Reviewing and "a conclusion as to value"

[OddManOut]

I'm not a newbie in review work but lately I have been running into clients who are not typically satisfied with an opinion as to whether the appraisal complies with regs and provides a credible opinion of value ((let's call this Scenario 1). It seems like it's become popular to ask for "a conclusion as to value" that pops out a number. Sometimes what they are asking for is a number that could likely be supported based on the data presented in the appraisal (Scenario 2). Other times they are asking for a number that could be supported based on data that they are providing or based on data they want me to dig up (Scenario 3).

I'm not really looking for tangential discussion on "oh boy I'd never do that because they couldn't pay me enough" nor am I looking for unsupported opinion. I'm looking for USPAP-based discussion as to whether it is possible to comply with USPAP in providing a Scenario 2 or Screnario 3 response without pulling the trigger on Standards 1 and 2.

And I don't mean to sound *itchy about the tangential discussion stuff....I've just seen how things get a little snarky around here and am more interested in a focused discussion on compliance. I know there are some members of the forum with USPAP chops so I'm hoping they weigh in with "yes and this is why" or "no and this is why" kind of intell.

Thanks

 

[Craig81]

What most lenders seem to be looking for in my market is a review AND an appraisal report rolled into one product for the price of one. Which seems like what you're also being asked for. Unless I misunderstood?

It's sadly common enough. Ball is in your court if you want to do it or not.

 

[Mr Rex]

Page U-31, start @ line 978

The reviewer is not required to replicate the steps completed by the original appraiser.​

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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 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, 3, 4, 6, 7, or 9, as applicable, to produce a credible
value opinion.​

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(d) state the opinions, reasons, and conclusions required in Standards Rule 3-1(d–g), given the
reviewer’s scope of work;
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Comment: When the reviewer’s scope of work includes expressing his or her own opinion of
value, the reviewer must:
1. state which information, analyses, opinions, and conclusions in the material under review
that the reviewer accepted as credible and used in developing the reviewer’s opinion of
value;
2. summarize any additional information relied on and the reasoning and basis for the
reviewer’s opinion of value;
3. state all assumptions and limiting conditions; and
4. clearly and conspicuously:
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state all extraordinary assumptions and hypothetical conditions connected with the

reviewer’s opinion of value; and
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state that their use might have affected the assignment results.

The reviewer may include his or her own value opinion within the appraisal review report
itself without preparing a separate appraisal report. However, data and analyses provided by
the reviewer to support a different value conclusion must match, at a minimum, the reporting
requirements for a Summary Appraisal Report for a real property appraisal (Standards Rule 2-
2(b)) and a personal property appraisal (Standards Rule 8-2(b)), an appraisal consulting report
for real property appraisal consulting (Standards Rule 5-2), a mass appraisal report for mass
appraisal (Standards Rule 6-8), and an Appraisal Report for business appraisal (Standards
Rule 10-2(a)).
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(e) include all known pertinent information; and
Comment: The reviewer must provide sufficient information to enable the client and intended users
to understand the rationale for the reviewer’s opinions and conclusions.
(f) include a signed certification in accordance with Standards Rule 3-3.​

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[xyzpdq0121]

Appraisal review is probably one of the most misunderstood appraisal services that appraisers provide.

Our client typically does not understand the Scope and amount of work required to perform a review. They often believe it consists of proof reading the report and then drive by and shoot some pictures.

If the report under review is of good quality, then a review is not that difficult. Often appraisers make it difficult because they begin to apply personal preferences and biases against the other appraiser because "the other appraiser doesn't do it like I do it." That is not the intent of an appraisal review, and those that do it that way are not doing it right.

We are to review the WORK of another appraiser, NOT the other appraiser.

If the original appraisal truly is misleading and you disagree with the value conclusion of the other appraiser, you must provide your own opinion of value and follow the appropriate Standards Rules. With the exception of performing a complete inspection of the subject (interior/exterior) and completing an entire new URAR, the amount of work to be done is often more than if you had simply done the original appraisal from scratch.

The reason fees associated with review work is so low, many performing the review do not adhere to all the Standards Rules and fail to apply the appropriate Scope of Work, fail to understand their responsibilities and therefore fail to charge a fee commensurate with the work required. I personally often charge more for an appraisal review than I do for an appraisal.

USPAP FAQ 268:
REVIEWER DISAGREES WITH VALUE CONCLUSION
Question: In performing an appraisal review, a reviewer disagrees with the value conclusion in the original appraisal. What is the correct action the reviewer should take according to USPAP?

Response: STANDARD 3 addresses the development and reporting of an appraisal review. The Comment to Standards Rule 3-2(c) states that the reviewer may express his or her own opinion of value. When disagreeing with the value conclusion in the work under review, the reviewer is REQUIRED to fully develop a value opinion under the applicable development Standard (STANDARD 1, 3, 4, 6, 7 or 9) and clearly set forth the basis for his or her conclusions.

 

[The Warrior Monk]

If you are rendering an opinion of value then you are performing an appraisal. See definition of "appraisal" in USPAP for details; an opinion of value doesn't have to be in the form of a point value.

In Scenarios 2 and 3, opinions of value are being made, and thus appraisals are being performed. Standards 1, 2, and 3 apply.

 

[Rlong]

"In Scenarios 2 and 3, opinions of value are being made, and thus appraisals are being performed. Standards 1, 2, and 3 apply."

I concur, what remains is how much of the existing Standards 1 and 2 "stuff" you are going to "build of off" (and accept responsibility for); and how much you need to do yourself from scatch. It could be as simple as correcting an adjustments that was inadvertantly made the wrong direction, but you "buy" the rest; or you may de doing a "whole new appraisal". As was noted, most clients don't inderstand Review SOW.

No drama from me.

Bob in CO

 

[Jo Ann Meyer Stratton]

As a licensed or certified appraiser a review assignment is typically simple. If you agree with the opinion of value in the original report, Standards 1, 2, and 3 apply. If you disagree with the opinion of value in the original report, Standards 1, 2, and 3 apply. In both situations the licensed or certified appraiser is expressing an opinion of value--therefore Standards 1, 2, and 3 apply.

 

[Dale Smalley]

This is another example of USPAP lacking any common sense. If the value is supported you should be able to say yes the value is $zzz. as of the ED. and explain why. Otherwise the reader is left going ?????

 

[hastalavista]

I'm not a newbie in review work but lately I have been running into clients who are not typically satisfied with an opinion as to whether the appraisal complies with regs and provides a credible opinion of value ((let's call this Scenario 1). It seems like it's become popular to ask for "a conclusion as to value" that pops out a number. Sometimes what they are asking for is a number that could likely be supported based on the data presented in the appraisal (Scenario 2). Other times they are asking for a number that could be supported based on data that they are providing or based on data they want me to dig up (Scenario 3).

I agree with the others who argue an independent review value triggers SR1.
Scenario 1 as you describe it is the quality review. BTW, all SR3 reviews require the reviewer to judge the quality of another's work.
Scenarios 2 and 3 go beyond the quality evaluation and require an additional value opinion. Therefore, 2 & 3 are subject to SR1 and reporting the results of the review, if there is a different value from the original report must, at a minimum, meet SR2-2(b).

In AO-20 (p. A-64 of USPAP) there is a flowchart that shows the the review development process. Appraisal development under SR1 is shown as an activity required once the intended use and SOW are determined for the assignment.
Simply put, if the client requires the reviewer to form an opinion of value, the assignment must include the appropriate SOW to do so; the intended use and the necessary SOW to conclude a review value triggers the need to follow SR1.

 

[Kevin Mc]

I'm not really looking for tangential discussion on "oh boy I'd never do that because they couldn't pay me enough" nor am I looking for unsupported opinion. I'm looking for USPAP-based discussion as to whether it is possible to comply with USPAP in providing a Scenario 2 or Screnario 3 response without pulling the trigger on Standards 1 and 2.

I don't see how your can provide Scen#2 or Scen#3 without "pulling the trigger" on Stanards 1 and 2.