Top 10 things Attorneys should know about appraisals.

[Daystar]

Hi, I have been asked to speak to a group of attorneys on the topic of: The top 10 things attorneys should look for in appraisals". I have my ideas, however I come to my peers to crystalize the thought process. What say you.

 

[William K]

USPAP, USPAP, USPAP,USPAP,USPAP those are the first 5 things that come to mind.

6) Inconsistencies
7) Opinion of Value higher than sales prices of any comparables provided
8) Mis identified client ( who ordered the appraisal, who engaged)
9) Mis reported subject information
10) Across the board positive condition adjustments

 

[Howard Klahr]

Let's start with who is your audience ... what area of law do they practice? A divorce attorney will be interested in different information than one who specializes in eminent domain.

Also remember, besides being aware that USPAP exists, attorneys do not care about the minutia. Keep it on a very high level.

 

[David Sawyer]

If it is a divorce, and a trainee did the report with the supervision signing off, do not subpoena the trainee. The trainee is not an appraiser. If you supoena the supervisor, make sure he/she checked the box, "did inspect" .

I known of a case where the trainee was dismissed by the opposing attorney the 1st day of trial. On the second day, the supervisor appeared and was dismissed again by opposing attorney due to the fact that he checked the box, "did not inspect" and was laughed at after he was dismissed and had left the court room by the judge and both attorneys. Very inexperienced attorney!

 

[Michigan CG]

I don't think lawyers want to hear about USPAP, too complicated to understand after one little session.

What idiot would send a trainee to do a divorce appraisal???????

Lawyers are in business to win cases. Teach them the difference between good and bad appraisals. Bring them an example of a bad appraisal and a good appraisal of the same property. Explain to them they want an appraiser who will fully support his value of opinion in the report.

Tell them how to discredit a report. Explain to them what a review appraisal is and how they can use it to their advantage.

 

[Wendy]

Simple one, but very common:

No "new" fannie forms!

 

[Metamorphic]

I think I'd do a hand out with the USPAP stuff. Bullet out the big points; provide links to the details...something they can stuff in a folder for future reference. Toss in some stuff about different kinds of value, and different methods of valuation on the hand out. Most atty's are good multi taskers so they'll probably absorb most of the hand out while you talk about the things that will make you sound more interesting and professional (after all the point of this is to become the go-to appraisers for atty's right?....dont forget to staple a card to your hand out and use letter head with your contact info on it.). I think I would focus on how to communicate with an appraiser about what you want when ordering an appraisal (how to get a professional appraisal), and how to evaluate how good a job they did for you which will naturally lead into how to discredit the report of someone you're in litigation with...which might lead to some review appraisal and consulting appraisal work.

I'd work hard to keep is quick and snappy, but sometimes you end up being to fast that way, so I'd stand ready to do a couple minutes on the shape and trends of the local real estate market if you need some fill. Most of them are probably owners and would be interested in that for personal reasons.

added: make sure you dress like you're ready to go to court.

 

[Mike Phillips]

(1) Note the difference between license categories, Trainee, Licensed, Certified Residential, Certified General.

(2) Discuss the importance of data sources, experience in the local market where the subject is located and the importance of the physical inspection. Discuss why the desktop appraisal or drive-by might not be in the best interests of their client.

(3) Remind them of IRS regulations - I think they are covered in Circluar 230 (check it - don't quote me).

(3) Teach them the difference between an appraiser and a property inspector. Discuss the role of the sales agent/broker.

(4) Discuss Intended Use, Intended User and SOW.

(5) Discuss E&O insurance.

(6) Discuss the typical types of pressure appraisers have faced in the last 2-5 years. Pressure to hit value, pressure for rapid, if not recklessly short t-times.

(7) Discuss "comp searches" - why there is no such thing - why we can't give preliminary estimates of value.

(8) Discuss the new AQB requirements for Certification.

Just off the top of my head.

 

[Gregory Beck]

And after all that don't forget to ask for business.

 

[DWiley]

I would use USPAP themes, but at a high level. One of the basic things they need to know is that an appraiser must not be an advocate, but must remain independent, impartial and objective.

I would also discuss competency and the importance of using an appraiser who is specifically suited to appraise the proposed subject property. I often use the analogy that like doctors, appraisers typically have specialties.