In the early 1990’s, we began offering appraisal review services to local lenders who relied upon them for pre-funding and post-funding quality control requirements. At that time, reviews were more of a necessary evil for some clients than a service they truly relied upon to help manage appraisal quality. It was not uncommon to be penalized by a client for suggesting “too many” value revisions. I would periodically receive phone calls from an agitated client advising me that our “cut ratio” (aka, number of our reviews that reflected suggested value revisions) was “too high;” and they would be sending their business elsewhere. None of those clients are in business any longer, nor are many of the appraisal review firms they relied upon when our “cut ratio” was “too high.”
Today, reviews remain very much part of the landscape, and their importance is more pronounced than ever. The same types of clients order them, but the skills necessary to be an effective reviewer are not possessed by everyone. So what does it take to prepare an effective review?
To start, the reviewer should be a highly competent and experienced appraiser. A trainee won’t likely have developed all of the skill sets necessary to competently and consistently develop and communicate a maximally effective review appraisal. However, just being a competent and experienced appraiser is in no way a guarantee of competence either.
Preparing effective reviews is an acquired skill. An effective review is one that allows the client to pursue their objectives with the confidence in knowing the review will not be a detriment, but rather a definitive and conclusive tool. Reviews must be devoid of emotional language, accusation, lack of supporting data and documentation. Subjectivity is not always avoidable in our industry, but it should be minimized whenever possible. In addition, a review cannot include any of the same perceived or real misrepresentations, errors, negligence or unsupported conclusions the reviewer may have observed in the appraisal being reviewed. A review must be developed and communicated in anticipation of any possible challenge. In other words, the reviewer must recognize that their report will be very closely scrutinized and each conclusion challenged. It is not just the reviewer’s conclusions that will be challenged, but his/her market data as well. Every word contained in the review report is subject to rebuttal. A reviewer is assuming the very same level of liability for their report and conclusions; and in some cases, they are held to an even higher standard when a challenge presents itself. In litigation support-related reviews, every word and conclusion reflected in the report will be forensically analyzed and critiqued, with the intention being to dilute or destroy the reviewer’s credibility.
Despite these challenges, appraisal review can be a very rewarding undertaking; and many appraisers have made a career providing this service to a wide variety of clients.
If you have a question or would like to place an order for an Appraisal or Review, please fill out the form below. Once you’ve submitted your order, someone from our office will contact you within 1 business day to confirm your order or answer any questions.