Reporter, Analyst, or Consultant?

Starting out in this business, my father once told me that real estate appraisal is not merely a science but an art as well. Many people understand the science of data gathering and analysis. Some are good at reporting their findings, but few report their findings in a way that enables the user of the appraisal to understand the relevance of the information that is being presented.

As licensed objective professionals, we must make sure the information, as presented in the report,  is not only factual, but also relevant to the valuation process. Our professional obligation is to ensure that the service we provide is not misleading and will not lead the user of the report to erroneous assumptions or conclusions.

What prompted this particular soap box has been the news reports that continue to report housing trends nationwide. Many lenders have become stymied in what was once called analysis paralysis. Appraisers have been placed in a position of defending every statement that goes into their appraisals and if the news reports information about a particular marketplace that are not consistent with the data that the appraiser is presenting then the appraiser is assumed to be wrong.

My suggestion is not one that is new. I suggest that when you write an appraisal report, you write the report as if you are going to end up in court and have to defend your report before a judge. If you follow this advice, I guarantee that the instances you end up in court will be diminished by more than 98%.

The best defense is a strongly documented work file and I believe with today’s technology we can import MLS data into excel and create niffy worksheets and charts to easily document and demonstrate the market data and trend of supply and demand and the information that is relevant to the appraisal process.

Perhaps if clients were getting this information up front, they would be able to find some level of comfort with the information that is presented for their use and consideration.

Of course, as an appraisal reviewer and forensic fraud reviewer, I am painfully aware of the need for review. But if appraisal files were documented up front with public records and MLS records attached, it would limit the need for reviews on the same degree of work and we could then focus on those appraisals that are not as defensible.

See you around the water cooler!

Is it now necessary to confirm the verifiability of the confirmation?

It appears that we, as an industry, have finally reached that all time high of stupidity in action. I was recently instructed by  an appraisal management company to provide additional MLS sales on a grid to demonstrate market support for my opinion of value because I agreed with the origination appraisal. Had this been something other than a typical residential subdivision where the appraisal used sales from the same development, perhaps I would understand this requirement. Still, one wonders at what point have we crossed into the twilight zone of appraisal review.

I have attested to the confirmation of each section of the appraisal report. I have provided digital copies of all relevant public records, deeds, zoning maps, plat, flood, tax records, not to mention confirmation of MLS for each sale that was provided in the original report. Then a competitive market analysis for competing sales within 12 months of the date of value with a map and full printouts of each competing sale have already been provided. The appraisal was found to have been accurately reported and reasonably concluded. The value was adopted by the reviewer.

Despite all of this, now I am asked to provide additional sales to provide market support to my opinion of value? Really?! Having been a fraud investigator, forensic appraisal reviewer and review appraiser for the last 15 years, I am quite familiar with the reasoning for providing confirmation of each section and detail within the original report. I can even agree with the idea that the competing CMA data is helpful to the analyst at Fannie to determine the relevance of the data provided in the review appraisal. But at what point does the process become burdensome?

As I have stated previously, and oh so many times, sense has become like courtesy it is no longer common.

See you around the water cooler!