an exposure period the reviewer better have done so and reported it or the reviewer is now guilty of violating SR 1-2(c) and 2-2a(v). I agree with the sentiment that the review process itself should focus on frying bigger fish and maybe not sweat the little stuff but once SR1 is triggered what do you do? You now own the little stuff that appraisers get hanged for regularly.

The bigger issue though, and the one I find absolutely maddening as I consider the prospect of having to seek out desk work is the completely convoluted relationship involving the appraiser, the client, the SOW, and the fee when it comes to many assignments but these review assignments in particular.

Anytime someone excepts an engagement at an agreed upon fee for a 2006 under the guise of the label "desk review" it includes a mandatory OMV - that's an appraisal with clear responsibility for Standards 1 and 2-2a. Where is the outrage over this considering the typical fees offered and accepted. For the fees generally offered for this the assignment should end with the determination of "credible results" or "not credible results".

As for the 2000 form, when one accepts an engagement for an agreed upon fee there is typically no knowledge as to whether or not this will remain just a review of another report or will turn into that plus the development of a new appraisal. I understand and agree with George's point that both of these scenarios fall under "review" but the problem is not the ability to do "as much" or "as little" as needed, as provided by USPAP, it is the lack of ability to negotiate (fee and SOW) and proceed while taking full advantage of that flexibility. My experience has been that clients will not accept the prospect of a staged assignment that extends if "NO" is checked for question 3 with additional fees - and perhaps there is a conflict of interest there anyway - but this situation created by the forms, the clients, and in no small part to the appraisers that do these assignments displays some real stupidity that the industry should be heavily embarrassed about.

BTW some of the non-GSE review forms that are designed for assignments of a very defined scope - with no appraisal trigger - are perfectly fine and its a shame that they are not more widespread in their use.

 

[George Hatch]

As soon as an reviewer expresses an opinion about a value conclusion being accurate or not accurate (either one) they have performed an appraisal.


As for the fees, back in the day appraisers used to send out menus showing their prices for appraisals - often based on estimated values. Putting aside the contingent fee ramifacations, the fees themselves were established in the market by the participants. Everyone knew from the outset that some assignments would go faster than others but the fee was quoted based on what they thought it would take to even out the ratio of quick vs time consuming assignments.

 

[23Degrees]

Yes, stating that an OMV is "accurate" or "inaccurate" is in itself an appraisal. And that should really magnify the difference between indicating whether conclusions are "credible" and the use of the word "accurate" when it comes to using it as an adjective for the OMV.

Standard 3 only requires a conclusion as to whether or not the opinions and conclusions are "credible". Answering this question does not trigger Std 1 otherwise why specifically state that the further issuance of an OMV within the context of a review triggers the need for the appraiser to be responsible for x, y, and z.

Setting fees to account for an averaging out of assignment complexity is perfectly reasonable. This situation is a completely different animal.

 

[LordofTexas]

I think we're also in a time where a great deal of Clients and Lender's no longer will even consider getting a second appraisal as they are worried about federal guidelines / picking values coming into the picture. They consider a review their only recourse. There is nothing better for me than getting a good appraisal from an idiot, competitor, or stranger that is spot on the value and my job is done in the time it takes to check all the boxes and drive all the Comps. I'm sure everyone would appreciate and continually do those. But, I have reviewed a few of my competitors and they have been horrible (which other appraisal reviewers also have destroyed). Thus, the reason we consider them what they are. But, each is reviewed in its own as a separate product HOPING it is clean and reasonable with no bias. Why would you want someone to rebutt you for something you note in a review report that can even be considered as bias? You're just asking for trouble.

 

[Blue1]

I agree that when doing a review the first thought is there must be something up with the appraisal. I can usually spot it right away however, I must support my opinion.

In supporting my opinion, I essentially have to do an appraisal myself as well as double check the appraisal and related data/sources, etc.....What I am really biased against is being asked to except less than half my normal fee for doing a full review.

So....My review fee is the same as a full appraisal....I don't get many review assignments.

 

[redfish]

The Uniform Standards of Professional Appraisal Practice (USPAP) 2014-2015 Ed. defines credible “as worthy of belief” with further comments on the definition:
“Credible assignment results require support, by relevant evidence and logic, to the degree necessary for the intended use.”


If the intended user doesn't find the support, evidence and can't follow the logic in the reporting of the opinion of value a review will be ordered. Hopefully the reviewer can parse the logic and support out of a report that wasn't written in manner that someone without training couldn't understand in the first place.

 

[Terrel L. Shields]

I agree that when doing a review the first thought is there must be something up with the appraisal. I can usually spot it right away however, I must support my opinion.

This is like Kennedy's target...you might think you put that thought out of your head, but are you really sure you now don't have a "target" and thus someone writing in a style you don't like, or is poorly written...??? you might be a bit harsher on them? We are hired to value things, not hired because we have degrees in English Lit.

Again, a review is a cop out, ordered to get a discount over the cost of an actual re-appraisal.

 

[Delta85]

This is like Kennedy's target...you might think you put that thought out of your head, but are you really sure you now don't have a "target" and thus someone writing in a style you don't like, or is poorly written...??? you might be a bit harsher on them? We are hired to value things, not hired because we have degrees in English Lit.

I agree. It's human nature. The reality is though even if a report is poorly written with many typos if the value is well supported and explained and there are no blatant USPAP violations then that report should be deemed as good as one written by an English lit major. Our job is not to compose a short story that captures the imagination of the reader with creative descriptive writing perfectly edited. We report the facts and explain what we did and why.

 

[William Little]

I am in a position to see appraisals and their corresponding reviews and help make a decision about them. I tell tell you that conservatively, 70% of the reviews trash the appraisal, many cases its obvious there is bias, on others you have to look a little deeper. Me and my bosses wonder if appraisals are flawed and unreliable 70% why we order them at all? It just can't be.

I don't like doing reviews, but somebody needs to do it. Cloning errors, typos and failure to recognize poor quality data are the primary downfalls I see. It is never a good idea to rush a review. Read it, research it, analyze it. How can a client expect to pay less for a review than they paid for the original appraisal? If you paid $450 for the appraisal, expect to pay the reviewer $450 to duplicate all the steps the original appraiser took and make a reliable review report. A desk review eliminates the inspection; but that is a small, data collection part of the appraisal process. The reviewer has increased responsibility which should offset the original appraiser's compensation for the field work.