What is a "Quality" Appraisal?

[Joyce Potts]

Unbiased with full disclosure.

 

[Ross (CO)]

Sometimes, a test confirming accuracy is actually demonstrated when one observes a dollar-for-dollar reduction from the posted-and-recorded selling "price" for certain properties compared against the subject.......especially when it is learned that this same recorded price was directly INcreased by that same dollar amount in the latter days prior to closure, and unfortunately to the lament and chagrin of others when the resulting opinion of current market value reported by the appraiser is less than what shows on the bottom line of the contract as..."the price". Sometimes, accuracy hurts, well, feelings at least.

Sometimes, greater accuracy in appraisal reporting can be delivered when that appraiser is NOT required to review-and-comment upon a provided purchase contract for a pending transaction......as this act of contract review has already BEEN performed by the appraiser's client, and should ONLY be done by the appraiser's client, equally independent from the appraiser's independent and unbiased opinion of value.

Sometimes, the expressed demand that accuracy BE delivered is inadvertantly subterfuged and sabotauged by the very same persons who sit on the log with hands over their eyes, hands over their mouth, and hands over their ears.

Heh, can we have our Freedom and Independence back again, and make a decent buck in the meantime ? Heh, how's all the Hope and Change working out for ya ?

 

[Terrel L. Shields]

Credibility is not necessarily reliability, accuracy, or precision. Read your Fannie mae form.... They demand "Accurate" appraisals....whatever that is. Right under the heading on the first page. The purpose is to provide

..."an accurate, and adequately supported, opinion..."

USPAP demands credibility, not accuracy.

 

[George Hatch]

I think of "quality" as being more readily measured in terms of utility.

"Meaningful to intended users and not misleading". Notice that reference is not limited to clients as such, but include the other users as well.

The idea that any one appraisal product can be assumed to represent the pinnacle of appraiser performance for more than a narrow cross section of uses/users is patently absurd. If you're appraising a garden variety subdivision home for a mortgage lender, what's the utility to them of the 150 page narrative? How well are you servicing your client's needs by selling them more product than they need or can use?

We are not in business to impress each other or to satisfy our own internal standards or to only sell the products we prefer to produce. We're here to provide services that are are meaningful to our intended users. We need to identify, respond and adapt to those needs in the here and now, not attempt to hold a static line that used to be meaningful 10 or 20 years ago.

So in answer to the question of "what is quality?" we can only respond in terms of "what would be meaningful to those intended users?" and proceed from there.

I think a URAR with minimal additional add-ons can readily fit the definition of a quality appraisal if it otherwise fulfills the requisite level of utility. Conversely, I don't think the users of most mortgage-centric appraisals find any additional "meaning" in an appraisal report that exceeds that requisite level of utility by more than 10% or 15%.

 

[Lysander in Charlotte]

Agreed that quality is subjective, but I know it when I read it.

When I get a report to review, my radar first checks two places. First, I look at the photos to see if the appraiser drove the comps or used MLS pictures. Secondly, I read the Summary of Sales Comparison Approach. It will generally either explain the grid in detail, or it will be canned and applicable to any apprisal. I'm not saying that these two areas define quality. I have observed over the years that these two areas will indicate the quality of the rest of the report to be reviewed. Try it on your next review. The correlation is uncanny.

 

[Terrel L. Shields]

We are not in business to impress each other or to satisfy our own internal standards

can't tell it by this forum.

First, I look at the photos to see if the appraiser ...used MLS pictures

which immediately biases you against the appraiser with MLS photos without you having a clue why....bad bias.

The correlation is uncanny.

is it uncanny or are you biased by your pre-conceptions? Sometimes we read what we want to read into something. Hindsight bias and anchoring. You've violated both if you wish to maintain your "objectivity"...

 

[Mejappz]

Most appraisers cannot recognize a bias if it bite them in the butt. They claim they are unbiased. We are quite the opposite and no one should be fooled into thinking A-they are unbiased or, B-that they, not the bias are in control. When you tell the appraiser it went into foreclosure, that bias kicks in.
Read this and weep. You cannot stop yourself.
http://en.wikipedia.org/wiki/Hindsight_bias

http://en.wikipedia.org/wiki/Anchoring

What we do is a heuristic endevour and if we fail to recognize that very element..i.e- we do this as an experience based, experience reinforced exercise and not a Bayesian calculation (science).

The attempts to make appraising a science, rather than an art, has distorted not only the appraisal process, but the very appraisers themselves. We live by rules of thumbs which each of us develop within ourselves. We report what WE think is important and the state board, the investigator, the reviewer, all share the same sorts of biases but each tailor made for themselves and in direct conflict with every other appraiser in the world. I've commented before on my views on the Zen of Appraising. Frankly, until the whole profession understands these biases and recognized that my logic is not your logic and that does not make one or the other of us "wrong"...well, we get the kind of sh**mess we have in the profession - back stabbing and inscrutible instruction. Like Charlie Tuna, we've mistaken tastes good for good taste.

Terrel, great post. I will take it a step further and say review appraiser are the most bias indiviuals in this industry. Behind the appraisal management companies, big government and the GSE's, I can't think of a more destructive force to the this profession then review appraisers.

 

[DonPearsall]

Too many people throw around the word "quality" as if using that word signifies something. Quality is a noun that needs a modifier. Something is either "Good" quality, "Bad" quality, "Average" quality, etc. The phrase "That is a quality appraisal means nothing, just that the person saying it does not know much about English.

 

[Lysander in Charlotte]

Terrel, I respect your opinions as well as enjoy and learn from your post here. However, in this case I strongly disagree. By your logic, discovering a deficiency in any appraisal is to become biased against that appraisal.

What if I discovered that subject of the the appraisal under review was not measured and a GIS sketch was pasted instead? What if all comps came from the adjacent superior development when there was plenty of good comps in the subject's development? What if I knew that the inspection ws done by a runner rather than by the appraiser? What if photos of superior homes were inserted in lieu fo the actual comps? What if the zoning were incorrectly reported and zoning definitely had an impact in the case under study? By your logic, knowing any of these would cause the reviewer to be biased.

I do not maintain that not driving the comps automatically creates an report that is not credible. I'm simply pointing out my observation that appraisers who drive their comps are more likely to produce credible reports than those who don't. The same holds for appraisers who write a detailed analysis of the sales comparison as opposed to those who clone canned statements that could apply to any report.

Not many reviews come my way as my fee for a field review is the same as it would be for a URAR on the same property. When I do get a review assignment, I separate any discovered deficiencies that affect results from those that don't. If I write about the deficiency, it's about item(s) that affect results.

 

[Louis Pompeo]

Hogwash!

Terrel, I respect your opinions as well as enjoy and learn from your post here. However, in this case I strongly disagree. By your logic, discovering a deficiency in any appraisal is to become biased against that appraisal.

What if I discovered that subject of the the appraisal under review was not measured and a GIS sketch was pasted instead? What if all comps came from the adjacent superior development when there was plenty of good comps in the subject's development? What if I knew that the inspection ws done by a runner rather than by the appraiser? What if photos of superior homes were inserted in lieu fo the actual comps? What if the zoning were incorrectly reported and zoning definitely had an impact in the case under study? By your logic, knowing any of these would cause the reviewer to be biased.

I do not maintain that not driving the comps automatically creates an report that is not credible. I'm simply pointing out my observation that appraisers who drive their comps are more likely to produce credible reports than those who don't. The same holds for appraisers who write a detailed analysis of the sales comparison as opposed to those who clone canned statements that could apply to any report.

Not many reviews come my way as my fee for a field review is the same as it would be for a URAR on the same property. When I do get a review assignment, I separate any discovered deficiencies that affect results from those that don't. If I write about the deficiency, it's about item(s) that affect results.

Consider this:

Credibility is measured in the light of the Scope of Work.

If the client does not require an inspection of the subject property or comps, does not require that the appraiser even step foot in the country that the subject is located in, and/or does or does not require the appraiser to perform many or most of the functions that we see in mainstream appraisal - the appraisal can still be and IS credible.

Credibility is directly related to the SCOPE OF WORK that is agreed upon by the client and appraiser. It is NOT measured by how much effort went into the report or the level of care that went into the selection of comps, or inspections.

Let me clarify...

I think some of us are confusing CREDIBILITY with RELIABILITY. The two terms are not synonymous.

What Lysander is espousing is RELIABILITY....e.g. A Self-Contained report and a Restricted report are equally Credible. Thay are not equally Reliable.

Reviewers need to take great care to review the report in light of its Intended Use, Intended User, and Scope of Work. Not all SOW's are the same. Not all Intended Users have the same requirements, and Intended uses vary widely.

Since 2006, we've been told over and over again that Scope of Work drives the appraisal process. We need to remember that it drives the review process as well. Don't start the review at the Market Analysis section, start at page 1 with a particular focus on Scope of Work.

Don't come to a review with assumptions and pre-conditions. Clear your mind and look at each assignment with a new set of eyes.

Establish right up front what the client and appraiser are looking to accomplish and see if the appraiser has performed in accordance with that goal.