Valuation Management Group offers a robust technical review and/or desk review of various types of appraisal reports. Both clients and appraisers are often curious about some of our common review findings. We’d like to share some frequently requested revisions from our review team in order to help you better understand the review challenges.
The appraisal review focuses on the report, not the appraiser. It is a constructive evaluation of the report’s content and whether the reasoning and support leads the reader to the value conclusion.
Valuation Management Group’s experienced review appraisers may ask the appraiser to consider revising the report for completeness, accuracy, adequacy, relevance, reasonableness, appropriateness, and credibility to help the reader better understand the conclusions presented in the report.
For commercial reports, some of the appraisal reviewer’s most common requests for revisions include:
- Insufficient explanation for the omission of any approach to value
- Incorrect representation of the existing property rights (fee simple, leased fee, etc.)
- Improper terminology when reporting the value as of a future (prospective) date
- Failure to discuss the effect on value of personal property or intangible items when included in the value opinion
- Summing the values of various estates or components of a property without analyzing the effect on value of their assemblage
- Confusing the terms “extraordinary assumption” and “hypothetical condition”
- Simply stating conclusions (for example, highest and best use, market rent, operating expenses, capitalization and discount rates, comparable sale adjustments, unit value opinions, etc.) instead of providing sufficient reasoning, support and explanation of how those conclusions were reached.
For residential reports, some of the appraisal reviewer’s most common requests for revisions include:
- The contract information reported on the appraisal conflicts with the contract that was uploaded to the order.
- The occupancy is incorrectly marked.
- The question on the appraisal that asks “Is the subject property offered for sale or has it been offered for sale in the prior 12 months?” is incorrectly marked. The questions refers to the verb offered, not listed, therefore if it’s a purchase the answer should be yes.
- The borrower name or address does not match the order.
- The client name is wrong or not complete and/or client’s address is wrong.
- The comments in the report conflict with the data and/or analysis in the report.
- Lack of explanation for adjustments and/or inconsistent adjustments.
- Appraised value is not adequately supported by the comparables.
It is the professional reviewer’s goal to work with our appraisers to achieve a credible appraisal report for our mutual client and in most all cases; these items are addressed and resolved quickly and prior to delivery of the report to the client.
Valuation Management Group is a national, full service appraisal management service company that manages the appraisal process for community 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.