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Geo - Competency Appraisal Review

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Mike Kennedy

Thread Starter
Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
JANUARY 2008 USPAP Q&A - GEOGRAPHIC COMPETENCY IN APPRAISAL REVIEWS

Question: I have a client who has asked me to perform a desk review on a
property located in a different state. I have no knowledge of the real
estate market in that state and have never even stepped foot there
. Can I perform a USPAP-compliant appraisal review on this property?

Response: Yes. If you are engaged to determine whether or not the
appraisal under review complies with certain guidelines or standards,
geographic competence is not typically relevant.

Alternatively, review assignments that include evaluating the selection and adjustment of comparable sales typically require geographic competence.

As in all assignments, an appraiser must identify the scope of work required for the assignment and determine if he or she has the knowledge and experience to complete the assignment competently.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
With realtor.com, RealQuest, tax records, and other sources, you can make a pretty good determination of value even though you haven't been there. I realize that there are individual factors which can significantly affect value. However, there is data out there that can point you in a direction.

Example: You are asked to look at a condominium appraisal. Origination appraiser provides 4 sales, three outside, one in the project. Your subject is an interior unit. A few minutes of research finds that there are 10 active listings of interior units, all 10-15% below the appraised value, the one unit used from the project is an end unit and closed 10 months prior, and the three outside sales are from a project with higher values.

You have done sufficient research to make a decision that the sales would have not been either appropriate, or improperly adjusted.

Now, you can't do that in every state (for example, Texas and Indiana), but you certainly can in a lot of states.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Mike,
Its approaching the end of February....the ASB has already
weighed in (to the benefit those it serves) that any appraiser
is competent (of course depending on your SOW) to be
competent to any review in the 50 states and territories
the AF has jurisdiction over.

The ASB crafts its statements to meet the needs of the
corporations or title companies it has pledged to serve or
those IPOs that its current members hope to receive stock
options from in the future.
 

Michael Tipton

Senior Member
Joined
Sep 25, 2005
Professional Status
Certified Residential Appraiser
State
Florida
The way I intrepet The Appraisal Foundation's January USPAP Q & A response is it is a scope of work issue. If all the specific review's SOW requires is an analysis of whether the report being reviewed complies with specific loan guidelines or standards, geo competence is not an issue.
However, if the review's SOW involves analyzing comp selection, sales grid adjustments and/or value conclusions geo competency is required.
If my memory of a recent FREAB newsletter holds, The FREAB stated that they would consider filing complaints against out of state reviewers lacking geo competency when their reviews required analysis of comp selection and/or a value conclusion.
 

Fred

Elite Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Virgin Islands
The ASB crafts its statements to meet the needs of the corporations or title companies it has pledged to serve or those IPOs that its current members hope to receive stock options from in the future.
And me too. Who knows, I might want to do reviews someday.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Mike,
Its approaching the end of February....the ASB has already
weighed in (to the benefit those it serves) that any appraiser
is competent (of course depending on your SOW) to be
competent to any review in the 50 states and territories
the AF has jurisdiction over


Elliott,

The Appraisal Foundation does not have jurisdiction over any state or territory. TAF is not a regulatory body. I agree that it seems that way sometimes but that is simply because most states have not exercised their states rights in the matter of real estate appraisals.

Also, the ASB clearly has stated that if the review has to do with the selection of comparables, then geographic competency would be expected. However, I have discovered that it is the states that often hire appraisers from other states to review reports for their regulatory boards and waive geographic competency and allow those out of state appraisers to comment on comparables, value, and a whole host of other issues.
 

stefan olafson

Senior Member
Joined
Apr 2, 2003
Professional Status
Certified General Appraiser
State
North Dakota
I'm in total agreement with Don on this one. I've had work product reviewed on appraisals in NW Minnesota by a reviewer hired by the state of ND who lived and worked in Louisiana! No knowledge of the market, no knowledge of the area and the property. Yet he was questioning my ability to use appropriate comparables and was questioning my adjustments to those comparables.

We proved in court that geographic competency was an important part of the review process if the reviewer got off that narrow road of the scope of the assignment.
 
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