Field Review Question

[Thandi Guile]

Just curious how other appraisers deal with review appraisals when you determine the original appraiser's value is too high, but only by less than 5% of what you would have come in at had you appraised the property? Any thoughts?? Kind of struggling a little with this one because it is a purchase appraisal that I'm reviewing. The original appraisal came in at $840k and I would have come in at $800k. Thanks in advance for your responses.

 

[jay trotta]

it depends, how was the balance of the report ?

how were the comps ?

what would make Your comps. better ?

No personal quams bout adjustments, right - cause then your adding in Your personality and Not using the correct Brush for the canvas. Lift & separate is the answer.

 

[The Warrior Monk]

This happens often. Most of the time it's a result of the appraiser simply appraising the property at the sales price, ignoring other factors:

• The sales contract is packed with sales concessions.
• The sales price, with the concessions, is higher than the listing price, even though the property has been on the market for a few months.

 

[hastalavista]

You just received two good pieces of advice:

Dave points out a likely cause (one which I commonly see when I review) why there could be the "5%" difference!

Jay puts in common-sense language that the review process is about quality and credibility of someone else's work, and not personal style. Chances are better than not that if all four of us appraised the same property at the same time using the same data, we would come up with different values; assuming we know what we are doing laugh: ) all of our values could be reasonable, and you and I might differ by $40k!

To put it another way, let's say that "accurate" market value of the subject is between your estimate and the original report's: $820k. Now, the difference between your estimate and the original report's vary by 2% from the "accurate" value; If I was within 2% of the "accurate" value with consistency, I'd have every court, lawyer and mediator in the country calling me for value determinations.

If the report's quality is good, and unless the value concluded is not credible, I'd accept it.
In such cases, I'll make a statement that in my opinion, the original report's value is at the upper end (or, very high end, if I think this is so) of the reasonably supported value range. That's my review style; may not fit for others, but it tells my clients what I want them (and what I think they want) to know.

 

[Tony Blackburn]

Unless there are some very black and white issues in the report, It's probably likely that under USPAP, $840K and $800K can be viewed as credible. If you have three sales, all EXACTLY the same as each other and as the subject (Such would more likely be the case with condos), and they all sold at $800K and the appraiser is in at $840K, then cut it. If the issues that separate the two values and more "Gray", then in the "Real World", you would go with $840K. The reason I say "Real World" is what the lender is probably really asking with the review, is, "Is this $840K value supportable?"

 

[joe huffman]

Question is if you are doing just a review, then you can not agree or disgree with the value conclusion, if you are looking at value, then you are doing a review under STD 3 with an expanded scope of work to include an appraisal, make sure you know what you are doing and please use the right terms....

 

[Thandi Guile]

Thanks for all the advice everyone