Review Appraisals Fannie Mae 2000

[CoCat]

Good afternoon fellow appraisers. I am writing for some clarification on Review Appraisals. I find the information hard to come by with most trying to avoid review work.

I have spent a lot of time chewing on the nuances of the language, the client's typical expectations, and the process of other appraisal professionals.

In USPAP, “appraisal review” is defined as “the act or process of developing and communicating an opinion about the quality of another appraiser’s work that was performed as part of an appraisal or appraisal review assignment.”

My understanding is that a review can be provided with or without an opinion of value.

Is the Fannie Mae 2000 - Field Review - generally accepted to be a form where the reviewer's opinion of value is expected from the client?

The Fannie Mae 2000 Field Review language states "Is the opinion of market value in the appraisal report under review accurate as of the effective date of the appraisal report?"

What does "accurate" mean here?

Does it mean "I agree" (therefore reviewers opinion of value is given)
or does it mean "the quality of work is sufficient" (therefore reviewer's opinion of value is not given)?

Per USPAP AO 20 Clarification on language with and without reviewers opinion of value is as follows:

WITHOUT an opinion of value
"The Value Opinion stated in the appraisal report is (or is not) adequately supported"
The Value conclusion is (or is not) appropriate and reasonable given the data and analyses presented"

WITH an opinion of value
"I concur (or do not concur) with the value"
"I agree (or disagree) with the value"
"In my opinion, the value is (the same, too high, too low)"

It seems to me that the language on the field review "Is the opinion of market value in the appraisal report under review accurate" does not necessarily agree or disagree with the value, but instead looks at the quality, "was the quality of work credible" - therefore leading to "accurate results".

Let's say my appraiser friend is doing a field review, found a few errors, but nothing substantial that would call into question the credibility of the report.
Per the scope of work in the field review,
1) We are to determine "the accuracy of the opinion of value".
2) If that is found to be insufficient we are to then provide our own opinion of value using our own process.

However, Wouldn't factually correct data, standard methods for the market area, and reasonable comp selection almost always provide "accurate" value?

And how does this take into consideration the fact we may have DIFFERENT values, but that doesn't mean yours or mine is wrong. It just means qw are two different appraisers, doing things a little different (while still within the reasonability of typical process) and we have two different opinions. In other words - Hey this person did good work. Would I have come up with a different value? Yes maybe if I had started from scratch I would have done things a little different. But what this person did is completely acceptable also. So how can you say their opinion is "Not accurate" just because it is different than your own?


Thanks all!

 

[J Grant]

Good points ! The answer are within the 2000 field review form itself.
First the form asks a series of questions regarding the quality of the appraisal . ( Q 1-9, about comp choices, adjustments, support, neighborhood, data etc ) That leads to Q 10 below from the form

10. Is the opinion of market value in the appraisal report under review accurate as of the effective date of the appraisal report? Yes No

If No, complete Section II. One-Unit Residential Appraisal Field Review Report File # Freddie Mac Form 1032 March 2005 Page 2 of 4 Fannie Mae Form 2000 March 2005 SECTION II — COMPLETE ONLY IF REVIEW APPRAISER ANSWERS “NO” TO QUESTION 10 IN SECTION I. 1. Provide detailed reasoning for disagreement with the opinion of value in the appraisal report under review.

Above question 10 is a contingent question, if the reviewer feels the opinion of market value is not accurate ( NO) then the reviewer goes on to section II, where reviewer provides detail reasoning for the disagreement ( and is asked for a new value ). Thus, if appraiser said no to accuracy of the opinion of market value, they disagreed with it.

The MV opinion is a numerical $ amount and the support for that amount. Most times if the reviewer disagrees with the OMV, they are disagreeing with both.

 

[J Grant]

However, Wouldn't factually correct data, standard methods for the market area, and reasonable comp selection almost always provide "accurate" value?

And how does this take into consideration the fact we may have DIFFERENT values, but that doesn't mean yours or mine is wrong. It just means qw are two different appraisers, doing things a little different (while still within the reasonability of typical process) and we have two different opinions. In other words - Hey this person did good work. Would I have come up with a different value? Yes maybe if I had started from scratch I would have done things a little different. But what this person did is completely acceptable also. So how can you say their opinion is "Not accurate" just because it is different than your own?

A) Because an appraisal is an opinion and not mere collecting of data and there is no standard comp selection, each value can differ but each must be credibly supported. One would expect competent appraisers to arrive at a similar opinion of market value-

B) In a review, you are hired to review what the OA ( original appraiser) did, not what you would have done. To clarify, you are not actually reviewing the original appraiser, you are reviewing their appraisal. That said, as you move methodically through questions one through 9 on the 2000 form, to perform due diligence you would often end up extending research into what you would so - such as if the comps you select are different than what the OA selected. ( and then you have to explain why)

Regarding minor errors, if they do not materially affect value. I note the error and state that. Such as " Comp 1 closed date recorded incorrectly, however this does not materially affect the opinion of market value . " A review should not be a witch hunt to find a minor error, but we are obligated to note an error if we find it

 

[Tom D]

long ago when i did reviews for a subprime lender i got plenty of them that even an underwriter could see wasn't kosher. it was normally easy to find what was being done and then to explain it and why the value was off. that is a lot of work cause if i was right i really wanted to prove i was right. however, sometimes it's just an odd property or not an easy appraisal. i look for mistakes, the more i find the more something is wrong usually. if there are no bad things, then if the value looks reasonable i'm a go with it.
be careful that you think your value is better, i always thought that if 2 appraisers were within 10% of each other then either value was fine. sometimes i would add comps just to support that appraised value. some appraisers for lack of caring can write confusing reports, but have stepped into the right value. i do not like doing reviews anymore, if they are wrong i lose on the time spent fixing it.

 

[J Grant]

Doing reviews can make one a better appraiser but no question they are draining. At one time I did a lot of them, now only a few a year

You guys are going to laugh but this really happened - only time - (field review of an OA) - I agreed with the $ value amount as a numerical amount but it was so horribly developed via terrible c comp choices and poorly supported adjustments ( terrible comp choices because they did not use the most similar/ nearby/ recent comps why idk ...)...my value ended up the same but I marked " did not agree" as accurate because of the way it was developed... - accurate is a weird word but accurate also means truthful and done with care . A value is not just the number, never forget that.

Therefore, if I agree with their development,, even if find a few minor errors, if the answer is yes to the important 1-9 questions, the OA used good comps, adjustments were supported etc, I will mark "do agree" with their MVO,- even if my own might have been a bit different. However if I mark no to their comp choices/adjustments or find a major error or misleading info, it follows will probably end up not agreeing with the OMV.

I do not have an official benchmark - 5 or 10% or whatever - I work through the questions one by one on the review form and let the data speak . Follow where the results lead, rather than having the results follow a formula or expectation.

 

[Restrain]

Ok, having worked at Fannie’s NUC, ordered these, and done them as a fee appraiser, here is my point of view. First, it depends on the SOW provided by the client. You can have a ‘OMG What was he smoking’ Appraisal but the client may only want Part 1 completed. You may disagree with the value, but all the client wants to know is how bad was the report.
If the SOW wants a full Standard 3 and an alternative estimate of value if you disagree, then it comes down to whether the value is supportable from the market or not. You can have an appraisal where the appraiser really screwed up by the numbers, but when you get down to it, the sales data actually supports the final estimate of value. So, in this case, you would set forth all your findings but say that the value is supportable from the market and not complete Part 2. Alternatively you might find that the home had minor issues as to subject, etc, but really blow the comps, make adjustments the wrong direction, etc, so you would disagree and complete Part 2.
As to minor issues, if they don’t significantly affect value, Part 1 only, and agree to the value.

Key is the supporting addendum that you provide. Tell them what the appraisal says, document what is right or wrong, support your conclusions.

 

[CoCat]

Thank you everyone for the great feedback! I really appreciate being able to connect with other appraisers and hear different points of view. I believe my understanding of this is pretty solid now, and that scope of work is very important (as is the case with all the work we do!)

I do believe doing reviews (or anything that isn't the majority of our work) makes us better appraisers. It has made me look into things I traditionally wouldn't have stopped to really deeply consider. Thanks again, everyone!