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Standard 3 Review

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Tom McDowell

Member
Joined
Jan 19, 2003
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
North Carolina
In order to supervise real estate sales agents and operate a real estate company in NC you must attend the Broker In Charge course.

I would suggest that before an appraiser can supervise a trainee or do a review of another appraiser's work they must attend a "Managing Appraisers" course. Or you can call it by any name you want.

I have had trainees do field reviews of my work and the supervising appraiser sign them. I have had appraisers that have no experience in reviewing or supervising appraisers do reviews of my work. In most cases I find that appraisers doing reviews fail to do a Standards 3 review. I have only had one reviewer call me and ask what my thinking was in an appraisal. I have never had a reviewer come to my office and ask to see my work file.

Now I am not an advocate of more government involvement or licensing, but it appears something like this is the only alternative.

Just thinking out loud.
 
Joined
Jan 16, 2002
Professional Status
General Public
State
North Carolina
Tom

I am not in favor of more regulation until we get our own boards under control, but I think you have a valid point.

In USPAP terms, competency is a combination of knowledge and experience. I think that all would agree that a proper review would entail a greater level of competence than an appraisal. In a review, you are tasked with judging not whether the other aprpaisers work product conforms with your idea of the way it should be done, but whether it conforms to all accepted methods and techniques, not to mention the basic issues that appraisers can disagree.

How best to get the base of appraisers educated? I do not know, but I do know I have seen incompetent reviews by appraisers who have 30 plus years of appraising.

Good to see you posting

Regards

Tom Hildebrandt GAA
 
Joined
Jan 16, 2002
Professional Status
General Public
State
North Carolina
Tom

I am not in favor of more regulation until we get our own boards under control, but I think you have a valid point.

In USPAP terms, competency is a combination of knowledge and experience. I think that all would agree that a proper review would entail a greater level of competence than an appraisal. In a review, you are tasked with judging not whether the other aprpaisers work product conforms with your idea of the way it should be done, but whether it conforms to all accepted methods and techniques, not to mention the basic issues that appraisers can disagree.

How best to get the base of appraisers educated? I do not know, but I do know I have seen incompetent reviews by appraisers who have 30 plus years of appraising.

Good to see you posting

Regards

Tom Hildebrandt GAA
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
I have seen incompetent reviews by appraisers who have 30 plus years of appraising

That is the scary part. And they oft evoke that experience as proof of their superiority. I think there is no profession where a little humility would go further.

Fer instance, about 18 mo. ago I appraised 100 ac. tract for $1,300/ac. The property directly across the road sold for $1,200 as 212 ac. A larger tract with highway frontage sold for $1,400/ac. about 1 mile away. The subject sold less than one year later for $2,600/ac. WOW. Now I am being asked to go appraise that 212 ac. tract which sold in 2000. The $1,400 ac. tract was cut into 3 pieces. 40 ac. resold for $2,000/ac. another 100 resold for $2,400. Two other tracts nearby, large ones in fact, sold for $2,300/ac. The owner of those two tracts is about to go belly up! So what is the value? From 1 or 2 sales a year in this area, there are suddenly 10 or more and several are being developed with 10 house poultry complexes. I'm confused.

It would be easy for a reviewer to criticize my first appraisal. Hindsight has a lot to do with that. There are no sales between 1,400/ac - 2,000/ac. It just jumped from one to the other just because someone wanted to build some chicken houses.

I don't believe I need a management course for my subs. I have two that are certified and 1 that is registered. But folks, I can't beat this stuff into them. If they do not have an aptitude for what they are doing, I am helpless to pound that into them.

I have been disappointed in most trainess. Not a one I have trained has ever bought an appraisal book to my knowledge, except that required for a class. I have lent them books that they never bring back and yet never use. I probably average $300 in texts and help books every year. There are tons of features in Toolbox that my subs do not avail themselves of, like neighborhood databases, lender databases, etc. They don't know how to edit global comments and seemingly don't care. And not one really understands what a narrative is or how to prepare it.

As much as I have tried to beat it into them, they are completely clueless why a URAR is not a particularly good vehicle for reporting an estate value. They do not understand that fannie mae's certification is not ideal for every situation. And I have one appraiser friend whom I have not yet been able to break from calling me a "review appraiser" on the certification of a narrative. I finally have put my foot down and said I am your CO-SIGNATORY, CO-APPRAISER, ANYTHING BUT your REVIEWER!! The URAR mistake is not set in stone...forget it....call me a co-appraiser. Tons of appraisers I know are very poor communicators of income info and really don't understand the most basic concepts thereof. Or they attempt to complexify the income approach then cannot explain what they have just done. If you don't understand Yield capitalization or Band of Investment, then stick to GRMs and GIMs....You'll get creamed if you don't.

These judgments are straight forward and it worries me that so many appraisers seem to have those faults. They need to be reading USPAP and just plain old garden variety basic textbooks. Every appraiser should own a copy of the Appraisal of Real Estate and if you do Farms or Rural Property, The Appraisal of Rural Property and/or Farm and Ranch Appraising. One of the simplest books is Basic Real Estate Appraising, somewhat dated, but was the standard Calif. Textbook until 1990+ I understand. It has really easy to understand text.
 
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