The Uniform Standards of Professional Appraisal Practice (USPAP) defines appraisal review as “the act or process of developing and communicating an opinion about the quality of another appraiser’s work that was performed as part of an appraisal or appraisal review assignment.”
Dave Maul, MAI, a Commercial Quality Assurance Reviewer at Valuation Management Group, recently attended the Appraisal Institute’s course Review Theory–General. The course is required education and testing to receive the AI-GRS (General Review Specialist) professional designation. It presents the fundamental concepts and principles that a professional reviewer requires to be proficient, including what constitutes a review, why clients need reviews, and the role an appraiser plays in the review process. The course handbook states, “Appraisers and reviewers have similarities as evidenced by the characteristics that define them. Both are expected to be in a neutral position and thus provide their services with impartiality, objectivity, and independence.”
The course stresses that a reviewer must see beyond the form, format, and styling features used in the appraisal report, and that a successful reviewer should be fair-minded, a good listener, and optimistic when approaching a review assignment. The course also emphasizes competency as a defining characteristic of an appraiser acting as a reviewer, and states: A qualified reviewer generally has expertise with the property type involved in the work being reviewed and with the methodology applicable to the valuation of that property type. A qualified reviewer must also possess the following skills:
- Has expertise in review techniques
- Can identify the strengths and weaknesses of the work under review
- Can distinguish between material and trivial errors and omissions
Paramount in the review process are identifying the problem and developing an appropriate scope of work relative to the client’s intended use. It is important to define the reviewer’s scope of work so as to establish an agreement as to the client’s expectations of the reviewer’s level of investigation. An acceptable scope of work for any review assignment should meet or exceed the actions of the reviewer’s peers in performing the same or a similar assignment as well as meet or exceed the expectations of those who are regularly intended users of similar review assignments. When the only information made available to the reviewer is the report under review, and no personal inspection of the subject property or the comparables is performed by the reviewer, the reviewer’s primary focus is whether the data and analyses presented in the appraisal report are appropriately supported and, if not, why not?
Appraisal review is a professional skill and a necessary tool used to promote public trust in the appraisal process. To be review literate, an individual should possess the training to apply review techniques in a manner that leads to credible assignment results. Specific education and testing related to appraisal review, peer review of an appraiser’s review work product, and certification as a professional reviewer, such as the AI-GRS designation, are all reasonable benchmarks to consider when seeking a qualified reviewer.
The Interagency Appraisal and Evaluation Guidelines require that “as part of the credit approval process and prior to a final credit decision, an institution should review appraisals and evaluations to ensure that they comply with the Agencies’ appraisal regulations and are consistent with supervisory guidance and its own internal policies. The review also should ensure that an appraisal or evaluation contains sufficient information and analysis to support the decision to engage in the transaction. Through the review process, the institution should be able to assess the reasonableness of the appraisal or evaluation, including whether the valuation methods, assumptions, and data sources are appropriate and well-supported.”
Valuation Management Group is a national, full service appraisal management service company that manages the appraisal process, including the required review, for financial institutions, banks, mortgage bankers, and credit unions. We offer the full array of commercial and residential appraisal products and services. We take the appraisal process from ordinary to extraordinary.