Appraisal Review

Question 1

Four purposes of Appraisal Review:

Answer 1

Quality control
Compliance
Risk management
Litigation support

Question 2

Six reasons for real estate appraisal per 2nd edition of Appraising the Appraisal by Richard Sorenson

Answer 2

1. To provide a test of reasonableness for the user of the report
2. To test whether the methods and techniques employed in the appraisal are appropriate to the assignment
3. To bolster the appraisal’s credibility
4. To help clients manage risk
5. To support litigation and dispute resolution
6. To access the work product of other appraiser for clients who do not have internal appraisal capabilities

Question 3

Administrative review is typically performed by:

Answer 3

Attorneys, accountants, bank examiners

Question 4

Primary function of the appraisal reviewer:

Answer 4

1. Form an opinion about value of the subject property
2. Approve the appraisal for the underwriting department
3. Approve the appraiser’s value opinion

Question 5

Types of Appraisal Review:

Answer 5

1) Administrative Review (performed by attorneys, accountants, bank examiners); also called compliance review

2) Technical Review (an appraiser reviewing workmof another appraiser in full conformance with the professional standards)

   2a) **Desk Review** - usually consists of a detailed checklist
   2b) **Field Review** - most intensive type of review, usually includes an inspection of at least the exterior of the subject and comparable sales

Also
Complete vs Limited review ( review of only portion of the original appraisal)

Question 6

How can reviewer appraiser utilize the work of the original appraiser in reaching an opinion of value?

Answer 6

By use of an extraordinary assumption, the review appraiser can adopt those portions of the original appraisal that are credible and adequate and then add the reviewer’s own additional data and analysis to reach a value conclusion.

Question 7

“recertification” vs “update” of an appraisal.

Answer 7

A recertification is “performed to confirm whether or not the conditions of a prior assignment have been met” where an update “is a new appraisal involving a property that was previously appraised.” [See USPAP FAQs]. Since an update requires a new effective date it is a new appraisal. A recertification simply confirms that the conditions included in an appraisal with a previous effective date have been met.

Question 8

The ETHICS RULE is divided into four sections, name them.

Answer 8

• Conduct
• Management
• Confidentiality
• Record Keeping.