Review scope of work

[Pamela Crowley (Florida)]

How about some discussion about good Review Scope of Work verbiage please.

 

[hastalavista]

How about some discussion about good Review Scope of Work verbiage please.

Pam-

A great topic!! Once I get to the office I will be actively participating!

 

[xm72mhd]

Let us include some geographic competency right aff the bat. #1

 

[CANative]

Ferget it. I can't possibly compete with Denis.

 

[Mike Kennedy]

Draft Review Sow 2007

Draft 01/01/2007 Attachment .......feel Free To .....use It For Target Practice.........________________________________________________________________

APPRAISAL REVIEW ASSIGNMENT

SCOPE OF WORK

In developing this Appraisal Review, pursuant to the Clients’ request, and in accordance with USPAP Ethics and Scope of Work Rules, and Standard Rule 3, the Reviewer:

Identified the Reviewers Client and Intended Users, the Intended Use of the Reviewers’ Opinions and Conclusions, and the Purpose of the Assignment,
the Subject of the Assignment, the effective date of the Review, property and ownership interest appraised (if any) in the work under review, the Date of the work under review, the Effective Date of the opinion or conclusion in the work under review, and Appraiser(s) who completed the work under review, unless the identity was withheld as stated in the Review Report.

The Review Appraiser determined the Scope of Work necessary to produce credible assignment results in accordance with the SCOPE OF WORK RULE; ie

the Reviewer identified any extraordinary assumptions necessary in the assignment which were used because they were required to properly develop credible opinions and conclusions and the Reviewer has stated a reasonable basis for the extraordinary assumption in the Report; in the Reviewers' opinion use of the extraordinary assumption resulted in a credible analysis; and the Reviewer complied with the Disclosure Requirements set forth in USPAP SR 3-2(d) for extraordinary assumptions.

This Appraisal Review was conducted in the context of market conditions as of the Effective Date of the Opinion in the work being reviewed. Information available to the Reviewer that could not have been available to the appraiser as of or subsequent to the date of the work being reviewed was not used by the Review in the development of an opinion as to the quality of the work under review. The Reviewers’ independent Opinion of Value was developed within USPAP Guidelines for Review:

§ The Reviewers Scope of Work in developing his opinion of value was different from that of the work under review (refer to Appraisal Processes stated in the Report).
§ The Effective Date of the Reviewers Opinion of Value is the same Effective Date as the Report under Review.
§ The Reviewer was 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, 3, 4, 6, 7, or 9) can be extended to the reviewers 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, AND WERE, replaced with information or analysis by the Reviewer, developed in conformance with STANDARD 1, 3, 4, 6, 7, or 9, as applicable, to produce a credible value opinion.
§ The Reviewer used additional information available to him or her that was not available to the original Appraiser in the development of his or her value opinion; however, ONLY additional and corrected information that WAS available to the Original Appraiser as of the Effective Date of Appraisal served as the basis for the varying Opinion of Value stated herein. The Review Appraiser was required to, and did,

develop an Opinion as to the completeness of the material under review, given the reviewers scope of work; as to the apparent adequacy and relevance of the data and the propriety of any adjustments to the data, given the reviewers scope of work; as to the appropriateness of the appraisal methods and techniques used, and did develop, and report, the reasons for any disagreement; develop an Opinion as to whether the analyses, opinions, and conclusions were appropriate and reasonable, and did develop, and report, the reasons for any disagreement.

REVIEW APPRAISERS' CERTIFICATION

(copy paste USPAP Recommended Certification here)

Analyses, opinions, and conclusions herein were developed and this Review report was prepared in conformity with the Uniform Standards of Professional Appraisal Practice AND any Supplemental Client Requirments stated herein.

MR/MS.
State Certified/Licensed Residential RE Appraiser, Review Appraiser
CERT/LIC #
DATE SIGNED: EFFECTIVE DATE:

"Exclusively serving .................County(ies) in ..... State since 19 __"

 

[hastalavista]

My Entire SOW doesn't fit! Below are the significant parts.
My lender clients wan't me to tell them two things:

• Is the report’s value credible for us to use in making a lending decision now?
• Is there anything you discover in your research that you think is significant to our lending decision and that is:
  • Omitted in the original report,
  • Occurred after the effective date of the original report,
  • Inconsistent or contrary with your verification sources,
  • Is not addressed sufficiently in the report, or
  • Is not consistent with general appraisal practices?

The question, “Is this report’s value opinion reliable today” is significantly different from what is stated on the Fannie Review form. I do not use the Fannie Form. Given the client’s intended use, I include this statement:

This review appraisal is communicated in a summary format: Its use is restricted to my client only, CLIENT NAMED HERE and is only intended for use by my client. The purpose is to provide a quality rating of the report under review and the intended use is to assist my clients in their mortgage lending decision process for the subject property of my review. This report is not intended for any other use and cannot be used by any other party.[/qoute]

What my clients really don’t care about, but what USPAP requires me to do is form an opinion of the “quality” of the report. I have this statement in the report regarding the quality review and independent review valuation:

My review assignment includes an opinion of the quality of the original report under review and, if possible and warranted, my independent review valuation of the subject.

If necessary and if possible, my engagement agreement with my client requires me to conclude an opinion of value as of the review date (current) and not necessarily as of the effective date of the original report. My quality rating of the original report’s work is as of its effective date. My independent review value may differ from the original report and may use information not available to the original report in concluding my valuation. My quality rating is based only on my review of the market data that was available to the original report in the course of normal business operations. This process is consistent with Standard Rule 3 in the Uniform Standards of Professional Appraisal Practice (USPAP).

Most of the hate-rebuttals I get back are complaints that it is unfair for the review to conclude a value using information after the effective date of the original report.
When I conclude a different value as of a different date, I add this statement into my comments:

Note: The review SOW requires a value as of the effective date of the review. This is consistent with my review SOW and client engagement, and is in full compliance with USPAP (Please refer to SR-3 (USPAP) and Advisory Opinion 20 (AO-20) if there are any questions).

I don’t like the “accuracy” statement in the Fannie review form. Here’s a comment regarding “accuracy” and “credibility:

An appraisal concludes with an opinion of value. Two appraisers may appraise the same property, conclude two different opinions, and both opinions may be equally reasonable and credible. In most cases, when providing an "opinion", precision is best measured as a "reasonable range" vs. a point valuation. However, for mortgage finance appraising, point valuations are required. Therefore, my clients have instructed me to do the following:

• If I conclude the original report's value is within a reasonable range, I am to describe my findings and indicate the original report is acceptable
• If my difference is significant, then I am to provide sufficient data and analysis to support that position consistent with the intended use of this report. A comparable sale grid reflecting the analysis may or may not be necessary in order to clearly communicate the analysis.

I’ve been accused of not providing a summary report because there is no “grid”. A grid is not always necessary to communicate the findings. A good example is when the original report has three good comps, but because the market has changed, market time adjustments are now warranted. Does the review need to re-grid the original comps just to apply a market time adjustment? I think not, and I don’t. In fact, I think this shows that the original quality of the report is “good”; I’m agreeing these are the best comps; I’m just bringing them “current” for my own independent valuation.

For one client, I can interact with the original appraiser if I think such interaction helps the review process. Also, I can make recommendations to the client that go beyond just forming an opinion of quality and providing an independent valuation. Steven Santora pointed out to me that this probably blends SR-3 (Review) with SR-4 (Consulting). Consequently, I have this statement in my certification:

Consistent with my engagement agreement with the my client, I have the ability to:

• Contact the original appraiser for points of clarification if I believe such contact can address a specific or general area.
• Make recommendations to my client regarding such actions as (but not necessarily limited to):

a. Accepting or rejecting the original report.
b. Obtaining a new report to be completed by a source independent of the original appraisal’s source.
c. Obtain additional information, clarification or definitive statements from the original appraisal to address an issue found in the review.
d. Further review action, if deemed necessary and/or appropriate.

Recommendations outside of the review valuation can be interpreted as Appraisal Consulting, and I interpret it as such. Therefore, in compliance with SR-4 & SR-5, I add the following statement to my Certification:

“The reported analysis, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analysis, opinions, conclusions and recommendations”.

The word “in bold” constitutes the difference between a certification for appraising and a certification for appraisal consulting. This addendum is part of a signed certification of my report, and I make this statement herein.

My SOW to complete the above is relatively simple:

Scope of Work Statement:

• I have received this review assignment from my clients. I have reviewed the original report and market data (current and contemporaneous with the original report).
• This is a “desk review”. No site visit of the subject and comps was completed.
• I have reviewed some or all of the following data sources: Public Records, Multiple Listing Services, NDC (National Data Collective), FARES (First American Real Estate Solutions), Assessor’s Tax Data Base (web-based). Also, if needed and possible, I have also reviewed the subject’s zoning map and site satellite photo (via Earth Google professional version and/or city/county GIS websites), and AVM (Automated Value Model) resources at my disposal.
• I then reviewed the data in the original report, checked it for accuracy, reviewed the analysis contained within the original report, and formed an opinion of the original report’s quality, and formed an opinion of the original report’s value credibility.
• If I conclude that the original report’s value is not credible, or, if I conclude that it no longer reflects the current market environment, then I will, if possible, conclude my own independent review valuation employing the Extraordinary Assumptions listed in this report.
• If the original report under review is for a purchase, and if the purchase contract is provided in my review package, I will review it. If it is not provided in the review package, I will request it. If not provided for review, I will disclose this in the review report.
• If the original report’s credibility is significantly poor, and I conclude that I do not have enough data to conclude a credible review valuation, I will indicate the original report’s quality is “poor-“, that the report is significantly deficient, and no credible review valuation can be concluded at this time.
• In completing my review valuation, I will rely primarily on the Sales Comparison Approach to valuation. If necessary and meaningful for my review analysis, I will complete the Cost Approach and/or Income Approach. My client does not require these approaches per se, and only requires their completion if it is necessary to provide credible results.
• Upon completion of my analysis and the writing of my report, I will transmit my findings to my client.
• I will be available for follow-up with my clients to review my findings. I will also consider any additional information provided to me by my client or its agents that may have an impact on my review findings; if warranted, I will reconsider my review findings based on the presented data.
• Unless new data is provided for reconsideration, transmission/delivery of my review report to my clients constitutes the completion of the assignment, and all work is complete.

 

[hastalavista]

Let us include some geographic competency right aff the bat. #1

Edd-

What level of geographic competency do you think is necessary, say, for this given scenario:

Large Bank in New York. Regional Appraisal offices, each covering six different sections of the country.

The Desk Review's SOW is the following:
1. Verify reports data; subject and comps. Verification source is, at a minimum, Public Records services.
2. Ability to verify Zoning.
3. Satellite Overhead using GIS mapping system.
4. Some limited MLS for the larger areas.
5. An AVM product (more likely, a "cascading" AVM product of several different purveyors; the one selected is the one that has the best track record in that particular area/type of property).
6. Oh, yeah; the reviewer is a licensed appraiser, 5+ years experience field experience, competent in appraisal practice and analysis. Someone who, if they had an office next to you and came to know their work, you would consider to be overall "competent".

Intended Use: Quality rating and value verification.
Review Policy: All reports must pass some level of quality control- Minimal is technical review, next level is desk review, then field, then new/independent appraisal. Submitting loan agent or broker has the right to challenge the review (via the original appraiser) or request the next level of review be taken.

The Desk Reviewer has four different options she can use:
1. Agree with the report and find its value acceptable.
2. Question the report and require clarification.
3. Depending on the level of her data and in her confidence about her ability to use the data to conclude a credible value, she can:
A. Conclude a different value and provide her reasons for doing so.
B. Decide the report doesn't support the valuation as it is presented, but also concludes that she is not able to conclude a credible value either, so she recommends a field review.

If she chooses to conclude her own value, she knows that the process automatically sends her review and valuation back to the originator to rebut/address (or, quite possibly, to agree with).

What level of geographical competence does the desk reviewer need to exercise option 3A?

(it is a "given" that necessary geographical competence for the purpose/intended use of the review assignment cannot be "scoped" away)

 

[xm72mhd]

Let me think. I'm tired.

 

[Ms. Janet]

Most of the hate-rebuttals I get back are complaints that it is unfair for the review to conclude a value using information after the effective date of the original report.
When I conclude a different value as of a different date, I add this statement into my comments:

I'm so sorry, but, we're probably gonna get divorced over this, Denis

I agree with your victims ; it is unfair. I don't care how carefully you craft your SOW to cover your own butt...IMO, the truth is the lender is only going to see that new value you provide. Why should an appraiser be required to provide a rebuttal to a value opined by a reviewer who hasn't inspected the property and has used data occuring after the efffective date?

That's not right. If they want a value using data after the effective date, they should order a new appraisal report.

 

[Tina]

If they want a value using data after the effective date, they should order a new appraisal report.

Indeed....we can't see into the future.....:glare:

TB