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"retro field review"

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Linda Klug

Thread Starter
Freshman Member
Joined
Nov 1, 2005
Professional Status
Certified Residential Appraiser
State
Florida
Have a field review for an appraisal performed a couple of years back,when market appreciating at rapid rate. Appraiser used 3 closed sales in $165,000 to $175,000 range, 2 actives, $230,000 to $245,000 range. Gave the active most weight and came in at a value that exceeded all of the closed sales comps. I have a feeling I could end up in the "witness chair"on this one..so I want to have specific reference to the appraisal/ USPAP guidelines that reference the use of active/pendings as comparables. It is my first inclination to say that the appraiser was appraising for future value, based on extroidinary assumption..since we cannot verify what the market will be like tomorrow..we saw that recently when we had a sudden decline in values in the same market area. Need any help I can get on this one.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Have a field review for an appraisal performed a couple of years back,when market appreciating at rapid rate. Appraiser used 3 closed sales in $165,000 to $175,000 range, 2 actives, $230,000 to $245,000 range. Gave the active most weight and came in at a value that exceeded all of the closed sales comps. I have a feeling I could end up in the "witness chair"on this one..so I want to have specific reference to the appraisal/ USPAP guidelines that reference the use of active/pendings as comparables. It is my first inclination to say that the appraiser was appraising for future value, based on extroidinary assumption..since we cannot verify what the market will be like tomorrow..we saw that recently when we had a sudden decline in values in the same market area. Need any help I can get on this one.


Linda,

I did one very similar. It was about 2 years old when I did the retro review. The appraiser ignored a prior sale in the past year, included items that were not in the house such as a fireplace and central air. Put a great deal of weight on what a rehaber said he had done, with no documented evidence that he had done anything except slap some paint on the interior and exterior, and used sales not really comparable to the subject. I worked with an attorney. I did the review for the attorney, charged a full fee plus about 25% more than if I had done a new appraisal, and my opinion was over $20,000 lower than the original appraisers opinion on a $200,000 sale. I was also going to be compensated for court testimony. The appraiser had already been sanctioned by the state. The day before I was to go to court, the attorney for the appraiser notified us that the appraiser agreed to settle out of court.

Good luck. Remember, your role is to review the work of another appraiser, not the appraiser. You cannot be an advocate for anyone, but you can advocate for your own opinion. Also, USPAP compliance for you is the date of the actual review, not the retro date.

There is nothing in USPAP about how many comps to use, pending sales, or the like. Those are supplemental standard issues. And, BTW, the supplemental standards rule will not be in the new 2008-2009 USPAP. It is being eleiminated. Everything in the future will be based on scope of work.
 

bfriendly

Junior Member
Joined
Oct 14, 2007
Professional Status
Certified Residential Appraiser
State
Georgia
Wow Linda,

I would add to make sure that you dont use any data that was only available after the effective date of the appraisal under review or maybe better said that you use no data that was unavailable at the time of the appraisal under review-but I guess that is reviewing 101. Wish I was more help, sorry.

I will give you my opinion even though it may be wrong-I for one do not agree that giving MOST weight to a listing is appropriate. If values are going up, then that would give me reason to use the highest end of my value range. If they(listings) are going down, then I would expect someone to give weight to the lower end of the value range.

Regardless, I would be within my value range established from my sales.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
What was the intended use and who was the intended user? Look hard at the reconciliation section. Sounds like, from the information you posted, the appraiser probably failed to follow supplemental standards.
 

Linda Klug

Thread Starter
Freshman Member
Joined
Nov 1, 2005
Professional Status
Certified Residential Appraiser
State
Florida
I am glad you agree with me on the weight of comparables...I think to give weight to the actives and pendings would require use of a "crystal ball'. I also agree that the trend toward higher prices would validate the use of the sales from the higher end of the closed sales.
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
Linda,

You have the benefit of hindsight. You can construct a time series of sales that are similar to the subject 12 months before the appraisal date and each month leading up to the appraiser date. You have the two listing used in the appraisal and you should know what they sold for, if they did sell.

You can graph price per square foot over time using your similar sales and extrapolate that to the listings used along with the time it took for the listings to actually close. You can do this analysis based upon the escrow date. Does that analysis support what the appraiser did?
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
Linda,

Good luck. Remember, your role is to review the work of another appraiser, not the appraiser. You cannot be an advocate for anyone, but you can advocate for your own opinion. Also, USPAP compliance for you is the date of the actual review, not the retro date.

Don........I'm not disagreeing with you but if one is reviewing the work of another appraiser, it would appear that the review should be as of the date the original appraisal was performed. If you compare the subject with CURRENT sales rather than sales for that time period, it would not seem fair.

What am I not understanding?
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
What we have here is a failure to communicate. The effective date is the effective date of the original appraisal, the date of the review is the current date. An appraiser can cite sales data that occurred after the effective date but cannot use that data to dis-credit the original appraisal. I fully expect to see much more of this type of review as lenders, GSE, and government agencies go after bad appraisals and bad appraisers. Be sure to do your work carefully because if it goes to court they will most likely look to dis-credit the review.
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
Mr. Garrett,

I agree. This forum has one reoccurring theme all the time. It is one of responders responding without finding out what the original posters actual SOW really is. But then original posters, who are licensed appraisers, should stop assuming we all somehow know by osmosis what their SOW is regarding what they are posting about and tell us what it is. So I point out that "I have a field review" is NOT much detail about a SOW nor is it enough to help anyone with anything, if they are an appraiser, without having to make a bunch of guesses in order to do so. Somedays on the forum I really wonder. If O.P., that are appraisers, can't understand providing more SOW information on the forum in order to get questions answered, how in the world are they complying with Standard Two in detailing SOW in their reports?

Webbed.

P.S. Also for reviews, one would think providing a wittle bit about the SOW of what is under review might matter too! But nah.... It's better to spoon feed this stuff out very slowly. That way the first twenty or so responders will all have to take back some things they said in their first few posts after they finally understand they guessed about all sorts of things incorrectly in the first place. Sure makes for some nice long threads too! ;)
 
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Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
Linda,

You have the benefit of hindsight. You can construct a time series of sales that are similar to the subject 12 months before the appraisal date and each month leading up to the appraiser date. You have the two listing used in the appraisal and you should know what they sold for, if they did sell.

You can graph price per square foot over time using your similar sales and extrapolate that to the listings used along with the time it took for the listings to actually close. You can do this analysis based upon the escrow date. Does that analysis support what the appraiser did?

:clapping:
 
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