Appraisers' Free Forum

The appraiser felt it was an uphill climb from the living room into the kitchen. None of the doors closed properly and the corners of the doorway were not at 90 degrees. However the appraiser is not a structural engineer to actually determine if there was anything physically wrong with the home.

(The LO called me up on an Easter Sunday to bitch at me about my report)

I like to quote USPAP on anything unusual. For example, with an EA, I will start with the following:


Appraisal of the subject property is contingent upon the following extraordinary assumption in addition to the normal Contingent and Limiting Conditions. Extraordinary assumption is defined in the Uniform Standards of Professional Appraisal Practice (USPAP) as:

“an assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions.”

Specifically, ???

Then, I just describe what it is. In the case of possible structural defects, I might say something like:

A crack was observed at the corner of the southeast wall. It appears to be a one time settling and the owner indicates that it has been there for several years. Therefore, the extraordinary assumption for this appraisal is that the crack does not indicate structural deficiency that would lower the value of the property.

Then, I might include a photo, if appropriate. Keep in mind that I have boilerplate in other portions of the report stating that I am not a home inspector nor an engineer, etc., etc.

The deal with EA's is that you believe it is not a problem. I would not write an EA in a situation like Mr. Kowitall's example, where floors are not level and doors do not close. In such a case, you already know that it is going to have an effect on value... IMHO, EA's work best in situations where you don't think there will be any effect.

Steve's way or Jim's way is OK by me and I think those peers that hang out in the shadows. Just great for appraisers. But how many appraisers are reading your reports?

I would suggest for ease of reading and interpretation at a third grade level, you both do this.

"There is a crack in the basement wall big enough to stick your pencil in. Somebody who fixes cracks in basement walls should look at it to tell you how serious it is. Until we can see that report, I'm pretending the crack doesn't matter. If the report says the crack matters then this report is no good."

I'd refine that a little, Edd.
"...I'm assuming that the crack is the product of early settlement and that it has stabilized. I'm making that assumption because I've seen such cracks in many different basements. In my experience, the crack is harmless. But since such cracks can indicate structural damage, it would be prudent to have it checked by an expert. If it is later proven that the crack is the result of structural failure endangering the subject's house, then the opinion of value expressed in this report should not be relied upon."

Jim Plante wrote:I'd refine that a little, Edd.
"...I'm assuming that the crack is the product of early settlement and that it has stabilized. I'm making that assumption because I've seen such cracks in many different basements. In my experience, the crack is harmless. But since such cracks can indicate structural damage, it would be prudent to have it checked by an expert. If it is later proven that the crack is the result of structural failure endangering the subject's house, then the opinion of value expressed in this report should not be relied upon."

Good, put that in your workfile, and then report the grade school transalation of it.

Nothing wrong with it as far as if I was reading it, but you are sending this out to a sincere reader who is undertrained, overworked, suspicious, stressed and mosty likely has never appraised anything. Not unlike a state board investigtor. The point I am trying to make is that I think you need to dumb it down for somebody who speed reads at 30 words per minute. No disrespect intended, but outsourcing and English second language is with us to stay. Of course it is imperative that you remain accurate as well and that your development and report holds up under the inevitable fire it will get for delaying or killing the deal over the crack in the basement.

Also, I wonder if something as simple as mentioning USPAP or FANNIE in bold type will end run a lot of objections and discussion. I know it is important to appear articulate, but I think that is something of value to appraisers that clients do not share. They do not apear intimidatd by the written word in the original appraisa as much as they are in a rebuttal to a review. Maybe that has something to do with the reviewer being an appraiser.

Man, Edd, you hit a nerve with that one.

The problem all of us have is that we write like damned appraisers. This was pointedly evident in the Demo Alternative course. It's a hard habit to get out of.

But I think a certain level of formal style is necessary, not to lend credibility by slathering on the BS with a trowel, but to be sure we've covered the points that need to be covered.

The advance writing instructors all quote some ancient writer who apologized to a friend, saying, "I'm sorry this letter is so long; I didn't have time to make it shorter." Editing is a painful process sometimes, and it can take as much time as the report did if you do it right. Dig out one of your old narratives (2+ years old) and you'll immediately see places where you dropped the ball. (Damn, I hate doing that.)

Here's the main problem: We have to write the report so an eighth grade drop out can understand it, but so that a lawyer cannot rip our throats out over it.
Talk about a slight difference in potential readers. Oh, and we also have to make sure if it goes to the board, they will acknowledge that it was written well and is clear.

Okay, I think Edds is too loose, and mine's to tight-assed. Somebody take a stab at refinement.

Jim Plante wrote:Man, Edd, you hit a nerve with that one.

The problem all of us have is that we write like damned appraisers. This was pointedly evident in the Demo Alternative course. It's a hard habit to get out of.

But I think a certain level of formal style is necessary, not to lend credibility by slathering on the BS with a trowel, but to be sure we've covered the points that need to be covered.

The advance writing instructors all quote some ancient writer who apologized to a friend, saying, "I'm sorry this letter is so long; I didn't have time to make it shorter." Editing is a painful process sometimes, and it can take as much time as the report did if you do it right. Dig out one of your old narratives (2+ years old) and you'll immediately see places where you dropped the ball. (Damn, I hate doing that.)

Yeah, the problem is communication. If you are writing a demo report and write it like you were sending to underwriting, you probably did it wrong. Same with writing instructors. The demos and instructors are shooting for a level of performance from you that your normal audience doesn't even know exists and could care less about.

My comments in this arguement do violence to my position on a slightly different issue though. Have you noticed the volume of absolute irrelevant crap many narrative reports have in them, such as a regurgitation of the development of the Santa Fe Trail in Colorado or something equally mundane for your area?

It is filler, pure and simple. And the defense I can't get around, because I can't prove or disprove it is, the client like it and expect it.

So, I guessthat leaves me in a puddle of my own making. How much emphasis do we place on the audience we are pitching or stuff at?

How much emphasis do we place on the audience we are pitching or stuff at?

Practically all of it, IMO. You have to "talk to your client" and use language that he'll understand. My example text above could, as you said, be sent to a lawyer or CPA without change. They'd understand it. Your example would be appropriate to an unsophisticated individual.

I think we MUST tailor our report language to the individual reader.

benluby wrote:Here's the main problem: We have to write the report so an eighth grade drop out can understand it, but so that a lawyer cannot rip our throats out over it.

[font=Times New Roman]Actually, the reason we write at 8th grade level, IMHO, is to make it more readable for everyone... including college grads. When I was studying report writing, I got a letter from Harvard Business Journal. I ran it through Grammatik... guess what? Sixth grade level, number of syllables per word average way below how I was writing at the time. Seems to me that being clear and concise, which is consistent with the lower grade level writing, would also help eliminate a lot of legal problems.[/font]

I once heard from someone who is now lost in my memory that you need to be able to explain things so your grandmother can understand them wthout being offended or bored silly.