I’ve been a strong proponent of continuing to foster professionalism in the appraisal industry. The days of appraising as a vocation are long gone, so it’s incumbent on each and every one of us to ensure our actions are in the best interest of the industry.
Let’s talk about some immediate areas of opportunity based on the reports that I see on a daily basis.
1. Transparency in Reporting: Unlike your kids on Christmas morning, the investor community doesn’t like surprises! The more information provided within the appraisal report, the better. This doesn’t mean filling up ten pages with ‘canned’ commentary, this means providing a detailed synopsis of your analysis and findings. Remember, providing enough information for the reader of the report to replicate your findings in the future is the current ante to play. Did you analyze sales that were not used in your comparable sales analysis? Why not disclose these sales within your report, in the form of an addendum, and identify why they were considered less reliable than those sales utilized in your comp grid?
2. Reconcile the Value: Give the reader of the report an explanation of your reasoning for deriving the subject’s value. Did you consider the inventory, absorption rate and depreciation? Is the market stabilizing? Did you give one or more comparables a greater preponderance of weight when concluding the value? Why? If you’re able to answer these questions in your reconciliation commentary, you’re less likely to find yourself defending the value down the road.
3. Act Accordingly: When engaging the borrower to access the property and while conducting your physical inspection, ensure you arrive on time, you’re professionally dressed and act as if you are a guest in the borrower’s home. Remember, you may be the only face-to-face interaction a borrower has with anyone representing the lender. If your presentment during the inspection is anything but exemplary, you are increasing the likelihood of a complaint.
These tenets aren’t all encompassing, but they can improve your practice in short-order if adhered to on each and every assignment. The more time and energy you invest in a quality product and process, the better chance we – as appraisers – have at reclaiming the consumer confidence we’ve lost in recent years.