How to Reduce Appraisal Revision Requests
By Clear Capital November 14, 2022
Excerpts:
To cut down on appraisal revision requests, it is important to keep these best practices in mind:
Communicate in a timely manner
Address the request thoroughly and professionally. Add additional commentary where appropriate.
Ask questions. If you disagree with the request for appraisal submissions or have concerns or need clarification, please reach out for clarification.
1. Explain ‘How’, not ‘Why’ in the appraisal report
The most common frustrations arise when the appraiser focuses more on the type of adjustments made while the reader would look for the ‘how’ in the appraisal report. For example, if a positive or negative adjustment was applied in the report, the reader wants to know how the adjustment was determined.
“How did you determine that the subject comparable was inferior or superior in condition? Don’t leave the ‘how’ part out while applying adjustments. Be sure to address those questions; it will certainly help you in the long run.” says Ken Folven, Senior Director, Appraisal Quality Assurance at Clear Capital
2. Reduce lengthy commentary
In some cases, appraisers provide lengthy boilerplate commentary in an attempt to avoid a revision request. This strategy often backfires because parties involved in the lending process cannot find the specific information they are looking for in the report. Inconsistent commentary can result in common requests for revision.
Prior to submission, read the letter of engagement in detail, which highlights the customer-specific information, and make sure to include all required information in your report. Organize your commentary and explain your comparable selection process briefly.
“I always recommend organizing commentary by adjustment rather than by comparable and make it a habit to review the pre-delivery rules,” says Khan.
Derek Mitchell, a California-based Senior Appraiser at Clear Capital, has a different approach: “I use a lot of characteristic-based comments as opposed to comparable-based comments because it cuts down on the amount of writing that I have to do and the amount of reading the reviewer has to do,” Mitchell says. “It tends to get redundant when you’re just talking about different comparables but the same characteristics.”
In addition, staying up-to-date with Uniform Standards of Professional Appraisal Practice (USPAP), Federal Housing Administration (FHA), and GSE guidelines and industry requirements also goes a long way in drafting error-free reports that would otherwise create unnecessary revision requests.
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My comments: Good practical tips. We all hate revisions unless maybe it was because we forgot to put the value in. I did this sometimes in appraisals for a local bank ;> Your clients hate them also. They take appraisers too much time and can sometimes make you very upset, which interrupts your workflow.
What Causes Appraisal Revisions?
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12 Unacceptable Appraisal Practices from Freddie Mac
Excerpts: This is part three of a three part series on appraisal review – Read parts one and two. I am often posed with the following question “How do you know when you are looking at a “good” appraisal?” The reality is there is no universal acceptance of a single method of measurement to differentiate “good” from “bad.” After many years of reading appraisal reports, my response is “One that leaves the reader with few unanswered questions, allows the data to tell the story, keeps appraiser interventions to a minimum and is able to present a case for what a property is worth, as well as what it is not worth.”