What every appraiser should know

[rijman]

As a reviewer I do care about the appraisal industry and I wish I could forward my reviews to the appraisers. However, I get paid to do reviews, I don't have the time to setup a free training clinic. (I would love to do that to help others but I kind of need that paycheck at the end of each month) Besides, many appraisers are very defensive about their work, especially the ones who need the most help. It is not easy, even in a friendly let me help you way, to get some appraisers to listen. Appraisers do often times get a copy of the review when there are conditions although sometimes the info is just passed on verbally from the lender or broker without the review. It depends on the policy of the lender who ordered the review.

My favorite appraiser response was from a trainee who completed a 2 unit residential property appraisal on a single family form using single family comps. The subject was clearly two legal units in a neighborhood of many 2-4 unit properties. The subject's status was not in question and the appraiser even recognized the two units. The problem was the appraiser had never completed the 1025 FNMA form (as it turned out) so he used the URAR. When I requested the report be reworked on the proper form utilizing 2-4 unit comparables the appraiser responded back with a letter threatening to sue me and the lender. The lender client had to hold back from laughing when they read me the letter. Yes, some appraisers are very defensive about their work. The problem is that in some cases appraisers have been turning in work over a period of time with no feedback, so they assume they are doing it properly. The first reviewer that brings the issue to light is obviously wrong in the appraisers eyes. "How can it be wrong, I have been doing it that way for a XX years and no one ever questioned it."

I could write a book just on the responses appraisers send in to appraisal reviews. I have read some very angry and attacking rebuttals. Some could curl your hair. I have just learned that there is a direct relationship between the appraisers attack and their appraisal knowledge. The more ignorant the appraiser the higher the potential for an attack. Good appraisers are more concerned with correcting a deficiency and moving on than attacking the reviewer.

Please know that I do not see myself as an appraisal or review expert. There are far more experienced appraisers and reviewers out there. However, I have been fortunate to have a broad appraisal background including reviewing and managing reviewers where I learned much more about the appraisal industry than would have been possible just in appraisal.

Regards,

 

[Austin]

RIJ: There is another angle to what you are saying concerning appraiser reaction to getting put down by a reviewer. About ten years ago I took the AI class "Case Studies in Real Property Valuation." This class is one of the last required AI classes for the MAI designation. I took the class with about 60 other appraisers all of whom had years of commercial experience, and all worked for large MAI firms except for me. We had a couple days of classroom work then divided into three work groups, each group being assigned the cost, sales comparison, and income approach. The group worked their problem, and then the class reviewed the results.
The significant thing about this class was that there were about 60 experienced appraisers who had a good appraisal education background. I can tell you from this experience that there is more than one way to skin a cat. To further illustrate the point, there is a thread running over on the other board, "Help Needed" concerning external obsolescence. If you read some of the posts you will see that there is much confusion in appraisal circles concerning environmental, economic, and functional obsolescence and location adjustments. Everybody seems to have a different understanding. Along the same lines, over my appraiser education experience I have been taught a number of different theories concerning the cost approach as to what to use, effective age, actual age, or expected physical life in measuring incurable physical depreciation. As I stated in an above post, there are different views on the sequence of adjustments in the present sales comparison approach and a lot of subjective latitude in the income approach concerning the projection of expense and income increases. When one person jumps in and criticizes another appraiser when that appraiser is doing what he/she was taught is just opening a can of worms. Add to this local market nuances, and as I said, you open a can of worms. If I could convince you that the present sequence of adjustments in the sales comparison approach was wrong, would you in your reviews nail the appraiser under review for doing it the standard way? If I am convinced my way is right and can demonstrate it with data, how can a reviewer say I am wrong? How would we ever learn anything new using this line of thinking? As they say: "Appraisal ain't rocket science."

 

[wade3333]

Tiny280, let's don't go there, I submit no one knows what is surburban and what is rural. This will be debated till the cows come home and it still will not be agreed upon. You'll have a nice weekend. Wade

 

[Pam]

The best definition I've been able to find is: Suburbs have a diverse economic base (usually located in adjacent urban areas). Rural areas derive the majority of their income from "primary" (mining, fishing, agriculture, etc.) sources. This definition would include small, rural villages.

 

[wade3333]

Pam, that's wonderful, from now on I will never think rural again. Wade
Have a good one.

 

[Dee Dee]

I think of 'rural' as an area where it's too far to commute to a major employment city to work. It's about a 40 minute commute from the mountain areas that I service to get to Denver (unless someone flips over in the canyon...then it can be a couple of hours). At least 75% of the households here make that commute every day. I consider that a suburb, since it takes a similar amount of time for your average commuter to make it from one end of Denver to the other if their employment is across town.

 

[wade3333]

Dee Dee, I'm in good shape. Ga. has 159 counties, Americus is the county seat, It is not over 12 miles to the fartherest point so I will never be rural again. Wade

 

[Pam]

Wade, aren't there areas of your county where the majority of the people derive their income from agriculture? I left GA in 1982, but I recall some mighty rural looking places down your way.

 

[wade3333]

Pam, in all parts of the county there is agriculture, but people are buying land and moving into the county, they work in town. People in agriculture make up a small part of the population. I think all appraisers have a different idea about rural vs suburbs. Wade