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Is This Consulting Or A Review?

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Geoff Hatcher

Junior Member
Joined
Jan 23, 2002
Professional Status
Certified General Appraiser
State
Ohio
This is a first for me. I do a great deal of Relocation appraisals in my market, I recently had a transferee contact me to possibly do a relocation appraisal for them or assist them in their appeal of the first two appraisals.

They have provided me with copies of the first two appraisals, with the appraiser's names omitted. The scope of this assignment is to assist them in an appeal and offer additional suggestions to maximize their buy-in based on my knowledge of the Relocation process. The properties value is in the upper bracket for my market with exposure time often being up to a year in this price range. I plan on offering them suggestions such as possibly seeing if their relocation department will allow the subject to be appraised under "Normal market" times, etc, but also independently verify the data in each report, located and provide verified data on additional sales, analyze the reports for improper reasoning and inconsistencies and provide no opinion as to the anticipated sales price of the subject. This is to assist them in a stronger appeal supported with fact and opinions based on general appraisal principals and opinons on the apparent inconsistancies in the other appraier's reasoning. They have the option for an additional fee to phase this assignment and the next level would be completing an ERC appraisal and reconcile a value, I have informed them that there are no guarentees and that my opinion of the subject's anticipated sales price maybe less, equal to or greater than the other appraisal.

This report is for their use only.

I think I already know the answer, but what is your opinion, can this be treated as a consulting assignment, or since I am making commentary on two other appraisals does it have to comply with USPAP Standard 3.
 

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
George,

I believe a consulting asssignment is out of the question. I was reminded of this in another thread. If there is a value involoved you cant do it.

The other problem you have is wether the people are just spinning there wheels. The relo may not even consider your work. Plus, to review Two reports that most likely differ anyway is sure to be a mine field. How much did you say they were paying you?
 

Geoff Hatcher

Junior Member
Joined
Jan 23, 2002
Professional Status
Certified General Appraiser
State
Ohio
No value involved. Just alot of inconsistancies. I have acutally advised them against myself completing a new ERC appraisal as it would most likely be a waste of money. Think I would most likely pose my report as questions to the other appraiser for them to use, without my name. And provide supporting market data for there use to support their argument

Some examples of the inconsistancies are

Appraiser A:

Sale #1 - DOM 67 - Listed 11/1/02, reduced 11/2/02, Contigient contract 11/12/02
Appraiser makes a downward $30,000 forecasting adjustment due to 9-11 and the erratic stock market and a downward $60,000 adjustment for a pool. Says the subject is personal, although it is not and makes a $10,000 downward adjustment for decor, MLS interior photo's clearly show that the interior of this sale has bergundy and blue walls, much more personal than the subject.

Sale #2 - nearly twice the size as the subject - not comparable - same forecasting adjustment

Sale #3 Appraiser indicates that market resistance and long marketing time was due to the eclectic interior layout, and an upward Functional utility adjustment is made of $30,000. - Funtional utility adjustment are very subjective, in this price range of home, I would suspect higher market resistance. Property had its only price reduction 1/15/2002 and was in contract 2/20/02, appraiser proceeds to make a downward forecasting adjustment of $30,000 due to 9-11 and the eratic stock market. Which is it that explains the extended marketing time? is the forecasting adjustment supported? it was in contract in 35 days after its price reduction.

Appraiser B Indicates that his adjustment range is between X & Y, and feel the subject belongs at the high end of the range, the appraiser's actual adjusted range is X + $30,000 and Y +$80,000 with the high end being the best comparable, most similar in size, most recent, similar quality and located one block from the subject. Appraiser's anticipated sales price is approximately $100,000 lower than this comparable. Appraiser also was inconsistant on the GLA with some adjustments at $50/SF and some made at $100. The higher comps were adjusted down at $100/SF.

There is much more, but I do feel that enough inconsistancies exsist that can adequatley argues to make the relocation department think twice about the reliability of the reports.

BTW, its a very big fee.
 

David S. Roberson

Senior Member
Gold Supporting Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
I hope it IS a good fee, cause I'm not even gonna try to read this post again for less than $500.
 

Geoff Hatcher

Junior Member
Joined
Jan 23, 2002
Professional Status
Certified General Appraiser
State
Ohio
Just thinking,

Think this maybe a new niche? I received many owner appeals over the years, and they have always been unsubstantiated. The homeowner who thinks his house is worth 10% to 30% more because they have the 2nd upgrade carpet or the builder indicates that is what it would cost today or their view of the golf course across the street is much superior that the property that sold next door to them, two doors down and four door down. These appeals have been very easy to answer and have been very lucky with good variences. Although I am not aware of any, I am sure I have made some mistakes and inconsistencies, these would be much harder to defend with actual data and appraiser lingo reasoning.
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
You need to read USPAP on consulting and make up your own mind. I wouldn't want to make that call based on what someone (self included) tells you. USPAP is on line so it'd not like you can't find it.

With that said I had one recently and I looked in USPAP. IF I remember correctly if you are determining a value of any kind it is not consulting. What you are doing sounds like a form or a review to me. I would suggest reading the chapter on reviews in USPAP.

BTW that advice is worth what it cost you!
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
. IF I remember correctly if you are determining a value of any kind it is not consulting.

You can consult and appraise, too. Ditto for review. If you are simply critiquing the appraisal, and do not intend to proffer a new value, trashing the existing reports errors is a review and consulting. Consult, but make sure you comply with Std 3 as well. IF you come to a new value conclusion, you may be reviewing, consulting, AND must comply with Std 1 and 2 as well.

Listing the inconsistencies of a report does not render a new value, but indicates the value estimated may be unreliable.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Sure glad all of youse have to take a 15 hours USPAP update before you renew your licenses. It ain't consulting!
 

Geoff Hatcher

Junior Member
Joined
Jan 23, 2002
Professional Status
Certified General Appraiser
State
Ohio
Yep, what I thought, anytime you make am opinion on an appraisal, even if no value is given, it is a review.
 

John SRA

Junior Member
Joined
Jan 19, 2002
Geoff,

I suggest that you you quickly read the definition of an appraisal review in USPAP - you will find that a review is an opinion about the quality of another appraiser's work.

In light of this definition, it sure sounds like your assignment is a review.

However, you don;t have to use any of the industry standard review forms. I would do a short narrative that complies with Standard 3. Simple to do. Don forget the signed certification.

Have a good day

JC
 
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