Is this an appraisal?

[George W Dodd]

Does the following statement on a review consitute an appraisal?

"property value is slightly high"

 

[Blue1]

George,

According to USPAP Advisory Opinion 20 (AO20), the reviewer should have defined the scope of work. That is, they should have stated if the assingment includes an opinion of value. According to AO20, IF the review includes an opinion of value, specific and clear language should be used by the reviewer one example is: "in my opinion, the value is too high (or too low)" Seeing as how your reviewer did not state that it was his/her opinion, I'd say they are not fulfilling USPAP requirements.

For more info here's a link to the Appraisal Foundation and AO20:

http://www.appraisalfoundation.org/html/US...PINION%2020.htm

 

[wyecoyote]

Splitting hairs on this. But to my understanding if you agree, disagree with the value according to USPAP SR 3 you must do the following.

When the purpose of the assignment includes a requirement for the reviewer to develop his or her own opinion of value, the following apply:

the reviewer’s scope of work in developing his or her value opinion must not be less than the scope of work (Complete or Limited) applicable to the original appraisal assignment. However, the reviewer is not required to replicate the steps completed by the original appraiser. Those items in the work under review that the reviewer concludes are credible and in compliance with the applicable development standard (STANDARD 1 or 7) can be extended to the reviewer’s value opinion development process on the basis of an extraordinary assumption by the reviewer. Those items not deemed to be credible or in compliance must be replaced with information or analysis by the reviewer, developed in conformance with STANDARD 1 or 7 as applicable, to produce a credible value opinion.

the reviewer may use additional information available to him or her—either locally, regionally, or nationally—that was not available to the original appraiser in the development of his or her value opinion.

So to me the appraiser has completed an appraisal report, but, must state his scope of work and any assumptions included in the report to complete a credible value opinion.

Ryan

 

[Fred]

George on your question,
"Does the following statement on a review consitute an appraisal?
'property value is slightly high'"

I would say, probably.
The statement implies a 'one-part-of-a-range' appraised value. However, the context of the statement matter. For example, if the reviewer found a computational error that led to overstating the value that the appraisal would have found without the error, that is not an independent conclusion of value. On the other hand, if the reviewer is suggesting a different interpretation of the comps used or a that the value is high because of other comps, then the statement comminicates an opinion of value.

 

[Dale Smalley]

I would think the statment by itself is not an appraisal but an interpertation of the facts in the report. There should be a following statment why they think the value is high. When I review reports where there are alot of ajustments to push the value higher than the actuall sales prices I would use a similar comment. You see these mostly by AI appraisers that use time or Front Footgage adjustments. So he thinks the value is high Wow what a genius. I hope they could come up with something better than that.

 

[Elliott]

It Depends.....

We are entering the dawn of the 'intended user'.

If who makes the statement is an appraiser and its done
for a lender, then its an appraisal, cause the state board
gets its jollies on this sort of thing.

If your a realtor, AVM, attorney, accountant, anyone
else, your exempt cause you don't come under the
pervue of the state board and they can't touch you and
they don't want to mess with you.

Does it make sense. No. Its about money and
bureacracies.

elliott, IMHO

 

[The Bob]

These types of reviews are really multiple assignments....there are two clear objectives:

1. A review of the "quality" of work.

2. The review appraisers opinion of value.

Therefore, this would be covered under scope of work. I downloaded the following form the AI website. (emphasis is mine).





Example #6: Limited scope review assignments

The definition of “appraisal review” in USPAP is “the act or process of developing and communicating an opinion about the quality of another appraiser’s work”. The Comment to says “the subject of an appraisal review assignment may be all or part of an appraisal report, the work
file, or a combination of both.” This definition itself beckons the appraiser to delineate the scope of the review assignment. Clearly an appraisal review need not involve examination and critique the entire appraisal report. If it does not involve the entire report, however, the appraiser must specify what the review does involve. Further, “quality” itself has – potentially – a broad meaning. An opinion of quality may range from a statement that the “required elements” of the report are present to a concurrence or disagreement with the appraised value. Just as Standards Rule 1-2(f) requires the appraiser to identify the scope of work in the appraisal process, Standards Rule 3-1© requires the reviewer to “identify the scope of work to be performed” in the review assignment. The scope of work in an appraisal review assignment may be expanded, or narrowed, in a number of ways. For example, the reviewer might (or might not):

· Physically inspect the property that is the subject of the appraisal (the “field review”, as
opposed to a “desk review” in which the reviewer does not inspect);
· Check the appraiser’s math;
· Test the income approach using alternative yield/capitalization rates;
· Collect and verify additional sales/rent comparables;
· Re-run the cash flow;
· Examine the appraisal report in light of FIRREA/Fannie Mae/Freddie Mac/SBA/ other
requirements;
· Develop a differing opinion of value;6
· Etc.
Whether or not the reviewer inspects the property that is the subject of the appraisal becomes part of the scope of work decision. If the intended use of the review is for the client to obtain a level of confidence in the abilities of the appraiser who prepared the report, a “desk review” may be
adequate. If, on the other hand, the client wishes to also have an independent opinion of the value of the property, or a verification of the value, the scope of work may need to be expanded to include a field inspection as well as a re-enactment of the valuation process.

6 In the event the reviewer develops his or her own opinion of value, the reviewer must have adequate
support and reasoning to do so, to the same degree as one would in developing an appraisal under Standard1. The reviewer’s opinion of value may be reported, however, in the review report. Refer to the Comment
to Standards Rule 3-1©. See also Advisory Opinion ##.)

 

[George W Dodd]

JimBob

Great info, thanks for the response.

I am reviewing a review, in which the reviewer indicated that the comparable sales used in the orginial appraisal were appropriate, but then stated that better sales were available, listed the sales but did not grid them, then stated "value appears slightly high"

Hence the question.

I kind of think that the reviewer did make a statement of value and therefore should have complied with the requirements of Standards Rule 3

The orginial appraisal seems appropriate, sales in subject's neighborhood, and no significant adjustments. So if there is any difference in value it must be very small.

 

[bradellis]

George,

Yes, it is an appraisal. No, it is not always necessary for the reviewer to grid out the comps he/she has selected.

Brad Ellis, IFA, RAA