Appraisal Review: Determining Whether an Appraisal is Accurate

Appraisal review raises the bar on appraisal reports by providing professional, expert review of how well the report aligns with standards of appraisal practice, including the ability of the intended user to understand the report.

Appraisal review, as discussed in a previous post, is a standardized methodology that provides guidelines for adjudging the overall quality of an appraisal relative to guidance provided by the Uniform Standards of Professional Appraisal Practice (USPAP) in Standard 3.

Appraisal reviews can be especially useful for legal cases, collateral loans, business deals, insurance settlements or marital dissolution.

In situations such as these, you want to be sure that the appraisal you're using to make critical decisions is worth the paper it's printed on. If you're not confident in your appraiser and you need that value to be credible, an appraisal review could be a good investment.

USPAP Standard 3 presents the core concept of Appraisal Review:

Consistent with the reviewer's scope of work, the reviewer is required to develop an opinion as to the completeness, accuracy, adequacy, relevance, and reasonableness of the report, given law, regulations, or intended user requirements applicable to that work.

A thorough analysis of these qualities - completeness, accuracy, adequacy, relevance, and reasonableness - determines whether or not the opinion of value in an appraisal report is credible and thus defensible. Exactly how to conduct an appraisal review and what to look for during an appraisal review is the basis of two new classes the American Society of Appraisers is offering its accredited senior appraisers. I say "new" advisedly. These classes have been offered for years as part of ASA's ARM designation, a general appraisal review accreditation course.

What's new and exciting in the appraisal review field is that ARM 201 and ARM 204 are now offered in an advanced, breaking-edge format to already accredited appraisers who are interested in reviewing appraisals in their own specialities. This streamlines the process of accreditation for experienced appraisers and provides appraisal users with appraisal review experts who are also experts in particular appraisal specialities. Now equipment appraisals, for instance, can be reviewed by equipment appraisal review experts!

I spent the week before the International ASA Conference finishing up details of our new Appraisal Review & Management introductory class. This class, along with ARM 204, has been completely revised using a dialogue education format. I taught the class in San Francisco earlier this year and in Chicago earlier this month, both times under the capable direction of current ARM Committee Chair Bob Podwalny, FASA. The new format for the class was a big hit with the students, who enjoyed the class interactions and project-based instruction more than the usual lecture mode.

When I earned my Appraisal Review designation for the Machinery & Technical Speciality (read "machinery & equipment"), we were still using the old model. I enjoyed working with Bob and Robb Davis, an adult education expert, to develop these new courses. Teaching classes is a stretch for me but I'm glad to be able to contribute not only to this professional organization which has offered me so much but also to the future clients of the new crop of accredited appraisal review experts.