A very interesting document provided by the Appraisal Foundation to state boards. Not mandatory, just information for them. State boards vary dramatically in how they handle discipline. Fortunately, I am in California, which has never had a state board (Governor of CA at that time did not want to increase any expenses, including advisory boards). Investigators are all state employees.
An appraiser states in his certification on an appraisal that he inspected the interior and exterior of the subject property, when in fact he only drove by the property.
As a result, he stated that the subject property was in average condition when it was actually in poor condition and essentially uninhabitable. He did not use any extraordinary assumptions or hypothetical conditions in the assignment. He knew that the lender required an interior inspection.
An appraiser accepted an appraisal assignment in an area where he is not geographically competent, failed to notify the client that he was not geographically competent and failed to take the necessary steps to become competent. As a result, he produced an appraisal that was not supported by market data.
In the sales comparison approach, an appraiser simply adds the adjusted value of the three comparable sales used and divides by three for an indicated value, even though some sales were far better indicators of value than others.
Note: These are the simple examples. There are more commercial appraisal examples and more complicated residential examples.
Click here to download from the Oklahoma state regulator web site.
My comment: Well worth reading. What does your state board do?
Thanks to Long Time Reader and author Doug Smith in Montana for this great link!!
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