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Seeking Opinions From Review Appraisers

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liznindy

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Indiana
I perform a large quantity of reviews and from time to time I find the appraisal report under review can not be totally relied upon as accurate in its description of the subject. (Surprise, Surprise).

When the reviewer disagrees with the opinion of value expressed in the report, he/she is asked to provide an opinion and state the extraordinary assumptions made in arriving at this opinion. Whether we as appraisers like this aspect of reviewing or not...the client wants this included in the scope of the review.

When it is fairly obvious (from MLS data) that the condition of the subject has not been accurately portrayed in the report under review....don't you know they are all average condition <_< ... (for example....the subject is sold as a foreclosed property and is listed as needing renovation in the MLS). In this instance, I can and do provide an opinion which 'assumes' the subject differs in condition that what is stated in the report. In some instances in which several 'errors' are noted in the report, I then begin to wonder "What can be relied upon as accurate in the report?"

Is it reasonable to refute the "condition" of the subject as stated but to depend upon the GLA and bedroom/bath count as stated in the report under review? Yes....BUT what if the reviewer has a MLS sheet which differs from the bedroom/bath count stated?.....AND what if the reviewer knows that in some instances (say the subject is a foreclosed property in which the listing agent may or may not have seen the interior of the residence) the MLS data may not be accurate?!


ARGHHH!! :blink:

I am trying to decide if it is prudent to rely upon the GLA and bedroom/bath count stated in the report (when providing an opinion of value with the review), while at the same time, relying upon the MLS for an accurate portrayal of the condition of the home. Unfortunately, in Center Township, Indianapolis, the Assessor does not have the bedroom and bath count of properties (They do not collect this data).


I guess I can pick and choose the report data to rely upon as I like as long I state the extraordinary assumptions!??? BUT what is YOUR opinon in reviews of reports such as these?
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
I had one that I didn't trust the subject info on and refused to give a value on it due to that. I simply stated that I had found enough conflicting data that I felt I couldn't rely on any of the subject data in the original report, therefore, I could not use any of that information to be able to justifiably form a value opinion. Relying on information I believe highly likely to be incorrect would be considered misleading. I would have to physically view the subject property inside and outside in order to complete a value opinion.

Hope this helps.
 

Mike Simpson

Senior Member
Joined
Jan 30, 2002
Liz,

When I performed reviews (some years ago), and was faced with a similar situation, I'd go to the property and inspect is from the exterior. I've an extensive construction background and combined with my appraisal (and similar industry) experience I can tell a great deal from an exterior inspection.

Additionally, I'd call the listing agent (MLS) and interview them whenever possible.

I'm no longer willing to perform reviews as the fees were always totally inadequate for the work performed. I.e., the client wanted my opinion of value if I disagreed with the original appraiser's estimate. Additionally, the fact the appraisal was going to review was typically because, someone else saw something wrong with the original report.

Consequently, the client was asking for a review (line item by line item), and my estimate of value should I disagree, which was a high percentage (nearly always) of the time. Catch was the client didn't want to pay a reasonable fee for this service (especially when I worked with AMC's)--it was too much work for the money.

-Mike
 

liznindy

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Indiana
Mike,

I agree some clients won't pay my review fee...However, this client is a good one!

The reports that I typically review are from a couple of years back (retrospective reviews), thus calling the listing agent is not an option as I am sure they will not remember!

I have declined to provide an opinion when faced with a similar situation but was then asked by the client to make what extraordinary assumptions I felt were needed to provide them with an opinion of value....

I am just wondering if it seems REASONABLE to not agree with the condition of the subject as stated in the report (based upon a recent foreclosure sale of the subject as listed in the MLS) but to accept the bedroom/bath count and GLA, though the same MLS sheet differs in this regard as well. (It is not unusual for agents to not fully list all rooms in foreclosed properties as they may not even set foot inside the residence)...Then how can I be sure the subject needed repairs????? WELL, the low sale price is an indication as it the financing....CASH.

Opinions please.....is making these types of assumptions misleading or reasonable if the client is asking you to use your best judgement?

I always make the statement that the reviewer's opinion of value is unreliable if any extraordinary assumptions made in connection with the review is found to be incorrect.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Tough call Liz. Under those circumstances, I would write up what I believe to be reasonably correct, that you strongly feel that you cannot trust either the appraisal under review or the MLS data, and base your opinion on that. Nice disclaimer already!
 

Mike Simpson

Senior Member
Joined
Jan 30, 2002
Liz-

Viewing the home from the exterior, you should have a pretty good understanding of room placement. Bathrooms have roof vents (assuming you can see the roof), and if you've enough experience you should be able to get a pretty good feel of the floor plan by exterior inspection.

Regarding the condition of the improvements at the time of the original appraisal (Yikes--good question). Could you interview the homebuyer? I've found some willing to talk once I explain who I am, and what I'm doing. I've also offered them a bribe in the form of free information--you help me, and you can call & pick my brain in the future regarding appraising or real estate.

If you can't determine the condition at the time of the original appraisal, or get an interview with someone who'd know the condition, and if your client won't let you off the hook--I'd do an aweful lot of explaining throughout the review report.

Good Luck

-Mike
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Liz:
Dunno about the realtors in your area, but many of them in mine DO recall properties that they handled a few years ago, particularly if you can bump their memory with a few salient points. I'd also call all agents involved in the recent sale: sometimes they will pop off with comments about what a shame it is that the place got so beat up, LAST time it was available it had looked like thus and such. I would make calls to all past and present selling agents involved!

I would NOT assume poor condition at the time of sale on a three year old repo, unless I could SEE from the exterior that certain elements really looked like they had been bad 'back then'. A recent very low dollar cash sale often means that the vacating owners trashed the place on thier way out the door.

Due dilligence in a review does not include witch-hunting. Even if the appraiser is well known locally for a crooked narrow nose and habit of wearing long black robes and riding brooms on alternate weekends in his/her off time.

I would approach the review with an open mind...even slimeballs occasionally do a good job.

But if you find blatent errors or ommissions that you can PROVE through other resources... well :twisted: ... then NAIL 'em down and drive a stake through the witches-- or is it garlic or am I mixing my creatures again...
 

liznindy

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Indiana
Thanks all...

I am starting to think more clearly.

I appreciate this forum (and you'all) so much. Sometimes it helps just to lay it all out in print...get some feedback...start the brain power again :D

Lee Ann,

the recent sale I was referring to actually took place recent to the effective date of the appraisal under review (3 months prior to the effective date of the appraisal, 9/2001)...As the appraisal mentioned no significant repairs or renovation, I assume none were made in the 3 months since the MLS listing (in which the subject was a bank foreclosure)....

I think I will rely upon the MLS listing for bedroom and bath count as well as the report does not mention the prior sale and other aspects of the report are incorrect as well.

All extraordinary assumptions will be fully explained and weight will be given to the prior sale as it was a MLS listing with market exposure.

The subject is located in an area which has abundant foreclosures and homes sold "as is', "bank-owned"....so I believe the prior sale to be the best indictor of market value if no updates were performed.


I think I am putting too much emphasis on MY opinion of value in the review process and need to remember the purpose of the review is to determine the reasonableness of the report under review.

I approach all the reviews I perform with the attitude that the data is correct and the report is reasonable until it is proven otherwise....

I need a long weekend away :wacko:.......I can go there in my mind...Beach..cool breeze...ocean sounds...adult beverage...cabana boy.... B)
 

Claude From NY

Senior Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
New York
Originally posted by liznindy@May 2 2003, 07:09 PM

I am trying to decide if it is prudent to rely upon the GLA and bedroom/bath count stated in the report (when providing an opinion of value with the review), while at the same time, relying upon the MLS for an accurate portrayal of the condition of the home.

I guess I can pick and choose the report data to rely upon as I like as long I state the extraordinary assumptions!??? BUT what is YOUR opinon in reviews of reports such as these?
Hi Liz,

I do a # of reviews also and have run into the same problem. I rely on the scope of work description that indicates

1. The review appraiser is NOT required to replicate the steps completed by the original appraiser.

2. Those items in the original appraisal that the review appraiser believes to be credible and in compliance with the applicable development standards of USPAP are extended to the review report by use of an extraordinary assumption.

3. (from FNMA guide) Assume the property condition reported in the original appraisal report is accurate unless there is evidence to the contrary.

So you can pick and choose if you have the evidence.

I had two cases just this past week. On one, the appraisal indicates 1 kitchen in a single family dwelling. The current MLS listing of the subject clearly describes 3 kitchens, two of which are set up in accessory apartments. So when providing my value opinion I adopted the reports GLA and condition of the subject but not the room count since I had contrary evidence.

On the second case, the appraiser describes the subject to be in average condition, but a listing taken just before the appraisal date says that the subject has sustained significant fire damage.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
I believe a comment such as "the condition as reported in the appraisal report may or may not have been accurate; however, since there has been a considerable time lapse since the appraisal, the reviewer (assumes it to have been correct) (assumes it was not correct) (is unable to determine if it was correct). Since condition is a major factor in establishing a market value I believe the following adjustment is necessary.

Generally, I give the appraiser the benefit of the doubt since he/she was there at the time and I was not.
 
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