Poll from www.appraisalport.com

Thanks again to Steve Costello, AppraisalPort Relationship Manager, for sending me these Most Interesting weekly poll results

5-12-15 poll on distance-geog competent

My comments: Many commercial appraisers cover wide geographic areas. Some do the entire U.S and sometimes other countries. Fortunately, the “wing dippers” – appraisers flying in for a few days from other parts of the country to appraise a commercial property – definitely declined after licensing. I somehow had a “bad attitude” about helping them…

As we all know, distance from the subject is not the best “only” criteria. If you work in a rural area, usually you have to drive long distances.

But, I know many appraisers here in the San Francisco Bay Area who work in many counties. Travel distance does not always mean much if you work in a more urban area. Huge variations among all the cities. I cut down my area to be more profitable – driving time is lost money. Appraisers sell our time. I don’t work in San Francisco, 10 miles from my office. Very tricky to appraise. I decided not do appraisals that required crossing a long bridge.

  1. Ok, so it’s not just me. I recently cut ties with my best AMC client. They use out-of-state reviewers who know nothing about my market but insist on challenging me with a parade of ROV’s. At the end of the day my original appraisal value remains unchanged. My last week wasted 4 hours of my day writing for revisions and rebuttals and unnecessarily driving comps all over the Bay Area. MAJOR WASTE OF TIME and productivity. Geographical competency should also apply to the reviewer.

  2. Long ago when I was a staff appraiser for a Blue Chip transportation corporation (then the largest private owner of real estate in the country), they would send in-house appraisers out from the main office across several states. Largely because these were salaried positions, and because the company had more trust in employees than when they had to fee out some work, the corporate attitude was that the staff appraisers needed to spend as much time in the field as was required to do competent work, whatever the nature of the assignment. Fee appraisers don’t have that luxury.

  3. I appraise in Jacksonville, FL, which is the largest city in the country. We have almost 1000 sq miles in the city. The city and the county are one in the same. We have urban, suburban and rural areas in Jacksonville. We have a major river(St Johns) that flows through the city, we have the Intracoastal waterway and we also have the Atlantic Ocean within the city. Any appraiser that works in Jacksonville has all the knowledge and experience to complete all residential assignments. We are also geographically competent well over the 1000 sq miles in Jacksonville.

    • This is a valid point you make Don. I cover a major portion of Klamath county which is over 6000 square miles. Klamath county is the fourth largest county in Oregon which is the tenth largest state in the U.S. Anyone who thinks distance is the determinant factor for geographic competence does not have a clue about what it means to be geographically competent. According to USPAP it is the responsibility of the appraiser to determine competence.

  4. Excellent report. Geographic competence should apply to reviewers as well as appraisers. Lack of information regarding locations or neighborhoods are the cause of many superfluous revision requests.

  5. I have an MAI friend who specializes in appraising resort properties. Needless to say, he travels all over the world. Of course, he is not an AppraisalPort user.

    OTOH, if an appraiser from around the world came to consult with me (or with a competent real estate agent) with his residential appraisal assignment in my local area, it would not be difficult or time-consuming to convey to him the basics of the market, what things to be aware of, etc., to impart enough geo-competence to keep him out of trouble. I have been doing this for 27 years and I am still learning little nuances about my market.

  6. My primary service area is 60 miles from my office. I have been studying this market for over 10 years. Some lenders/AMCs do not send me work until they get desperate because they are stuck on stupid and use a distance matrix to make their orders. The stupidity of the AMC/lender does not bother me because I am booked solid into August. For many years I covered three counties that included a geographic area with a radius of 200 miles. Geographic competence is up to the appraiser to be and declare; not the AMC and not the lender and I do not understand why any appraiser would accept an assignment in a market area they had not studied long enough to be competent. Funny thing is the AMCs and lenders in other states with personnel who have never even been in Oregon are operating as if they were geographically competent by lending in this state and reviewing appraiser’s work for quality. I am proud to say I have fired most if not all of the AMCs/lenders who use such matrix and my clients (most of whom are local to the market I serve) see the quality and competence of my work regardless of the distance to my office.

  7. I believe most appraiser’s can familiarize themselves with an unfamiliar market by conducting market studies, internet data sources, consultation, and probably as important, if not more, is speaking with multiple experienced realtors in that particular neighborhood, as it is reasonable to assume they have first-hand knowledge of the varying markets within a general neighborhood and are able to differentiate between any varying economic markets.

    However, the time needed to perform these tedious and time consuming tasks conflicts with the ever influencing “turn-a-round” times. And if you are battling with, and allow yourself to become influenced by turn-a-round times, then the true accuracy of your appraisal is already compromised, regardless if you obtained an ballpark figure simply by mere luck.

    In conclusion, why would any lender, amc, etc. consider using an appraiser outside of the subject’s market area anyways. Oh, that’s right, they are more concerned by the cheapest appraisal fee fully willing to compromise the accuracy and reliability of a report to save $50.00 bucks. They deserve what they ask for.

  8. I believe that “Geographic Competence” is the biggest scapegoat of our profession amongst the uninformed.

    I’m knowledgeable enough to know that I’m probably not qualified to appraise in New Orleans, due to Napoleonic Law. But I could probably become competent by consultation.

    Of course, this would not qualify me in the case of an FHA appraisal, which requires competency at the time of the acceptance of an order.

    Other than that- appraisal principals are appraisal principals, and I believe that this is an overblown issue that appears to be valid to the general public, who believe that an Appraiser who lives beyond the City Limits isn’t qualified to appraise their home.

  9. I perform residential appraisals in urban and suburban areas. If I have access to the same data bases and spend an appropriate amount of time researching the market, talking to local agents, visiting the area, etc. I should be able to drop out of the sky into any urban or suburban neighborhood in this state and choose the same comps as would an appraiser who has lived there forty years, and my opinion of market value should be very similar to theirs.

    I had never heard of “geographical competence” until the market started falling off the cliff and real estate agents’ deals were falling apart. This became their mantra (encouraged by some appraisers) for any sale that wouldn’t appraise to the contract price.

    The difference was that before the crash we could explain to the lender directly (who could explain to the agent) why it would not appraise. After the crash we were not allowed to talk to our client (as one could in any other profession), so any problems with the appraisal had to be due to a lack of geographical competence.

    During the crash some lenders I had worked with previously would send over some supposedly terrible appraisals (read: deal-killers) for me to take a look. In every single case the appraisal was credible and professionally completed, and there was absolutely no correlation between the quality of the report and the distance the appraiser traveled. The problem was that the market had turned soft and the number was just not what they wanted to see.

    There will always be a percentage of properties that will not appraise to a contract price or a BPO. Without researching I would guess it to be between 5% and 10% in a balanced market and much higher in a declining market. The agents and/or brokers in these deals will always be unhappy. How one handles an unhappy client is up to the individual of course, but accepting and agreeing with their theory of geographical competence is not a solution.

    • Wow! Great reply. I started doing appraisal work for FHA in 1981. At that time I was a real estate broker since 1966.( licenced as a sales person since 1961 ) In 1989 (?) I took the state test ( CA ) and became a State Certified Appraiser. In 2015 I hung the appraisal license up and dusted off my Brokers license. To answer your question, see what Joe Regan wrote. He got it right. I liked the part about having the proper data and being able to appraise anywhere in the U.S.the best. Fo me that meant that I had to have access to the main MLS.

  10. I disagree with Debbie,
    In order to complete a good appraisal you must be familar with the area, neighborhoods and the market in that area. You can not learn this from the internet or with a quick drive thru the area.

    • That is why we have so many problems with appraisal companies sending their appraisers 4 hrs one way from a metro area into the local rural areas are where I live and work and get it correct. NOT so much. I have seen and review so many reports where this is the case and I beg to differ, geo competency is a major factor.

  11. grow up and learn to appraise.

  12. If you’ve lived in a State Like Michigan, and lived up North, and on three different Lakes including a Great lake, and small inland lakes Down state, I would say I am Competent to do most every county in Michigan. Appraising Great lakes, large inland lakes, Acreage parcels and farms, besides Tract built houses, I can do just about anything in Michigan. Its been 29 years, and one year as a Loan Officer in a Community Bank right before the Downturn in 2006.
    All those years were spent appraising not in a lending Institution, reviewing.
    However, as you look at hundreds of appraisals all over the country after having the real experience, I would think one could do just about anything anywhere you reviewed. Again that would also take years.

    • Debbie, I’m not commenting on the gist of your post regarding geographic competency.

      I’m commenting on the fact that YOU GOT IT RIGHT, by stating that the melt-down began in 2006.

      If 2006 was not the year of the melt-down itself, it was certainly a frozen and uncertain market. I saw it. Lenders were expecting upticks in value for re-fi’s as usual, but the market was stagnant, and we didn’t have indicators of where we were heading.

      I had no end of grief by submitting reports that didn’t show increases in value at that time. I told the truth, and the Borrower typically has no interest in that.

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