[Editor's Note: I've been taking a little time off from Appraisal Scoop and so apologize for not keeping up with the "normal" flow of articles. This article by Bryan Reynolds is a little late getting posted but is still great food-for-thought!]
Celebrate Appraisers Independence, Not Yet!!! by Bryan S. Reynolds, AQB Certified USPAP Instructor
The 4th of July is around the corner and millions of Americans will celebrate their Independence. However should the appraiser be celebrating their appraiser independence as a result of the HVCC or any other pending or proposed legislation?
Although the number of requests to “hit the number” may be fading, appraisers are certainly shackled by the client dictating requirements many of which are unreasonable and unfounded. Yet when clients demand appraisers to jump it appears many appraisers typical response is How High?
It's time for appraisers to stand up, become truly independent and learn to say no! Let’s have the tail quit wagging the dog. When you are asked to do something you should not do or something perverse have the courage and backbone to say no.
Recently I appraised a property on 13 acres with a portion of the site being in a flood hazard zone. The client received a flood certification indicating the improvement was not located in the flood zone. After repeated requests, which turned into demands, to have me change the first page of the URAR to check the box no under flood zone I was successful in speaking directly to the underwriter. If you get to speak with the underwriter I have found most are pretty reasonable people. After providing her with the Fannie Mae Guideline, as listed below, she said thank you and nothing further was needed from me.
Special Flood Hazard Areas
Fannie Mae’s appraisal report forms provide an area for the appraiser to indicate whether the property is located in a Special Flood Hazard Area that is identified on the Federal Emergency Management Agency’s (FEMA) Flood Insurance Rate Maps. Flood insurance is required if any part of the principal structure is located in the following Special Flood Hazard Area zones: A, AE, AH, AO, AR, A1-30, A-99, V, VE, VO, or V1-30.
If the first page was changed to reflect no when a portion of the “property” was in fact in a flood hazard area a misleading report would have been prepared. A portion of the site was in the flood zone, the house was not, make the loan and leave the appraiser alone.
When you educate yourself, having the tools and resources at your disposal is very powerful. The published Fannie Mae Appraisal Guidelines are the underwriters’ guideline for review of appraisal reports. If you are familiar with them, when asked for things that are not required you can respond with no and can quote them their guidelines for reviewing appraisal reports.
For instance did you know that for appraisal reports delivered to Fannie Mae:
- an interior floor plan is only required if the subject suffers functional obsolescence attributed to the layout
- photos of comparable rentals and listing are not required
- comparable sales over 12 months are acceptable sales
- you may exceed the 15% and 25% adjustments
- mls photos are acceptable
Now for one you didn’t want to hear about. Minor conditions including holes in window screens must be reported. My first thought was all windows screens have a whole bunch of little holes in them. Fannie Mae does want them reported and considered in the overall condition rating but do not require repair.
One area appraisers routinely simply check the box is with regard to Highest and Best Use. This is one of the most critical areas of the appraisal process. How do you know what is comparable until a proper H+B Use analysis is conducted? The answer is you don’t.
I encourage everyone one to read a book, take a class with substance by seeking out meaningful education instead of the closest, fastest and cheapest. Challenge yourself; try to complete your next assignment on note book paper instead of a preprinted form you are currently utilizing as a crutch.
Light a sparkler and celebrate Independence Day but considered becoming a truly independent appraiser by not succumbing to client demands that makes little sense or that could place you in inauspicious situation. Let’s bring some Common Sense back to this business.
Bryan S. Reynolds is a Certified General Real Property Appraiser and an AQB Certified USPAP Instructor. Mr. Reynolds serves as an adjunct faculty member of The Columbia Institute, and is an approved appraisal instructor in 31 states. Reynolds is the owner of Reynolds Appraisal Service in Owensboro, KY, providing various residential and commercial valuation services, consulting and litigation support services throughout the area. He can be contacted at (270) 929-3088 or by email at bryan@reynoldsappraisalservice.com
Recent Comments