Appraisers' Free Forum

**Jim Plante** · Posted: Fri Aug 31, 2007 5:29 pm Post subject: Review? Or Appraisal? Or Both?

Example conversation:

Caller: "We need an enhanced field review of a property in your area. What's your fee and turn time?"

Me: "Enhanced field review? I've never heard of that product. Could you tell me what you want done?"

Caller: "Well, it's just a field review with two extra comps."

Me: "Please excuse my density, but I'm afraid I still don't understand. You say you want a review, and that's where I develop an opinion of the quality of another appraiser's work. Why would I need extra comps to make such a determination?"

Caller: "Well, when you come up with the new value, they want two extra comps."

Me: "A review does not involve developing a new opinion of value. It just tells you that I think this report is OK, or that it's not OK and why. Now, the fee for that service ranges anywhere from $150 to $900 or more, depending on just how detailed an analysis you need. If you want me to develop an opinion of value, then that's an appraisal. Those range from $350 for a current appraisal of a non-complex single-family residence. So if you want a basic desk review and a current appraisal, it would cost $500. If, however, you needed a full-blown courtroom ready forensic review and a retrospective appraisal of a non-complex single-family unit, your review would be about $900, and the appraisal would be another $500 if it's less than three years retrospective. So the whole fee would be a total of $1,400 for the whole package."

Caller: OK. Thanks. <click>

We need to start restoring a bright line between appraisal and review. The caller above was of course referring to the Fannie Form 2000, and he thinks that a review gets him an appraisal because of the way the form is laid out. And too many of us have fallen into form-speak, both by clients who deliberately try to bamboozle us, and through our own misconceptions of the review process.

IMO, we should NOT be concurring or agreeing or disagreeing with the opinion of value in a review. ALL a review is supposed to do is to develop an opinion of the quality of another appraiser's work. Here's an example of my analysis of a faulty sales comparison analysis.

**Denis DeSaix**

**skibs** · Posted: Sat Sep 01, 2007 11:20 am Post subject:

I don't see a problem with it. A field review reported on Form 2000 is an appraisal, as in providing a value estimate, already. The extra comp thing is to "show your work" agreeing with the estimate of value reported in the original report. You would include them anyway if you disagreed.
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**Edd Gillespie** · Certified General Joined: 13 Aug 2007 Posts: 2282

I was with you on reviewing the results as wel as the support, unitl you said the value is reasonable. I think you can say wheterh the value is supported by the report, but once you bring in reasonavle there is an implication that you are validating the value based on your own knowledge, research or whatever independent of the appraisal. I think on review you stick to the report. If you want to go off and do some independent work # 3 allows for it, but there may be some business issues to overcome.

As you know I shy away from review. Part of that is philosophical, geo competency, judging others (which you can see causes me all sorts of probems), etc., and part of it is that the process called enhanced review is exactly what Jim says it is, clients using appraisers to provide a second opinion at 1/2 or less of the original cost. Cut rates is not good for the profession guys, even if the lenders do like it.
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Edd “In the real estate economy, there are no guarantees that reason will prevail in a market where emotions run high and the amount of misinformation runs deep.” Jonathan Miller in The Matrix. So what’s an appraiser to do?

**skibs** · Posted: Sat Sep 01, 2007 12:44 pm Post subject:

I have yet to do an "enhanced review" for a lender looking to make a new loan but I do quite a few field reviews with additional comps required for clients looking to make other types of decisions concerning the property. As all users of appraisal services, the ordering parties don't always have a good grasp of appraisal language and I have even had otherwise intelligent audit personnel ask for a "review plus comp check". I can only imagine the indignation that one a caused somebody not willing to dig a little deeper into the inquiring party's real need. These things are what they are, a Standard 3 review plus Standard 1 value estimation reported in compliance with Standard 2 reporting requirements. They obviously are more work than simple desk type reviews or simple appraisals and doing them for half the going rate for a simple appraisal would be ridiculous. Even in the odd occurance (real odd considering the nature of the files involved) that I have personally agreed with the report, the SOW calls for the additional comps so you end up gridding out 5 or 6 sales, the original 3 which happened to the best available (rare but it happens) plus the additional sales.
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**Pina Colada** · Certified General Joined: 13 Aug 2007 Posts: 565

**Jim Plante** · Posted: Sat Sep 01, 2007 3:14 pm Post subject:

**Pina Colada** · Certified General Joined: 13 Aug 2007 Posts: 565

**Jim Plante** · Posted: Sat Sep 01, 2007 5:21 pm Post subject:

But I never developed an opinion of value. I merely looked for similar, proximate, and recently sold properties, just like the blurb said. Certainly this is *part* of developing an opinion of value, but unless I fully develop those facts into one, I haven't committed an appraisal.

By definition, an appraisal is either the act or process of developing an opinion of value; or, simply, an opinion of value (Dictionary of Real Estate Appraisal, 4th Ed.) So if I don't develop an opinion of value, but merely develop an opinion about the quality of the comps used, I have not performed an appraisal.
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Jim Plante

**Pina Colada** · Certified General Joined: 13 Aug 2007 Posts: 565

**Jim Plante** · Posted: Sat Sep 01, 2007 9:32 pm Post subject:

Where'd you see any prices in my post? I wrote only about proximity, similarity, and recency.
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Jim Plante

**Pina Colada** · Certified General Joined: 13 Aug 2007 Posts: 565

**Jim Plante** · Posted: Sun Sep 02, 2007 1:05 am Post subject:

If it wasn't reported, then how would you prove that I did one? And, to veer slightly off point, if one develops, but does not report, does it make a sound?
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Jim Plante

**Pina Colada** · Certified General Joined: 13 Aug 2007 Posts: 565

**benluby** · Certified Residential Joined: 12 Aug 2007 Posts: 1576

How can you develop an opinion of how accurate the other appraisers value is without developing, even if unreported, a value of your own?
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