Matt Simmons has been busy with his third edition of “Random Thoughts of an Appraiser“! There are plenty of times where appraisers have collectively had thoughts or concepts that can be communicated and/or questioned in a sentence and don’t need a dedicated article. We are pleased to have Matt Simmons, partner of Maxwell, Hendry & Simmons, offer a periodic collection of observations on what’s going on in the valuation world. Matt is a licensed appraiser and consults on both residential and commercial income-producing acquisitions. Matt’s random thoughts are strictly for your entertainment. Enjoy!
Every appraisal should start with clarifying the six assignment elements of Problem Identification within the Scope of Work Rule. Amazing how many reports we see with multiple mistakes or even lack of identifying what they are. It’s the foundation of the entire appraisal process. You don’t pick countertops (comps) until well after you lay the foundation.
Always makes me laugh when I see a subject-to appraisal with “subject to inspection.” That’s all? Doesn’t matter what the result of the inspection is? Perhaps an adjective that conditions the appraisal on the OUTCOME of the inspection would be a good idea.
Every retrospective appraisal, by definition, should include an Extraordinary Assumption regarding the physical condition of the property on the effective date. Every one. More than half of the reports I see of outside appraisals don’t include it. Do yours?
I was appraising an island estate for a blue-blood American family – a surname we all know. My family is from Nashville and though I grew up in Florida, I was a Vanderbilt University sports fan (terrible idea), and I had a vanity plate on the front of my truck, VANDERBILT. I pulled up and got out of my truck and the estate caretaker said, “Oh hello Sir, I see that you’re a Vanderbilt.” Um, not quite. But to him, that would be completely normal. It was as if I’d pulled onto the set of Downton Abbey.
The good old days weren’t as good as your nostalgia leads you to believe and the grass is greener where it gets watered. Maybe our attitudes toward the profession are as much to blame for the challenges as the other things we complain about?
I read a terrible supplemental standard the other day in a residential engagement letter. “Three sold comparables required – five are required if value in excess of $1M” – there are all kinds of these out there and they create terrible incentives. So my reconciliation leads me to either side of the $1M mark but I have fewer reporting requirements if I conclude 995K. What could go wrong with that?
If you order a 1004D, tell me which service you want. Do you need an Appraisal Update, a Certification of Completion, or both? The form serves two masters. I didn’t design it that way but that’s what we’re working with, so be clear.
The comp is the transaction, not the property itself. Helpful to understand it that way for when you deal with properties that sold since the transaction you’re using as the comp (and get questions back about it). Also applies with using the subject’s prior sale as a comp.
Mrs. Clean can’t possibly live in all of these houses.
USPAP sets our standard as credibility, not accuracy. I think that word choice is superb too. We sell our opinion. That wording is also an acknowledgement that the quality of our work (credibility) exists on a continuum and can constantly be improved. Something can always be made more credible. But more accurate? This is actually the same concept used in the wordsmithing of the Preamble to the Constitution, “in Order to form a more perfect Union.” There’s a reason it doesn’t say ‘to form a perfect union.’ The union is never absolutely perfect. But we can keep pushing for a MORE perfect one. In the same way, accuracy is too high (and unmeasurable) a goal for an appraiser. But I can constantly, even in small ways, add to the credibility of my work.
Yes, I just compared USPAP to the U.S Constitution. I’ll show myself out.
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