Appraisal Reports for Litigation 1 – Work Files

Having worked as an independent fee appraiser for several attorneys on civil suits, bankruptcy, divorce, probate, deficiency and condemnation cases, I have found that my best results as an expert witness have always come from following some basic assignment preparation and archival rules.
I always begin a litigation assignment by creating a new binder with a printed title like “John Doe vs. XYZ Enterprises – Appraiser Work File.”  If you want to enhance it with a professional logo, letterhead or graphics, that’s a plus.  It may or may not be supplied to attorneys or the court but you may need it when you testify.
I place any and all correspondence, engagement letters, instructions, plans, drawings, complaints, supplied definitions, supplied case law and related pre-appraisal documents in the “assignment info” section of the binder.
The next section in the binder holds background information that I summarized in my written regional, market and sub-market discussion.  If the information is taken from State University reports, U.S. Census data, the State Demographer or other sources, I include the documents in my work file binder for future reference.
Usually I include at least the following sections in the binder; assignment info, market area documents, cost approach, sales approach, income approach, market research, client supplied data, news / articles, miscellaneous and my report.  Of course there can be several other categories that you may want to include that are specific to your property or your assignment.
I populate the binder within the sections that I have labeled.  In the sales approach section, I include a map of comparable sales, the printed pages that detailed the sales information, the conveyance document and a list of sales that were displayed and excluded from consideration during the appraisal process.
In the income approach section of the work file binder I include printed source pages that display the current interest rates, capitalization rate studies, income and expense information on similar properties and the direct capitalization and yield capitalization pages with all details.
Cost approach pages include the printed pages referenced from Marshall & Swift or other cost service that I used together with all of the multiplier pages and depreciation page if that were used as the basis for depreciation. 
It is important to keep a journal with names, dates, times, phone numbers and discussion summaries for all of the individuals who confirmed sales or who provided other pertinent information.  There is nothing worse than having to admit in the deposition or at trial that you had a source that provided important information but you don’t remember who that was.
News articles, professional (trade) articles and reference materials that you reviewed during the appraisal process and that you relied upon is important to include in your binder.  Make sure that you know where this information came from, even if you only include the Internet URL or Journal details.  
While some appraisers make a contrary argument that you should accumulated as little related to the assignment as possible in your work file, so that the opposition’s attorney will have less information to attack you about, I prefer the “include everything relied upon in the work file” approach.  It’s often the case that I can supply only a portion of my work file since I reference USPAP and other documents but don’t print every page out to put in my binder.  Bring a copy of the entire digital file, if it hasn’t been requested you don’t want to get to court and have to admit that there is more but you don’t have it.  It’s better to have it digitally and offer to supply it all available for the attorneys and the court.
When your report is complete, a copy of it also goes into your work file.  When you get to your deposition, which as I noted sometimes doesn’t happen, and you get to the witness stand, in my opinion you will do a lot better being well prepared and having a well-organized work file.
The only exceptions to the generalizations that I have outlined in this article are condemnation cases.  Those cases focus on value and you can expect a real roller coaster ride.
2013 Update:  Don't expect that your report is going to carry any weight in the outcome of the case.  Litigation, at least in Nevada, at times feels like politics not logic and you never know what's going to happen.  In one of my recent cases no one had a copy of my report and no portion of it (including my value opinion) was ever put into the record.  I don't think anyone wanted to deal with my opinion of value, or at least not the opposition or the Judge.  In another case the opposing appraiser admitted on the stand to not considering the subject property’s planned land use as required by USPAP. The judge disregarded the fact that the property was planned for 18 units and gave weight to the opposition appraisal that considered it a single-family lot.
The point being that no matter what you do, how well you do it and no matter how bad the opposition appraisal is you have to be prepared for a bad outcome. 
For more appraisal information contact Glenn Rigdon, MA, MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email or via his business website Horizon Village Appraisal (http://www.horizonvillageappraisal.com), or you can also click on “Contact Us” on the home page of this website.
 

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