Reviewing a Poor Appraisal

[Joker]

I would like to get some other appraisers' opinions on this.
:arrow:
If an appraisal report has several errors of ommission and commission that produce misleading results, should the offender be reported to the state regulatory board? I do not want to file a formal complaint, but people like this give our profession a bad name. I just want to generate some discussion.

For example: I recently reviewed an appraisal of commercial property and to begin with, the appraiser stated the present owner wrong. There had been 2 transfers in the past three years that were not addressed. The entity stated as present owner in the report had not owned the property for 3 years. The Sales Comparison Approach was not done, stating that there were no sales but there were 2 in 10 miles in the last year. The Income Capitalization Approach was the only approach relied on and was not supported by market data. Additionally, this approach had an error that inflated the value by 20%. The property has been vacant and for sale for almost a year. The value indicated was "as-is" but was 65% higher than the asking price, with no explantion why. The report was labeled "full commercial narrative report", not complete apppraisal summary report or something similar.

 

[Pamela Crowley (Florida)]

If you were not an appraiser and were relying on this report.... how would you feel after reading your review?

Should this person continue to appraise? NO

Just who else is going to do something about it? How many others will be harmed before someone does finally file a complaint?

Just do it. I know it's hard but do what is right.

 

[Dave Doering]

I am not sure what your reservations are with respect to filing a complaint with your state regulatory board. Inaccurate, sloppy or purposely misleading work puts a black mark on our entire profession. Granted we are all human and from time to time make mistakes or errors in our appraisals, USPAP is fairly forgiving in this respect in allowing for an this reality. However, it is less forgiving with respect to a series of errors or mistakes that in an by themselves would not be considered to be serious, but in aggregrate result in a less than reliable or credible work product. Further, your post addresses specific ommisions of relevant approaches that on the basis of your statements go well beyond that.

In my opinion, you should refer this appraisal to your state regulatory board for review without any regret. As professionals, I believe it is our duty to police ourselves for the good and integrity of our profession.

 

[Farm Gal]

As professionals, I believe it is our duty to police ourselves for the good and integrity of our profession.

DITTO!
If not you then who? If not now then when?

I always re-read the line in USPAP about "knowingly permit another appraiser" if I am looking for such a decision... Does permitting the perpetrator of that report to continue his acts of ommission and/or commission result in a USPAP violation if I knwoingly let him/her carry on? ((OK Folks don't beat me up on USPAP interpretation: I am voicing MY opinionand though process here))

Quick scan of your comments leans me toward an affirmative: I would most likely turn it in for judment by the board.

 

[Tim Hicks (Texas)]

I always learn something when I do a review. Most of the time I learn things I wish more people would notice. I realize there are good appraisers out there who have been burned in a review (I have), but those few instances are greatly ouweighed by the fraudulent and misleading reports that are slipping under the radar. A good appraiser can always defend and support their value. A bad appraiser has no defense for poor appraisal practice. Send the report in with full (USPAP compliant) review, save the state some work and do them a favor. I offered to do "free" field reviews in my area for my state board, but they declined. Their loss.


P.S. I mentioned USPAP compliant field review, because the first line of defense would not be their report, it would be to discredit your report.

 

[Ross (CO)]

Doug, I do not have commercial appraising experience but would certainly like to participate in such to become more diversified. My review work is not regular and can be counted on fingers-only. The very reason a client approaches one of us to do a review is more likely to be because of glaring inadequacies and weaknesses in the original appraisal report. The client sees them too, and hence, the review is requested. You did the review and fulfilled your end of that arrangement. You now are wondering about any other obligation there may be for you to "turn in" a notice to the State authorities. Only you know that answer, at best. I would always be left to wonder if, or why, the client and recipient of the original appraisal report would not have similar thoughts too. After all, they received a report which cost them more money.....they had to pay you.....to clear-the-air on what they hoped to use with the first report ordered. Many will say that clients as a whole do not care to do enforcement work, and so the obligation comes around to our camp to be the police.

 

[Restrain]

Some states, like Texas, want your review as well as the offending appraisal. So, if you are going to submit a file for review, BE SURE that all your i's are dotted and t's crossed. But like the old saying goes, be sure you're right, then go ahead.

 

[Joker]

Thank you all for your input. I guess I know what I should do, but am still hesitant. I have already taken a part of this individual's business, as have other appraisers. His work is relatively infamous in these parts. I just don't want to be the bad guy who takes away remaining dignity from an older gentleman who hasn't yet retired.
Want the rest of the story :?: The lender agreed with my review and doesn't use this appraiser but accepted his value because the loan is backed by a federal guarantee program, the administrator of which accepted the appraisal before my review was complete. The lender knew there were problems with the appraisal, that's why they called me, but when they have a federal gurantee on the loan, why are they worried?

It's a good thing we don't get upset when people don't follow our suggestions, isn't it?

 

[Bemis Pownall]

In doing reviews it gets real old trying to straighten them out or try to teach the appraiser you are reviewing the correct procedures..heck they will probally never see your review and keep making their sloppy mistakes..
By turning them in to your local board that might be a learning experience for them...
IMHO

 

[bobburnitt]

Turn 'em in, turn 'em in, turn 'em in.

BB in Texas