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Rebuttal Letter

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wyecoyote

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Washington
Yesterday I received a Desk Review provided by the client the review appraiser increased an adjustment to $10K based upon uncertanty of repairs. I am simply asking am I to harsh on the review appraiser? Is there anything that I am missing or should reword before I send this off. This is the first bad review in probably 3 years. The largest problem that I had was that the review appraiser did not support his adjustment with market data. He also did not read the report. Here is the letter any and all comments (negative or positive) prior sending this out are welcome.

This is a Rebuttal Letter for the Desk Review completed on 08/02/02 review appraiser is unknown.

Item 9: Functional Depreciation checked unacceptable for the cost approach. The review appraiser states the report does not recognize functional depreciation due to current condition. However, as stated in the improvement comments paragraph five, “The estimated cost to cure will be reflected in the cost approach is included in the physical depreciation and in the sales comparison market grid under condition of improvements.” This was included in the physical deprecation section of the cost approach, because, these items reflect the physical depreciation of the subject’s overall condition. The original adjustment for physical deprecation was made at $35,438 and an additional physical depreciation of $2,000 was made for the Recreation Room. This is not a functional depreciation but physical depreciations included as such in the cost approach.

Item 8: Condition Adjustments checked unacceptable for the sale comparison grid. The review appraiser states, “Report adjusts -$2,000 for subject condition, Appraiser is increasing this adjustment to -$10,000 due to anticipated market reaction regarding subject needed repairs and the uncertainty of undiscovered repairs. The -$2,000 will be recognized as what the appraiser has estimated the cost of repairs. Reviewer recalculates value range to be $168,500 to $169,000 and subject value being lowered to $169,000.”

All repairs were estimated based upon Marshall and Swift Home Repair and Remodel Cost Guide and local contractors’ estimates. The cost of the dry rot damage to the eves is based upon an approximately 2 ½ foot width by 6 foot length soffit (eve) 15 feet linear. Marshall and Swift estimates are $5.00 per linear foot times a local multiplier for Roofing 1.09 equals $5.45. Therefore, costs estimate of 15 feet linear times $5.45 equals $81.75 total cost to repair as estimated by Marshall and Swift. Based upon Marshall and Swift Home Repair and Remodel Cost Guide the estimated cost of repair is $81.75

The Recreation room is 24 feet by 18 feet which, equals 432 square feet or 48 yards. There are approximately four holes total varying from less than 6 inches diameter to approximately 2 feet by 3 feet or 6 square feet. The estimated cost to cure as provided by Marshall and Swift is Repair of existing gypsum extra large room for (ceiling) $215 with a local multiplier for (ceilings) 1.12 equals $236.50. The estimate as provided by Marshall and Swift for repainting extra large room (ceiling) $180 with a local multiplier for (ceilings) 1.12 equals $201.60. The estimated cost to cure as provided by Marshall and Swift is Repair of existing gypsum and wainscoting extra large room (walls) $295 with a local multiplier for (walls) 1.12 equals $330.40. The estimated cost to cure as provided by Marshall and Swift is repainting extra large room (walls) $350 with a local multiplier of (walls) 1.12 equals $392.00. The cost to install average quality carpet and pad based upon Marshall and Swift is price per yard is $18.85 the room yardage is 48 yards $904.80 with a local multiplier of 1.05 equals $950.04. Based upon Marshall and Swift Home Repair and Remodel Cost Guide the total is $2,192.29

Local contractors were consulted for costs estimates based upon the size of the Recreation Room and dry rot damage. The cost estimates for the dry rot damage and drywall damage as provided by “Mr. Handyman” Contractor #ALLPRBM997KC at 866-533-1028 the estimated cost to repair said dry rot damage was $100-$200 dollars. The estimated cost to repair and retexture the drywall/wainscoting was $50-$200 dollars. The cost to install new carpet and pad as estimated for a 48 yard room provided by “Carpet Liquidators” for average quality carpet and pad was between $12-$15 dollars per yard or $576 to $720. The cost to repaint a 24 linear foot by 18 linear feet with approximately 8 foot high ceiling for a total of 1,104 square feet as provided by “Superior Restoration and Services” License #SUPERRO33MA at 253-472-0795 was $200-$300. These total cost estimates as provided by licensed and bonded companies in the subject’s market area ranged from $926 to $1,420.

This provided an estimated repair range per local contractors and Marshall and Swift Home Repair and Remodel Cost Guide is $926 to $2,192.29. The local contractors’ estimates were given most weight and estimated high and rounded to the nearest $500, in the appraisers final opinion of the estimates with an overall estimation rounded to $1,500.

The appraiser took into consideration that there could be a market reaction to the repairs necessary for finishing said items. Therefore, a search of the market was made for the subject’s area of houses that had sold in the past twelve months that required repairs. The indications were that the incentive of sale would be from 10% to 30% for a marketing incentive, thus creating a further adjustment required from $150-$450.

The overall adjustment for the condition ranged from $1,650 to $1,950. This adjustment was then analyzed and reconciled at $2,000 (or to the nearest $500). The appraiser did include a market opinion based upon the reaction of the market area to repairs required, analyzed and summarized in the original appraisal report. Per, USPAP Standards Rule 1-4 (a) and summarized based upon USPAP Standards Rule 2-2 (b) (ix).

Discrepancies in the desk review report completed by the review appraiser are summarized below.

The “review appraiser ”:

CERTIFICATION AND STATEMENT OF LIMITING CONDITIONS
• CONTINGENT AND LIMITING CONDITOINS: 5. Disclosure of the contents of the report is governed by the Uniform Standards of Professional Appraisal Practice and the bylaws and Regulations of the professional appraisal organizations with which the appraiser is affiliated.
According form utilized by the review appraiser, the certifications and limiting conditions number 5 states that the review appraiser has followed USPAP Standards Rule 3 in completing this review report. However, the review appraiser appears to have violated USPAP Standards Rule 3-1 (This Standards Rule contains binding requirements from which departure is not permitted.) This is based upon the following analysis of USPAP Standards Rule 1, 2 and 3.
© identify the scope of work to be performed;
• 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—locally, regionally, or nationally—that was not available to the original appraiser in the development of his or her value opinion
A summary of this is that if the review appraiser’s opinion differs from that of the appraiser the review appraiser must complete standards rule as applicable to arrive at a credible adjustment. “Appraiser is increasing this adjustment to -$10,000 due to anticipated market reaction regarding subject needed repairs and the uncertainty of undiscovered repairs.” In making this adjustment the appraiser, per USPAP Standards Rule 3-1 © must follow USPAP Standards Rule 1-4 (a) When a sales comparison approach is applicable, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion. And Standards Rule 2-2 (b) (ix) summarize the information analyzed, the appraisal procedures followed, and the reasoning that supports the analyses, opinions, and conclusions;
Comment: The appraiser must be certain that the information provided is sufficient for the client and intended users to adequately understand the rationale for the opinion and conclusions.
When the purpose of an assignment is to develop an opinion of market value, a summary of the results of analyzing the information required in Standards Rule 1-5 is required. If such information was unobtainable, a statement on the efforts undertaken by the appraiser to obtain the information is required. If such information is irrelevant, a statement acknowledging the existence of the information and citing its lack of relevance is required.
The review appraiser has provided an opinion of market value for the subject at $169,000 with no summary of the analysis of the market reaction for said adjustment. This may be a violation of USPAP Standards Rule 1, 2 and 3.
Item 20: Amenities Adjustments checked Unacceptable. The review appraiser makes no mention of how the Amenities Adjustments are Unacceptable. Review Appraiser should disclose how said adjustments are unacceptable and provide the summary of the analysis of the comparable sales and market data as provided by USPAP Standards Rule 1-4 (a) and Standards Rule 2-2 (b) (ix). The appraiser can not refute or agree with the Review Appraiser’s analysis and summary for said Amenities Adjustments. Or the appraiser should amend the review appraisal to 20: Amenities Adjustments checked Acceptable.
Comments by the Review Appraiser the Review Appraiser states that the opinion of market value is $169,000 which falls within the 5% variance for opinion of market value provided by the appraisal report of $179,000. However, based upon the analysis of the further supporting data, the original opinion of market value of $179,000 is supported.

Thanks in advance,

Ryan.

Just for others information I do several field reviews lately been averaging 4-6 a week. Personally I stay away from making subjective adjustments without supporting data and include my comments to facts based in USPAP. When my opinion differs or agrees with the original appraiser I include comparable sales and market grid to justify my comments based upon Standards Rule 1, 2 and 3.
 

Randy Beigh

Senior Member
Joined
Jan 16, 2002
Ryan

This is why some people should not do reviews as they find it hard to seprate themselves out. Seems the reviewer is just a bit to nitpicky.

I think your rebuttal should be the same as the review should have been. That is you need to remain objective. I would remove all references to the review appraiser not following USPAP as that could easily lead you and him into a non-stop rebuttal thing and you don't want to go there.

The stuff about the size of a room should be removed, also. In other words, don't attempt to go on the offense or make the reviewer look like an idiot, even if he is. Any attempt to do so will only make you look bad.

Just try to respond to the reviewers concerns and stay away from any attacks on his credibility. I don't think it is your own best interest to accuse the reviewer of not following USPAP.

I have no trouble with you sticking to your value, if that is where you think it should be, however, no appraisal is perfect. Acknowledge the mistakes that were caught by the reviewer and move on. Further, it sounds like you are taking this as personal affront on you and I would urge you to look upon the reviewing process as a learning experience rather than an attempt to damage your feelings or reputation.

Same is true in reverse. Since you are doing reviews, learn from this experience and it will make you a better reviewer.

Hope this helps
 

George W Dodd

Senior Member
Joined
Jul 9, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Ryan,

I agree with Randy, don't let it become personal. Go back over the areas of concern and address them in an appropriate way. If you have written estimates include them in your response. Also, a few pictures of the damage can be worth a thousand words.

Good luck.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
I am in full agreement with Randy & George. When we personalize either an appraisal report or a review we become less objective.

However, the one area in USPAP that allows an appraiser to be an advocate is in relation to their appraisal and appraisal report. Just take out the personal referrences and you have a good, professional rebutal.

Don Clark, IFA
 

David S. Roberson

Senior Member
Gold Supporting Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
Ryan,

Let it go, man. Do the next appraisal on your desk & forget about it.
 

Larry Lyke

Senior Member
Joined
Feb 2, 2002
Dear Ryan:

You drop that bag of garbage on your client's desk and they'll get rid of you just to relieve themselves of the burden of dealing with your attitude.

Do what the gentlemen have recommended.

Be terse and politely to the point and to a fault: Nothing more, nothing less.

Whatever the real problem is, deal with it qucikly and go on to to something more bank fulfilling!

'We love you, but we want to hug you, not mug you!'
 

wyecoyote

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Washington
All,

Thanks for the replies I received the fax last night and was having a real bad hair day at the time. Waking up this morning was not much better and the first thing I looked at on my desk was this desk review. Like I said this is the first bad review in probably 3 years (knock on wood). For the recored I do understand that no appraisal is absoultly perfect and I have agreed with reviews prior when I missed an adjustment or forgot a comment.

So yes after posting here this morning I decided to take possibly a long over due day off. I played with the dog, painted and mowed the yard. Coming back here tonight fully relaxed and a couple beers later I'm working on cleaning up the rebutal letter as all suggest and I agree I'm not trying to get in a pi**** match with anyone. Though I gotta say it did feel good to vent a little. And this was a long overdue day off from the stress. Boy I need a vacation.

Thanks for the comments.

Ryan
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
the reviewer is entitled to his/her opinion.....don't worry about it.
 

Pat Butler

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
I read your post rather briefly but think I caught the main content. Based on that, how can the reviewer argue over your condition adjustments if he/she didn't also inspect the subject property?

The reviewer would have to have some pretty detailed photos and specs in order to argue that his numbers are more accurate than yours. His comments seem extremely specific which would make it much easier to dispute his numbers considering that he is placing all of his reliance upon cost guides and contractor's estimates at the great expense of quite possibly not having the interior facts right to begin with....
 
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