The top mistake that keeps reports from being compliant

“Data to support the adjustments made is often times not provided,” she said. “A lot of appraisers will make adjustments to the comparables in the comp grid and include commentary in the report regarding the adjustments. However, no data to support their findings is provided. That has a big impact on the overall value and compliance with USPAP, with the credibility of the appraiser coming into question as a result of such absent information.

“Surprisingly, reconciliations pertaining to detailed information is also left out,” Conolly added. “The range of comps and determination of how the opinion of value is derived needs to be outlined. Sometimes the appraiser simply writes ‘all comps considered,’ which doesn’t provide any real information as far as our review of the report.  The appraiser needs to tell the reader which comp was weighted more or less, the reasons why, and provide specific details regarding how they determined their opinion of value.”

And when items are not readily made available to the appraisal reviewer, there is a process involved to make sure everyone is on the same page.

“We have two levels of reviews,” Conolly said. “The first level is handled by USPAP-trained QC (quality control) reviewers, with our second level of review done by our staff appraisers. If we find questionable items or commentary that doesn’t help us understand or explain how the appraiser arrived at their conclusions or opinion of value, we reach out with an email calling to the appraiser’s attention what is missing. We follow up the email with a phone call to the appraiser to discuss and answer any questions they may have, which ensures an expedited process.

“Sometimes, they actually didn’t realize a specific item was needed in the report,” Conolly continued. “Sometimes, additional commentary is needed for clarity and for issues to be resolved quickly. The time it takes for us to review an appraisal could be 30 minutes or two hours, it depends on how complex the assignment was and how well the report was put together. The goal is to get things right the first time, because this is a time-sensitive business.”

Deciding the risk level of the appraisal is the key for staff reviews of reports, she said.

“In what constitutes a complete review, we look at it from the risk assessment point of view,” Conolly said. “We look at what specific types of data were included in the appraisal, as well as what data was available to the appraiser, that led the appraiser to the overall conclusion as it relates to value.”

The forms appraisers use can be subject to debate. Some use a standard form with specific sections to check off, while others use a more narrative form of reporting.

“I’ve seen various ways to complete a report with it going all across the board,” she said. “Some appraisers keep it short in terms of just checking those boxes on the form with no commentary, which is not the preferred way with the way appraisal practices are going. This doesn’t lend much information, data or support to the reader regarding the appraiser’s opinions and conclusions. Others are very detailed in their reports, offering charts and graphs offered by software platforms to illustrate their point and further enhance their findings. It is more challenging to review narrative reports simply because of the time involved having to potentially go through a variety of pages.”

Still, Conolly and others who review appraisal reports will agree that there is no such thing as “too much information.”

“You can never have enough information for a reviewer to look at in determining compliance,” Conolly said. “For the underwriter needing to make a lending decision, the more you disclose the better. The appraiser is the underwriter’s ‘boots on the ground.’ They need to know everything the appraiser knows in order to make an informed decision, so you really can’t over-disclose in an appraisal.  ”

The additional software available to appraisers to enhance the data they are supplying is also a plus for those writing reports.

“There really isn’t an excuse to leave required data out of a report with what software companies are making available to the appraiser,” Conolly said. “If appraisers are not doing this, they are really behind the times.”

Appraisers always are looking to enhance their businesses. Conolly believes she plays an important role in helping appraisers make their business the best it can be.

“We work with our appraisers,” she said. “I’ve had a lot of positive feedback from appraisers who are very thankful when we spot something that will not be compliant with USPAP or the FHA, and point it out to them. Some appraisal businesses are one-man shops, and they may not be up to date on certain regulations, so we are happy to get the appraisers on the right path. At the end of the day, it is still up to the appraiser to do things right, but we feel good about helping them do just that.”

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