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Had an appraisal reviewed on a sale that I came low on and it got cut by 2.5% more.

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The Sheriff

Member
Joined
Mar 21, 2007
Professional Status
Certified Residential Appraiser
State
Arizona
All considering... I'm pretty anal retentative... so, I was like 2.5%... that's pretty minimal... let's see what got thrown back at me that I possibly missed since I already came lower than the sales price. Furthermore... I've never had an appraisal cut by this client - as confirmed by their Vice President (a damn good bank that thinks, "it is what it is").

Well... here was my rebuttal in an informal email to the VP and the loan originator. If you are going to slash an appraisal of an appraiser that actually cares about his company, you better after the cojones to back it up.

Here's my rebuttal...

I realize the second appraisal was cut by a desk review… industry guidelines TYPICALLY say to cut a value in a report if there is greater than a 5% difference in value between the review’s opinion and the opinion provided in the original report. Cutting a report by 2.5% is very aggressive, and should require substantial evidence to provide such a marginal cut (model match sales, etc).

As a reviewer myself, and realizing this was not the typical cookie cutter report for a tract home, the competency of the review that was completed should be highly questioned. Please enjoy the extensive rebuttal of the review below.

The properties utilized to reduce the value were 7-10 years OLDER than the subject property. The subject was lightly lived in, very upgraded, and less than a year old. The reviewer stated my adjustments in the original report were accurate (SEE MARKET DATA ANALYSIS SECTION), yet, when the reviewer made age adjustments to the sales that were utilized to reduce the value, the age adjustments were not consistent with what the review stated were appropriate adjustments in my report. I adjusted comparable #3 in the original report $7,500 for being five years old. The reviewer adjusted an eight year old property only $7,000. Either my adjustments were inappropriate (which the original review stated they weren’t), or the reviewer obviously under-adjusted the new sales that were utilized.

Sale #2 in the desk review had an incorrect address in the grid. If you are going to provide credible data to reduce a value, it would help to get the addresses correct for the comparables being utilized to cut the value.

The biggest issue I have with the review is based on the incorrect analysis of the narrative that was written in the original report. The review stated that the original report relied on original comparable #1 in the review for high value. As quoted: RELIANCE ON SALE #1 FOR HIGH SIDE VALUE AS A BUILDERS SALE IS NOT THE BEST AVAILABLEAS SUBJECT IS A RESALE PROPERTY. This was no where indicative of my analysis. Here is how the weight was distributed in the original report: “The most weight is given to the adjusted sales prices of comparable #2 as this property represents the most similar resale with upgrades and views similar to that of the subject property. Comparables #1 and #3 are given secondary weight due to their inferior views and upgrades.” Comparable #2’s adjusted sales price was $393,400. The opinion of value was $395,000. Comparable #1 represented the ceiling at $408,700. The opinion of value was clearly given to comparable #2 and not comparable #1 as the review incorrectly stated.

Upgrade adjustments were made in the review of $10,000 and $20,000 respectively to sales #1 and #3. The reviewer though stated that both properties had average quality upgrades. So, either the reviewer adjusted one of the two comparables wrong (the review did state they had similar upgrades, why a difference in adjustments?), or some narrative should have been provided explaining the $10,000 difference in the adjustment.

The time adjustment to sales #1 and #3 show a lack of competency of the reviewer. Sale #1 sold before sale #3. The contractual date (from which Fannie Mae bases the negative time adjustments on) for sale #1 is older than sale #3, and the sales price is higher for sale #1. These three factors would all equate to a larger negative time adjustment to sale #1. However, sale #3 has the larger adjustment. This demonstrates incompetence and carelessness of the reviewer on the grid (see upgrade adjustments above).

The reviewer included photos for the sales that were utilized in the review (not a bad touch in my opinion, but not recommended – and here’s why not). Sale #1’s photo is not that of sale #1 (and who knows where that photo came from). There were four MLS photos that could be possibly utilized for new sale #1 after reviewing the MLS history for this property. However, none of those photos were utilized. Instead, a photo of a property that is obviously new construction (and not 11 years old) was utilized. Further showing the lack of credibility of the desk review, the photo for sale #1 has a two car garage, yet, the listing and the reviewer’s grid both state that this property has a three car garage. This again demonstrates the carelessness of the reviewer in checking his work when providing a very important client a competent and precise review.

Besides the array of errors in every other section of the review as noted above, if a reviewer can’t take the 60 seconds to run a spell check on their own work before submitting it to an important client, would you really want to rely on their opinion of value when reconciling a value off of a limited scope desk review? Unfortunately, in our very competitive industry which has seen an influx of under-trained appraisers in the last five years, the management companies typically prey on the cheapest appraiser to complete their review work, not necessarily the most qualified.

The review’s new opinion of value falls within the adjusted range of values from the original report. Whereas the reviewer elected to come in at the lower end of the adjusted value range, the original appraiser felt the opinion of value was justified more towards comparable #2, or the mid range of the value range (and still below the sales price). Based on the lack of competency of the review that was completed, the appraiser stands by the value of $395,000.

Have a great day!

Owner, USF Appraisals, LLC


Well... got an email back today...

(Our VP) has approved the value and the rebuttle. The value will stand at $395,000.00.

Sometimes you gotta stand up for yourselves. By the way... this is the first appraisal that I've had knowingly cut where I got to rebutt the review in the past two years. I took down the first reviewer as well back then. I don't have a perfect report (does anyone), but I damn well know value in my coverage areas and can write a report well enough to support it.
 

The Sheriff

Member
Joined
Mar 21, 2007
Professional Status
Certified Residential Appraiser
State
Arizona
My old boss said to turn the review into the state... seems like it is more hassle than good! Gotta love a Land America $125 review!
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Good job - one major suggestion for future - change "the reviewER" to the "Review"..........

keep the focus on the REPORTS not the person.
 

Kevin Mc

Elite Member
Joined
Jun 7, 2004
Professional Status
Certified Residential Appraiser
State
New York
Good for you Sheriff.

Gotta love a Land America $125 review!

Tells me everything I need to know. Joe Moore will tell you otherwise but what kind of appraiser is doing a FR for those fees?
 

The Sheriff

Member
Joined
Mar 21, 2007
Professional Status
Certified Residential Appraiser
State
Arizona
Mike... I initially had written the rebuttal to attack the report... but then, I thought about the informal process I was going through, so, I was like, might as well let the reviewer have it... This client wants to filter through the non-sense... whereas other clients might want a rebuttal like you suggested.

You bring up a good point though... When I was reviewing work on a regular basis, my old firm demanded that we never attack the appraiser... just slam the report.
 

CURT VAN HOOSER

Senior Member
Joined
Nov 3, 2003
Professional Status
Licensed Appraiser
State
California
Desk Review... $31.25 to $125 per hour (minus expenses) depending on your analytical skills. No...I don't work for them but I'd rather be appraising at that rate than working at something else
 

Kevin Mc

Elite Member
Joined
Jun 7, 2004
Professional Status
Certified Residential Appraiser
State
New York
My old boss said to turn the review into the state... seems like it is more hassle than good! Gotta love a Land America $125 review!

I would turn the appraiser in if I found the review negligent. New comps on a desk review with a new value?.....I'm too tired to even get into that. Turn em in.
 

Tudor

Member
Joined
Aug 15, 2006
Professional Status
Certified Residential Appraiser
State
Arizona
Unfortunately, in our very competitive industry which has seen an influx of under-trained appraisers in the last five years, the management companies typically prey on the cheapest appraiser to complete their review work, not necessarily the most qualified

Exactly why appraisers must be certified and have at a minimum 5 years experience appraising in that area to be qualified to review, and that does not include letting the trainees, newly licensed perform the review and then sign off.
 
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