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Review of Appraising the Appraisal : The Art of
Appraisal Review : The Definitive Guide for Reviewers by Richard. C. Sorenson.
Appraisal Institute Hardcover (August 1998).
Amazon.com Price: $27.50.
Published in the September, 1998 issue of Appraisal
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Books on reviewing appraisals are relatively few, particularly for commercial narrative appraisals, although almost all appraisers either review appraisals or have their appraisals reviewed by others.
Appraising the Appraisal: the Art of Appraisal Review by Richard Sorenson, MAI, covers a wide range of topics, from USPAP reviewing standards to reviewing regional shopping center appraisals to reviewer ethics.
The book is both "textbook"-like and practical, using the author's many years of experience in commercial appraisal review. When I first skimmed the book it seemed like it had too much basic material, but upon re-reading, the basic material such as a description of highest and best use, is often followed with practical advice on what to look for in your review, such as valuing the land and improvements with different highest and best uses.
The book starts out with a hot issue: Why are appraisals reviewed? The author gives practical reasons for reviewing appraisals such as a wide range of writing and research skills, problems maintaining consistent quality, and production time pressures.
Chapters on Troubleshooting appraisals of complex and special use properties and Evaluating Lease by Lease DCF/Computer programs are particularly useful for reviewing commercial appraisals. Sorenson gives guidance for what not to do in appraisal reviewing, such as using hindsight, refuting data in the original report without verifying that the data is inaccurate, and overemphasizing minor clerical errors.
What is covered in a review is also addressed, with seven levels of analysis for a desk review from scanning to full confirmation of market data. A list of six additional tasks in a field review is also provided. Lists of "common report deficiencies" are scattered throughout the book, such as lists for the three approaches.
A sample 14-page commercial appraisal review form is provided, plus a list of 11 quick steps if you have to complete a review in an hour. Several administrative check lists are provided, which can be completed by a clerical person or less experienced appraiser prior to a technical review.
Communication between reviewer and reviewee can be acrimonious. Scattered throughout the book and in the chapter on Communication with the appraiser, Sorenson has many tips for reviewers, such as, "An appraisal that contains a reasonable value conclusion should not be rejected because of nit-picking by an overzealous or inexperienced reviewer. A report can be acceptable even if it has some typos and minor errors...In a marginal case the reviewer should try to give the appraiser the benefit of the doubt... After all, the appraiser has inspected the property...Direct your criticism at the report, not the appraiser."
Many tips are provided for telephone conversations with the reviewee. I particularly enjoyed the Dilbert cartoons scattered through the book. One of my favorites is: - "Wild guesses can be transformed into business facts through the miracle of communication" (Dogbert speaking).- Step One: Wild Guess. "I dunno...it could be anywhere from one to one million." (Male person).- Step Two: Rumor. "They say it could be a million. (Female person)- Step Three: Fact. "Experts say one million." (Dilbert) To read more cartoons, buy the book!
Should you buy this book?
If your firm does commercial narrative reports or you review commercial appraisals, buy it.
If you do residential appraisals, the book will work as a reference for USPAP and give some help on such topics as communicating with the reviewee, reviewer ethics, and levels of review.
Unfortunately, few checklists, forms, and practical tips are provided for reviewing residential form reports. Fortunately, many seminars and workshops are available on residential reviewing.
Overall, I found the book full of many "gems" that I found useful in understanding reviewing with many practical tips and good advice. Although I don't provide commercial appraisal review services, I plan on using the checklists and tips for improving my firm's internal review of commercial appraisal reports.
Maybe you could send a free copy to a reviewer you find difficult to work with!
The author, Richard Sorenson, MAI is a former chief appraiser for First Chicago Bank (NBD) in Chicago IL and former national president of the Appraisal Institute. He has written several articles on reviewing.
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