Why “Just Any” Residential Appraiser Will Not Do

This blog is a re-post of a recent blog by our own Woody Fincham, SRA.  It was originally posted on the Appraisal institute’s Opinions of Value blog located here.

Why “Just Any” Residential Appraiser Will Not Do

The following is a guest blog post by Woody Fincham, SRA, principal, F&M Associates, Inc.

With so many appraisers vying for low-fee appraisal management company and lender-related work, many AMC-centered appraisers are starting to compete for non-lender work.

Residential_Appraisal_Report

Most consumers don’t understand the need for experienced and designated appraisers outside of lender use work. It’s the appraiser’s responsibility – and in his or her best interest – to remind non-lender clients that hiring a designated appraiser is worth their time … and, most importantly, their money.

Attorneys, financial experts, homeowners and other non-lender consumers and users of residential appraisal services should tread very carefully when selecting appraisers. There are two distinct groups of appraisers in residential valuation: appraisers who perform primarily mortgage related work and those who work with non-lender clients.  It pays to be able to discern between the two groups.

What is the difference? 

Non-lender residential valuation is a market niche, often best suited for experienced appraisers who think outside the box. These assignments include appraisal reports performed for situations such as wealth-management, divorce and other litigation related needs. Often, intended users need to find the most qualified and experienced appraisers. Well-vetted experts are most applicable when testimony is a possibility or when looking at unique properties. Selecting an appraiser limited to only experience with lender related work could result in less than optimal results.

Take attorneys, for example. They need someone who can write reports well enough to be seamless and defensible, but also handle cross-examination in a trial or the craziness that can be a pre-trial deposition. It takes a good professional to write the report, but an even better one to be effective on the stand or to help with pre-trial preparation.

Often, during the interview process in pre-trial or in court testimony, the appraiser must be able to communicate complex valuation theory to a jury or a judge who may have no understanding of such things. In other words, the appraiser must become an effective teacher in addition to being a good report writer.

Many residential appraisers who work primarily with lenders − especially since the housing crisis emerged in 2007 − are required to stay confined within a limited scope of work. Lenders often require appraisers to utilize comparable sales within a very narrow window of time, a small geographic area, and to not exceed lending guidelines when adjusting comparables sales.

This can be problematic when dealing with situations that often, or may, end up in court. The cost for an attorney to reorder a better report, or to pay a well-qualified appraiser to assist in pre-trial analysis, can get expensive quickly. Even worse would be finding that across the courtroom, the opponent hired the appraiser he or she should have hired.

What is the Takeaway for Consumers?

  • Be willing to ask an appraiser why they are a better choice than the other appraisers you are considering.
  • Ask for a resume and check references.
  • Take the time necessary to make sure the appraiser is well qualified, beyond just the minimum qualifications.
  • Look strongly at professional designations such as the MAI, SRPA and SRA designations.
  • If you are looking for pre-trial consulting that involves the review of another appraiser’s report, the new Appraisal Institute Review Designations are a great place to retain talent:
    • AI-RRS for residential reviews, and
    • AI-GRS for non-residential reviews.
Advertisements

About woody22911

I am a professional assessor/real appraiser by trade; I manage a staff of 13 people. I have a bachelor of science in business admin and an associates in culinary arts. I am looking into a masters in public policy/public administration. I am also a musician, a father to three kids and I attempt to write. I have Diabetes II as a result from a condition that causes my body to produce unusually high triglycerides. I have been hospitalized with acute pancreatitis four times over the last 15 years. This particular blog is an attempt to document my successes and failures to fix the problem through nutrition and activity.

One thought on “Why “Just Any” Residential Appraiser Will Not Do

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s