Very recently, I was presented with an appraisal report that was actually a fourth revision. The appraiser had accurately completed a report and submitted the report for consideration to the lender, then over the next six weeks apparently, was barraged with a continual flow of reconsideration requests and alternative comparables, until the report appraiser finally felt pressured enough not only to re-grid alternative comparables, but also to change the opinion of value by almost 20%. I was involved in a quality assurance review and, fortunately for the appraiser, was able to reject the revision that could have ultimately placed the lender in a very bad position and placed the appraiser in jail for a report that was very misleading.
What led to this place of dark descent? This is the question that we will be exploring in the next few paragraphs. I took the time to counsel with the appraiser and offered my personal cell number for anytime that they may be faced with a similar circumstance. “Why?”, you may ask. Because it is my belief that if appraisers did not feel alone they may have the courage of their convictions and not be pressured into a place where they really cannot defend their decisions.
The mistake made in the original report was a common one. The property was vastly over-improved, not only for its site, but also for its neighborhood market area. The appraisal did not 1) take the time to discuss the listing history of the property, showing market resistance to this being an over-improvement; 2) take the time to explain to the reader how the subject related to the surrounding competing sales; and 3) take the time to find like/type properties with similar over-improvements and market resistance. Without finding the proper comparables, an appraiser is easily challenged even if their sense of value is correct. This is why an appraiser must follow the valuation model when conducting an appraisal; and most importantly – 4) develop friendships with other appraisal professionals. Join some social networks, read some appraisal blogs stay active and interactive.
In this way the appraiser can stand up to the “clients from hell” and not be pushed off the field of practice by making choices that they will regret in the long run. Remember this is a small industry but it is an industry that serves giants. Only if we stand together can we keep from being bullied by the giant.
See you around the water cooler!