Review appraisers generally act as appraisal consultants, they develop and communicate usually in writting their opinions regarding the quality of another appraiser's work. As most appraisers know, a reviewer looks at the data, reasoning, analyses and conclusions of the appraisal, or other work, and they form an opinion as to the credibility of the conclusion that was reached and the adequacy of the evidence that was provided. Reviews often do not form their own opinion of value through their own independent analysis, it happens but it's not usual.
It's important to understand that many appraisal reviews have a limited scope. Many reviews are "desk" reviews, and the review appraiser never sees the subject property, the comparable sales, the neighborhood or the rent comparables. Thus most review appraisals are focused only on format, they seek to know whether the appraisal report being reviewed provided "adequate" and "appropriate" content to form a credible value opinion. Users of appraisal reviews need to understand that an appraisal that has been correctly completed and well supported can be criticized by a review appraiser because of their opinion that it is incomplete or confusing.
One of the most frustrating things about an appraisal review is that the reviewer, due to his or her limited scope, does not express a value opinion. They may talk about the shortcomings of a report that they know has concluded a value 50% higher or 50% lower than they think was appropriate but they can't talk about that in the review. So they pick out technical problems but never express an opinion. So what was the point of the review? Was it to be critical, often to the point of absurdity because even appraisal peers do not provide the detail that reviewers identify as being "inadequate" or to find the true value of the property?
The review process often runs off the rails when it gets into the litigation area. Attorneys are forever trying to criticize the opositions report and its appraiser and make their report and appraiser appear to be the only one that is credible, and you have some judges who buy into the maniupulations lock, stock and barrel. The problem with appraisals for litigation is that there are no perfect appraisal reports, there are always problems no matter what you do to minimize it. There are also so few appraisers who can withstand a vicious cross examination. Many attorneys pride themselves on being able to bring an appraiser, regardless of his education and experience, to the point where he is apologizing for his mistakes on the stand.
There are specific issues that are discussed in all of the review forms that I have seen which are true to USPAP standards, but that will cause difficulty for many an appraiser. Specifically the issue of an expense data. USPAP 2012-2013 Standard Rule 1-4 (ii) requires an appraiser to "analyze such comparable operating expense data as are available to estimate the operating expenses of the property." While some appraisers are coming around, few have address expenses in the past, and relatively little data on expenses exists in many markets, so this may not have been an area where you or your peers put a lot of attention.
Even more painful is the simple review issue regarding the adjustment of comparable sales. Every review I have ever seen notes "No" in response to the standard question "Are the appraisers adjustments supportable." Basically it is saying that you did not provide, in your short summary report that doesn't require specificity regarding such factors, a detailed paired-sales study, grouped sales study or statistical study that details how you made those location, size, construction quality and other adjustments that you thought were reasonable. The reviewer is basically saying that in order for your appraisal to be complete, to have supplied appropriate data, that you must now provide that background information.
Lets be honest, I have read hundreds and hundreds of self-contained appraisal reports, many of which I have scanned and are in my files and none of them provided the basis for every single adjustment that the appraiser made in his report. Some do a fair job of quantifying the market conditions (time) adjustment with paired sales. One or two of hundreds have provided the derivation of other adjustments, although the data generally deteriorates into a quagmire and it begins to lack credibility. The most defensible appraisals written for litigation purposes often simply make very few adjustments. While the after adjustment range is wider the appraiser doesn't have to worry about the defense of as many adjustments. There is also the use of qualitative adjustments, I think they make a lot of sense but you will take a lot of criticism as an appraiser for using qualitative adjustments, and the banks and government customers won't accept them.
As an aside, I think the term "forensic appraisal" is an oxymoron, since an appraisal is just an opinion not a fact and a "forensic appraisal" implies that since it was prepared for litigation, and provides precisely defined terms and a precisely defined problems, that it will provide more to its user than any other opinion.
Review appraisers use forms and a number of them are available for download on the Internet. Some review appraisers develop their own forms. Like the appraisal process itself there is nothing magical about the review process, it is usually just a step-by-step examination of each USPAP standard and then making comments about content. There are some examples of forms used for commercial reviews attached to this article that can be modified for your particular assignment. Good luck, and keep in mind that an appraisers work should be judged based on what their peers do every day, and not by an ideal that no other appraiser in the market meets. It may make great reading at the bank but I dare you to provide evidence that your review comments are consistent with what you find in peer reports.For more appraisal information contact Glenn Rigdon 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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