How to respond.

[Non Sequitur]

Summary of Sales Comparison Approach: The sales used are a good representation of the market in this neighborhood and, in the appraiser's extraordinary assumption, are the best sales available and are most comparable to the subject. The comps are similar quality and from similar market area's.

Yep, that's it. Verbatim. No explantion for the many adjustments, why one sale exceeds typical proximity guidelines, why another exceeds typical date of sale guidelines, etc.. you get the picture. How do I comment on the lack of comments and explain to the reader that this is a bunch of mumbo jumbo without coming across as a jerk.

And yes, this review turned into a whole bunch of work.

 

[CANative]

Gawd. I see that same generic comment in so many reports I review. Lazy, a-hole, so-called appraisers.

I'm not qualified to spout USPAP or cry violation, but I see nothing worng in sneaking a cut and paste snippet of 2-2 (b) (ix) into my comments.

"The minimal comments in the sales comparison approach section of the report under review do not meet the requirement that the information provided is sufficient for the client and intended users to adequately understand the rationale for the opinions and conclusions, including reconciliation of the data and approaches."

... or something like that. It changes every time.

 

[George Hatch]

The boilerplated comment about the sales being the best comps do not provide meaningful analysis of the differences between the sales data or indicate which ones are considered more similar and given greater weight. Also, if there is an extraordinary assumption being made by the appraiser they are not explaining what that assumption is, how it might affect the analysis, or whether the results would be affected should the extraordinary assumption prove to be incorrect or false.

 

[Mr Rex]

Poor thing, the only words he/she remembered from class was Extraordinary Assumption. Then he/she tried to use it in a sentence and failed miserably.

 

[Mary Tiernan]

Cite USPAP

In accordance with USPAP Standards Rule 1-1, an appraiser must correctly employ those recognized methods and techniques that are necessary to produce a credible appraisal.

Standards Rule 1-1 also dictates that an appraiser must use sufficient care in analyzing data to avoid errors that would significantly affect the opinions and conclusions provided. An appraiser must not render appraisal services in a careless or negligent manner, such as making a series of errors that together affect the credibility of the results.

USPAP Standards Rule 2 states that each written real property report must contain sufficient information to enable the intended users of the appraisal to understand the report. Additionally, USPAP Standards Rule 2-2(b) states that each Summary Appraisal Report must sufficiently summarize the information analyzed, the appraisal procedures followed, and the reasoning that supports the analyses, opinions, and conclusions.

(blah-blah-blah detailing where original appraisal is lacking or inadequate, i.e., Each of the comparables in original appraisal have inferior site size, with adjustments for site size made across the board. Review appraiser unable to determine how adjustments were calculated due to lack of analysis in original appraisal)

Due to lack of analysis of appraisal procedures followed, lack of analysis of adjustments applied, and inadequate summary of opinions and conclusions in original appraisal report, review appraiser is unable to adequately analyze original appraisal.Due to lack of analysis of appraisal procedures followed, lack of analysis of adjustments applied, and inadequate summary of opinions and conclusions in original appraisal report, review appraiser is unable to adequately analyze original appraisal.

 

[hastalavista]

Yep, that's it. Verbatim. No explantion for the many adjustments, why one sale exceeds typical proximity guidelines, why another exceeds typical date of sale guidelines, etc.. you get the picture. How do I comment on the lack of comments and explain to the reader that this is a bunch of mumbo jumbo without coming across as a jerk.

(my bold)

Here's my shot:
The report fails to adequately explain its adjustment analysis/process; when I analyze the market, I cannot reconcile the original report's adjustments and/or comp selection with data available. There may be appropriate reasons for the significant adjustments applied, but the report has failed to provide those reasons and I cannot discern them from the market.

 

[Non Sequitur]

Thanks guys and gals, the extraordinary assumption thingy kinda threw me off and a "WTF?" didn't seem an appropriate response.

 

[Fred]

I have such a different take on this.

No explantion for the many adjustments, why one sale exceeds typical proximity guidelines, why another exceeds typical date of sale guidelines, etc

I think the proximity guidelines are beyond my reach. Where can I find them?

In a big picture way, what difference does it make if the person

• makes no “best available” comment (because it is already on “the form”)
• makes a single, prophylactic best available comment
• makes some generic boilerplate statement that comps may have exceeded Fannie guidelines, but they were used because they were the best available
• itemizes each instance in which something exceeds something, and says in each instance (as if copied from the Harrison guide) that they were used because they were the best available

I ask in all seriousness, how much difference does the comment make and is this is some way integral to what your client is trying to learn from the review?
- Is the primary purpose of the review developing an opinion about whether the “best available” comment is true? And if that is the purpose or isn’t the purpose, what difference does it make how many time the comment appears?
- Is the primary purpose of the review to apply a checklist to the report and make sure “best available” appears each time anyone might think it is supposed to?

The report fails to adequately explain its adjustment analysis/process;

Due to lack of analysis of appraisal procedures followed, lack of analysis of adjustments applied, and inadequate summary of opinions and conclusions in original appraisal report, review appraiser is unable to adequately analyze original appraisal

Comp selection is vritually everything and adjustments are virtually nothing.

It seems to me that if the comps are the best available, almost anything within or near the range could be credible - whether adjustments are made or not. I have taken dozens of reports, logged the comp prices, averaged them, and listed the final conclusions. Very rarely does the final conclusion of value stray from the averaged comp prices by more the limits of a two-digit round off. The fact is that the comp selection creates almost 100% of the variability and the adjustments create almost no variability. So, what is the point of belaboring adjustments – they are insignificant.

And usually nothing but BS – hopefully harmless BS
I have never seen a form report that explains adjustments. I had this debate with Denis already – and others. I don’t want to characterize these long past comments, but I felt like I was debating against the idea that saying the size adjustment is $60 per sf is explaining it. I was saying, I can see it is $60, but that hardly explains where it came from.

Austin and I have put enough sample data sets on this forum that I am convinced very few appraiser would know a mathematically provable adjustment if it bit them on the butt. Even after you show the proof, you will be inundated with “art not science” and convince no one. So again, why belabor adjustments in review.

Closing
I think this happens regularly. The person misused the term extraordinary assumption, which leads to the inference that he or she must be an idiot, and that becomes the causus belli to create an assassination attempt under the label review.

 

[The Warrior Monk]

And usually nothing but BS – hopefully harmless BS
I have never seen a form report that explains adjustments. I had this debate with Denis already – and others. I don’t want to characterize these long past comments, but I felt like I was debating against the idea that saying the size adjustment is $60 per sf is explaining it. I was saying, I can see it is $60, but that hardly explains where it came from.

Over the years I've moved away from the boiler-plate statements regarding adjustments...as you've noted, they don't explain anything. I've beefed up the narrative description, which is much more useful to the reader.

Austin and I have put enough sample data sets on this forum that I am convinced very few appraiser would know a mathematically provable adjustment if it bit them on the butt. Even after you show the proof, you will be inundated with “art not science” and convince no one. So again, why belabor adjustments in review.

This reminds me of the SREA 102 class I took. We had an excercise that included determining adjustments by paired sales. After the excercise was completed, I noted to the instructor that if a -$500 adjustment was made for properties that had landscaping versus those that don't, all of the numbers fall right into place. I was told that landscaping can't have a negative adjustment. So it was a case a personal belief overriding the facts of the problem.

I personally believe appraising is both art and science. But if the science is there use that first, then use the art. Or, in appraisal terms, quantitative first, then qualitative.

I don't make a big deal out of most adjustments on reviews, except when they are obviously and provably incorrect. The most notable ones are location and/or lot-size adjustments. At least here, ballpark figures can be determined, and when the are completely out of line, they get noted. I've seen location adjustments on the order of $5M simply get ignored...can't let that go by.

 

[hastalavista]

Steven-

My suggested statement is "my" general statement; in my reviews, I then list the specifics that I think are significant. As a reviewer, I find inconsistencies or errors to be in two classes: Trivial and Non-Trivial:

The trivial ones could be typo's, the wrong specific zoning description (as long as the zoning itself is correct and the subject's conformity or lack of is correctly indicated), perhaps a date on the comp (1996 vs. 2006, when everything else matches with my 2006 data), etc. A trivial item or even a number of trivial items may have no impact on the overall credibility of the report. Some, while trivial to me, may be significant to the lender; the appraiser's correct license expiration date, for example, when I've already verified the license is current and valid. As a rule, these are not "significant", although I may list them for my client's benefit. When I do, I state that I do not consider these items "significant".
If enough trivial issues are present, I may begin to question the quality of the report. A sloppily written report detracts from its quality and credibility, which I am charged with forming an opinion about. If this is the case, I do consider this significant, and again, state my reasons. However, the value may still be supported in the market. This is an example of a report that "hit" a reasonable value but is so poorly presented, one has to question the competence of its reporting, if not development process. We read about these instances all the time.

A non-trivial issue is one that I find significant to the credibility and usually value of the original report. These can be when comps are provided, a general "these are the best comps" statement included, yet I find what appear to be more proximate, more recent, and/or more similar sales. Or, when a subject is a 2br home, all comps exceed 2br in configuration, and there is no explanation about market acceptance of 2br homes or the appropriate market adjustment between the two (the buyer pool for a 2br home is typically different, and smaller in my market than that for the 3br home).
It is when there is a conflict between what is in the report and what I discover in the market, and that conflict leads me to analyze and conclude a different opinion of value that I state the report has inadequately explained its adjustment and/or comp selection. And, again, when I make that statement, I'll provide the evidence I'm using to support my statement.

Adjustments for GLA are not precise. Rarely do I question the amount. I sometimes question it if the report's application isn't consistent in its results (and the difference has to be significant, not "trivial").

You in your assignments may, as a practice, use more than the 3 or 4 comps that are typically found in most residential mortgage finance appraisals. Your analysis is probably a little "deeper" than what is found (or required, given the intended use) of the residential reports I typically review.
3 or 4 comps can be more than sufficient to adequately support a value.

It isn't the number of comps that is necessarily important, it is the comps used vs. what appears available in the market that becomes a non-trivial issue. And, when there is inadequate comment or analysis provided so that I, the reader, cannot reasonable understand why the report has one set of comps or uses one set of adjustments when the market data I'm looking at (presumably, the same available to the originator) indicates another set appears more appropriate, then it is accurate to say the report has inadequately explained itself. I did use the terms "Analysis/Comp Selection", and those terms may be interpreted differently. But as a rule, my client (the intended user) knows what I'm talking about and so does the originator if provided a copy.

As far as the boilerplate comments, as a rule, they don't bother me, and I have some myself in my reports. But, if the boilerplate, which is typically a "generalized statement" is used as a substitute to explain an analysis process that I can't understand, support in the market using my own research, and certainly can't replicate, then it is inadequate.