How to perform a commercial appraisal review?

[kaner]

Briefly searched and could not find anything, but if this has been discussed before, I'd appreciate a link.
Appraisal review intrigues me. I've assisted with in-house reviews (proof reader, fact checker) and had my reports reviewed in-house one trillion times, but as far as official "review" work:

How would a relatively new appraiser get involved in commercial reviews?
Is it legal, ethical and moral for a Registered appraiser to perform a commercial review (I will hopefully earn my CG in three months)?
What are typical fees for a commercial review?
How do you perform a commercial appraisal review?
Is geographical competency a requisite for a review? (ie- could I review a report from my hometown, despite not actively appraising that market?)
Does a reviewer need access to local MLS, CoStar, Loopnet, etc?
Is it the responsibility of a commercial reviewer to research available comparables, to ensure that the appraiser did not omit or include comps that should/not have been used?

I may be 100% wrong, please help guide me. I think that, for a commercial review, you would be provided the report (possibly redacted for client or property confidentiality? But if working for a lender, they're likely the client?) and carefully review the entire document, which could be 50-100+ pages depending on the scope. A reviewer is not the grammar police, nor spellchecker, but rather, ensuring that there is sound logic and that the report "flows" (flow means, for example, that in the front half, it's not describing a junky building in a terrible neighborhood and a declining economy, then in the approaches, property is reconciled at highest end of range).

If the appraisal convinces the reviewer that the approaches are valid and logically lead to the reconciled value, I agree, write a one-page memo to the lender confirming that it works, everybody is happy. If I don't agree with the value conclusion but everything is documented, well explained, makes sense and leads the reader to the same conclusion, same result.

If the appraisal is a mess, does not flow nor lead to a valid value conclusion, what is done by the reviewer?

Thanks for your help. I do not have any review work and obviously do not have competency, but think it would be a useful skill and make me a better appraiser in the future as well.

 

[CANative]

As part of my "new job" I ready many commercial reports. From hotels to huge multi-family properties, from proposed sub-divisions to mixed use properties valued in the tens of millions of dollars.

I have a knack for ferreting out BS, finding errors, inconsistencies and incongruities as well as marveling at the truly good reports.

Would I do an "official" review on one of these? No way!

Once you get your CG and have 7 to 10 years of experience perhaps you can might consider taking on commercial appraisal review assignments.

 

[Marym]

Appraisal Review

I stumbled across this post today. And being recently manuevered into the Appraisal Review section of my small community bank, I am NOT encouraged! LOL


To put my story in a nutshell, the OCC has decided to make some changes here and they want a better defined commercial appraisal review process in place for their next visit. What I am looking for is educational instruction. (And apparently LOTS of it. ) Is there a recommended educational source for appraisal review? Or do all reviewers have to have 7 - 10 years appraisal experience to review a commercial appraisal?

 

[Ken B]

Appraising the appraisal -

http://www.appraisalinstitute.org/education/seminar_descrb/Default.aspx?sem_nbr=824&key_type=S

Although it is not being offered right now, note that it is considered to be an intermediate-level course.

 

[Hola27]

OMG. To review anything you better know the market VERY WELL as you are affecting appraisers lives. Geographic competence? If you asked this question im afraid for the industry.

 

[Vernon Martin]

“You want to fly jets? MY GRANDMOTHER WANTS TO FLY JETS!”

-- Louis Gossett, Jr., “An Officer and a Gentleman”.


One step at a time, my friend. First become skilled in commercial appraising.

 

[PropertyEconomics]

Or do all reviewers have to have 7 - 10 years appraisal experience to review a commercial appraisal?

I would think 7 - 10 is just about the time you feel comfortable doing commercial appraisal work ... add another 5 years and you might be ready for review.

Can you honestly imagine being a rookie, and I use the term nicely, and reviewing work that 1) you dont understand; 2) you dont understand; and 3) you dont understand nearly as well as the person who wrote it.


Yup Id say experience is the absolute best teacher for review ... anything less and Id guess some appraiser will eat the reviewers proverbial lunch.

 

[Craig81]

Take review and commercial appraisal courses. Start doing the commercial work you'd like to eventually review. Experience is the best teacher. If you can't write it compotently yourself, odds are you can't really review it.

 

[stefan olafson]

kaner!

How would a relatively new appraiser get involved in commercial reviews? You don't, in my opinion you learn the process of appraisal, complete a couple of hundred, then maybe you could call yourself competent to do a review


Is it legal, ethical and moral for a Registered appraiser to perform a commercial review (I will hopefully earn my CG in three months)? Probably not a question of legality. Depending on your own ethics, if I were a relative newcomer I couldn't do reviews, based on my ethics. Moral? That's entirely your call...

What are typical fees for a commercial review? Fees are based on a negotiation between the reviewer and the client, can range from very little to quite a bit. It all depends on the knowledge base of the reviewer and the needs of the client

How do you perform a commercial appraisal review? Again, this depends on the agreed upon scope of work of the client. I am doing reviews currently on a major transmission line project, our agreed upon scope of work allows me to critique the methodolgy, the grammar and spelling, the flow of the report, and the adequacy of the approaches to value. I don't comment at all on value and I don't perform a Standard 3 USPAP review. It's all spelled out in my scope of work that we negotiated. Performing a review is based entirely on what the request is coming from the client and what you negotiate and approve in your scope of work.

Is geographical competency a requisite for a review? (ie- could I review a report from my hometown, despite not actively appraising that market?) In my opinion geographic competence depends on the scope of the appraisal review, it depends on what you are reviewing.

Does a reviewer need access to local MLS, CoStar, Loopnet, etc? Once again, this depends on what you actually are reviewing, a scope of work process.

Is it the responsibility of a commercial reviewer to research available comparables, to ensure that the appraiser did not omit or include comps that should/not have been used? Once again, based entirely on what you, the reviewer, negotiated with the client. Do you need to research available comparables if you were hired to review the spelling and grammar in the report? Probably not! If as part of your scope of work you are required to provide an opinion of the reliability of the appraisers market value, then probably you do.

Commercial reviewing is an exciting job, but I only do it after appraising for over 30 years and in those 30 years I've appraised almost one of every type of property imaginable.

Nothing, I mean NOTHING takes the place of knowledge learned in the trenches.

Good Luck and I hope you take the right path.

 

[Pittsburgh Pete]

Have seldom had problems with reviewers--I've been lucky in that I work hard on my reports, try to include all applicable reasoning (including what I discovered in research and what I was unable to discover in research), have had generally knowledgeable reviewers.

The only problem that pops up tends to be more of a problem with the reviewer than the appraisal report. Inexperienced reviewers, those that haven't been in the trenches and don't know the diffculties involved, tend to comment from an "ivory tower" mentality. They know the theory and practice but are not aware of the practical shortcomings of valuing certain property types.

Experience in appraising is the best preparation for reviewing.