Appraisal Articles 2019 Free Appraisal Articles for Appraisers and the Public
Where would you imagine that an attorney would focus with regard to your appraisal report and deposition? Most attorneys are only as good as their expertise in a specific area. You pick a real estate attorney for your personal injury case and while he may take your money and represent you he may not be able to do the best job for you, he just doesn’t have the experience that the “specialists” have. Yes, he may be able to work his way through the case, maybe get you a great settlement, but are you really getting the best deal for your money?
How much focus there will be on the technical details of your appraisal report will likely hinge on the expertise of the opposing attorney. If they specialize in another area or areas and their in a condemnation case they are really at a disadvantage. They probably never heard of a “yellow book” and even if they hired a competent appraiser they likely still don’t know what he is doing or why. You can’t walk into someone else’s “house” and think that you are going to know all about it.
Yes, there are some really bright attorneys out there and some can move from one area to another and figure it all out, but many including judges, simply can’t. Many can muddle their way through their lack of knowledge in a specialized area but not master the nuances of it.
An appraiser usually finds out who the opposing attorney or attorneys are during the course of their deposition. “Attack dog” tactics try to rattle a witness, make them say something that they will regret later, and they are usually employed by attorneys who want to use the deposition transcript as basis for having an appraiser’s report excluded or an appraiser disqualified. Here are a few areas where an opposing counsel will focus:
1. Specific Experience – How many appraisals have you completed similar to the one you have completed for the current or instant case? If it’s an appraisal of a fast food restaurant, how many appraisals have you completed of that specific property type in the last 12 months, the last 2-5 years?
I have been in depositions when attorneys have asked for copies of all of the appraisals that an appraiser has completed in the last few years of the subject type. Appraisers in Nevada only have to keep records of non-litigation appraisals for 5-years so they can’t ask for appraisals farther back than that.
For most appraisers there are confidentiality issues with releasing appraisals to third-parties. It’s time consuming just to do searches, ask who is paying for that work, and some appraisers are non-responsive and ask that a court-order be produced that demands the production of the reports.
2. General Education – What is the level of your general education? The opposition will generally ask you about the detail of your education as a way to point out that it is “general” and not specific to the focus of the case. If you have a PhD in valuation analysis with a specific focus on fast food restaurants they likely will not even ask you about your education.
3. Specific Education – What courses have you taken that qualify you to complete appraisal reports on the specific property type that is the focus of the case? If the court case is about fast food restaurants, the opposing attorney will want to know what courses have you taken that deal directly deal with their valuation.
4. Memberships / Designations – What organizations are you a member of and how long have you been a member of them and what designations do you hold?
5. Licenses / Certifications – Of course they will ask you about your licensing. In how many states are you licensed to perform appraisal services? Have you appraised properties of the subject type in other states or locations?
REPORT WRITING AND DEVELOPMENT
Once you are finished with background questions attorneys generally move on to specifics about the report itself. Get ready for the step-by-step walk through your report.
Most appraisal reports estimate the “fair market value” of a fee estate interest in a subject property and a standard value definition used. Most reports identify Social, Economic, Governmental and Environmental factors affecting value. They identify the real property characteristics, determine highest and best use, research / analyze comparable sales, analyze income / expenses and consider land value and development costs. Expect questions about the following, and remember to reference your report:
1. Market Area / Neighborhood – What area was considered relevant?
2. Property Type Discussion – Not normally an area that you would spend a lot of time, but for litigation you may want to add specific information on the property type and / or the industry that affects it.
3. Ownership / Exposure Time / Sales History – Are all relevant and they are facts not opinions.
4. Demographics / Market Statistics – Again these items are facts presented by various sources relied upon.
5. Subject Property Facts / Photographs – Specific property facts and photos that the appraiser has taken.
6. Highest and Best Use – Often the existing use but the analysis must be your own and lead to the conclusion that you reached.
7. Valuation Process – This section generally relies on a text book explanation of the appraisal process and not generally challenged.
8. Income Capitalization, Sales Comparison and Cost Approach – These are sections where you analysis resides and depending on the attorney you could spend hours talking about the; who, what, where, when and how of each. If the value conclusion of your report is disputed, which it usually is, there will of course be a great deal of discussion about how you selected your comparable sales and how you developed your capitalization rate.
9. Detail – Appraisers usually don’t have to keep every detail about what they did in their work file. When you know that you are going to be questioned about comparable sales selection it a great idea to leave entire databases of recent sales from which you selected yours in your work files. You can then point and talk about why many of the sales were not use and why others were considered or used.
You know that the derivation of the capitalization number that you used is going to be questioned, why not include information on reports you referenced and data that you review? If not you will be searching for that information when they set your deposition date.
When it comes down to verifications I generally scratch them down on a card or a paper and if I reached a principal I have a phone record. That’s not going to be enough for litigation, you need to keep or reconstitute the process, keep the names of the parties and the phone numbers where you reached them.
For more appraisal information contact Glenn J. Rigdon MA, MRICS, IFAS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas (http://www.appraiserlasvegas.com), or http://www.horizonvillageappraisal.com, or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at http://www.linkedin.com/pub/glenn-rigdon-ma-mrics-asa/1a/30b/879/
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