Guest Appraiser Columnist:
Todd Huttunen
Todd Huttunen began appraising more than 20 years ago with a few years off in between to pursue a career in cabinet making. He relegated that to hobby status and is currently an appraiser in an assessor’s office. His best friend dubbed him The Hall Monitor because of his rigidity and respect for rules. He offers readers tongue-in-groove insight on appraisal and housing issues. View his earlier work on Soapbox.
Jonathan Miller
Not unlike the wording found in real estate contracts prepared by lawyers – “The party of the first part…” etc., — fully 95% of what you read in a real estate appraisal consists of boilerplate language which is the same in every report. This is standard procedure, and there is absolutely nothing wrong with it. One would assume, however, that since the boilerplate language is only actually typed out one time and then copied verbatim ad infinitum, that the grammar and spelling would be correct. Now I realize that I am more sensitive to these things than most people (I’ve agonized for years over whether or not to use a hyphen with the phrase “anal-retentive”). But with tools like Spell Check that make it truly difficult to butcher the English language, one can only look on with “shock and awe” at the following examples of boilerplate, taken from actual appraisals prepared by licensed appraisers. As I was typing these comments my keyboard was practically smoking from all the mistakes, but — I assure you — every keystroke is a faithful reproduction of what was written in the appraisals.
>THE EXTEND OF THE APPRAISERS INVESTIGATION INCLUDED (1) REVIEW OF PUBLISHED RECORD DATA FRO THE SUBJECT PROPERTY, WHERE AVAILABLE; (2) INTERIOR AND EXTERIOR INSPECTION OF THE PROPERTY IMPROVEMENTS AND INSPECTION OF THE SITE, UNLESS OTHERWISE STATED IN THE IS REPORT (3) INSPECTION OF THE NEIGHBORHOOD AND ANALYSIS OF REGIONAL CHARACTERISTICS; (4) RESEARCH OF SUBSCRIPTION SALES DATA, PUBLIC RECORDS AND OTHER PUBLISHED DATA SOURCES AND CURRENT LISTINGS; (5) ANALYSIS OF THE SELECTION COMPARABLE SALES AND LISTINGS INCLUDED VERIFICATION OF THE REPORTED DATA; (6) CONSIDERATION AND ANALYSIS OF THE HIGHEST AND BEST USE OF THE SUBJECT SITE; (7) CONSIDERATION AND APPLICATION OF THE APPLICABLE APPROACHES TO VALUE (ALL THREE APPROACHES TO VALUE WERE CONSIDERED AND USED EXCEPT WHERE NOT APPLICABLE OF OTHERWISE NOTED); (8) FINAL RECONCILIATION OF THE DATA TO ARRIVE AT THE ESTIMATED MARKET VALUE.
>THERE APPEARS TO BE ADEQUATE FINANCING IN THE SUBJECT AREA AT COMPETITIVE RATHES AND TERMS. BASED ON ANALYSIS OF PREDOMINANT MARKET PATTERSN, EXPOSURE TIME FOR THE SUBJECT IS APPROXIMATELY 30 TO 180 DAYS WHEN PROPERLY MARKETED.
>APPRAISER HAS REVIEWED THE CONTRACT, HOWEVER SINCE THE APPRAISER IS NOT AN LAWYER HE HAS NOT ANALYZE THE CONTRACTS.
>WINDOWS WERE NOTED AT THE TIME OF THE INSPECTION.
>THESE TOWNHOUSES ARE ON 4 LEVELS WHEN YOU INCLUDE THE TANDEM GARAGES. THEY ARE FOR THE MOST PART NARROW. CLIMBING THESE UNITS DOES APPEAR TO HAVE AN NEGATIVE IMPACT. THE INSTALLATION OF ELEVATORS APPEARS TO HAVE A BIG POSITIVE IMPACT. MOST LISTINGS WITHIN THIS COMPLEX HAVE COMMENTS THAT ELEVATORS CAN BE INSTALLED.
This next description of market conditions follows the appraiser’s checking boxes on the appraisal form indicating property values are declining, there is an over supply of homes on the market, and marketing time is over six months:
>MLS RESEARCH INDICATES AN ACTIVE RESALE MARKET WITH A NORMAL SUPPLY OF AVAILABLE PROPERTIES. LOCAL MARKET CONDITIONS INDICATE MANY HOMES SELLING AT OR ABOVE THE LISTED ASKING PRICE. MARKETING TIMES ON AVERAGE ARE LESS THAN 90 DAYS FOR PROPERLY PRICED HOMES IN GOOD CONDITION.
>COSMETIC REPAIRS ARE NOT REQUIRED; HOWEVER, THEY ARE TO BE CONSIDERED IN THE OVERALL CONDITION RATING AND VALUATION OF THE PROPERTY, WHICH THE APPRAISER VIEWED THAT THERE WAS NORMAL DEFERRED MAINTENANCE AND DID NOT RISE TO THE LEVEL OF A REQUIRED REPAIR.
My personal favorites are these last two, both of which were written by a self-proclaimed Notre Dame alumnus.
>MARKET CONDITIONS ARE CURRENTLY APPEAR TO DECLINING AND FOR THE GENERAL MARKETING AREA SINGLE FAMILY DWELLINGS. THE GENERAL MARKET FOR LOANS APPEAR TO BE DIFFICULT TO OBTAIN RATES AT THE TIME OF THE INSPECTION.
>MARKET CONDITIONS ARE CURRENTLY APPEAR TO HAVE SOFTENED AND FOR THE GENERAL MARKETING AREA CONDO’S OF REAL ESTATE SELLING AT A STABLE RATE, THE GENERAL MARKET FOR LOANS APPEAR TO BE DIFFICULT TO OBTAIN RATES AT THE TIME OF THE INSPECTION.
I wrote these selections in all caps because that’s how their authors wrote them. Perhaps it’s just a coincidence that the worst writing I found was from appraisals typed entirely in capital letters, but I don’t think so.
My wife Carol, an executive recruiter, suggested that, given these phrasings, the absolutely perfect candidate for a career in real estate appraisal would seem to be none other than Sarah Palin herself. If you saw William Shatner reading her “tweets” on the Tonight Show the other night, I’m sure you’d agree.
5 Comments
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Todd,
Although I agree with your premise that the appraisal profession pretends to expertise, our ranks are absolutely bloated with appraisers who generate the kinds of examples you quote. How the public trust in appraising will ever relax while this sort of stuff is going on is a continuing mystery.
Even though you may be anal retentive (sic), don’t be guilty. You are write about righting. Appraisals reports in the US are expected to be communicated in at least high school English and appraisers should be proficient at least that.
I’ll bet if the English in the reports is that bad the analysis in the appraisal is even worse.
Too bad USPAP has that pesky confidentiality thing in it. Otherwise you could publish the names and let peer pressure work its wonders.
But, this brings me to my perennial point. The lenders are enabling this incompetent stuff, it is what they want and all that they will pay for. The only thing to do about it that I can come up with is to refuse to appraise or review for them that send their loans to the secondary market on a Fannie form.
The extra benefit for you if you refused to review for the fly-by-nights, no matter if they are too big to fail, is that you won’t have to read this kind of butchery any more and risk aggravating your colon condition.
Todd,
Sadly, the example cited is much too common. The only upside is many of users of such boilerplate are being sanctioned by state appraiser regulatory agencies; at least in the Sunshine State.
Dozens of appraisal reports with language shockingly similar to your example were among the 60+ complaints against appraisers I just examined as part of my participation in the Florida Real Estate Appraisal Board Probable Cause Panel.
So much paper, so many words, and so little sense.
The fact that so many poorly written appraisals are being used every day by financial institutions and others, and that even reports with numerous flagrant errors have no problem passing muster, points to a serious problem with the profession and its future viability. If the client doesn’t read the report then what purpose does it serve? If the client does read the report, and it is filled with the kinds of mistakes we’re discussing here – and that does not cause the client to question the appraiser’s competence and judgment – well let’s just get out the rubber stamp and be done with it.
Maybe it’s time for real estate appraisal to go the way of the buggy whip maker.
Todd,
When field reviewing reports, a well written, competent report is so rare that I have to call a peer and share my joy.
Todd, et al,
For the most part it does seem the appraisal industry, at least looking from the demand side in the mortgage sector, is an anachronism. The mortgage industry has moved on and collateral value is an after thought. The law made the mortgage appraisal necessary, sort of a tax, so why not get the cheapest one? Nobody is going to read it, so who cares what it says? You and hand full of your conscientious peers is who. Good appraisers care and thanks for continuing to remind us.
Frank is correct. The law also added government oversight of appraisers that for a myriad of reasons can’t seem to get around to the issue of excellence.
However, if this mess is to have an end, it will come about through the efforts of appraisers. It’s uphill and in to the wind right now and no light in the tunnel, but I believe you can eventually make the needed difference, if your colon can handle the delay.
Thanks guys for reminding us that excellence in every appraisal is our goal. If we keep at it, it will happen. For me the client is an important part of the equation and I can’t do my best overnight for a dollar-two-ninety-eight.
Apparently, assuming your examples were taken from Fannie forms speeding down the secondary track, others can’t either.
Although the argument is made that excellence must be the appraiser’s guide, it has all of the impact of a Sunday morning sermon in Las Vegas. At the mortgage level excellence is not demanded by the client and our industry has responded in free market fashion and supplies what is in demand.
And if we don’t supply it, just around the corner are BPOs and AVMs. You can get those way cheaper and faster than appraisals and boiler plate is never an issue.
Please remember and preach that fee and turn time is a part of the scope of work and do not join with those appraisers who relegate those matters to nothing more than a business decision. Make no mistake, low fees and fast turn times impact quality negatively. But even so, many appraisers compete solely on those bases.