Aren’t Appraisers Supposed to be Independent?

When was the last time you brought in somebody from outside your firm to help you solve an appraisal problem?  Is that a step you should take?  Aren’t appraisers supposed to be independent?  Aren’t outside consultants and advisors expensive relative to the typical appraisal fee?

Recently I had an assignment in Wyoming, a state not known for its temperate climate, gentle breezes, and dulcet winters.  This was a custom-designed and custom-built home with well over 5,000 square feet of living area, and luxury amenities too numerous to mention.  However, for reasons not important here, the owner-builder never completed the structure and it had sat, open to the elements and unprotected from the ravages of nature and squatters (who had done the house no favors by their occupancy).  Needless to say, despite this property’s grand potential, when I toured it, it was a dump.  Therefore, I had a two-fold challenge (for a huge fee, by the way):  appraiser the property in its then present condition; and appraise it as if it were complete per plans and specs.  

While I felt competent to complete the appraisal portion of this job, I knew I was going to have to bring in outside help to help me with the “as is” value.  To help me with this, I hired a local contractor I know and trust.  Their job was to analyse for me how much of the house was still usable, how much would have to be repaired or replaced (a lot, by the way), and what the costs of all that would be.  They even told me how much it would cost to demolish and dispose of the existing improvements so I would know how to value the vacant site (I even consulted with my All-Star Team, whose members were a great help and sounding-board.  Thanks, guys!)

Long story short, after we looked at the costs of construction, marketing, brokerage and so forth (including an entrepreneurial profit!) versus what its market value would have been had someone completed the construction, it was clear the highest and best use of the site was to raze the improvements, then sell the vacant site to a retail end-user.   

My point here is that, without the contractor, the help of local realtors managing tribal loans, the help of local investors, and so forth, I could not have completed this assignment competently and within USPAP.   I just did not have the competence in all these extra-appraisal areas.  That’s why I brought in the outside experts.

What’s the take-away here?  It is simply that when you need help, reach out for it!  You’ll probably have to pay for that help, but is that not cheap money to pay to avoid the expenses of a defence against a charge of incompetency from your state appraisal board?   We can’t be experts in everything.  So let’s be expert real estate appraisers, while we contract out the rest.

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 

4 thoughts on “Aren’t Appraisers Supposed to be Independent?”

  1. The competency part is the issue if you are completing the assignment for anyone except the VA. Fannie, Freddie, FHA, USDA require you have the competency prior to taking the assignment and do not permit you to gain the competency. Only VA permits you to gain the competency. So don’t you run into a issue there?

  2. Looks to me like the Appraiser did have the competency to complete the assignment. He knew to bring in right people to received the information he needed. The Appraiser identified the problems that needed solved and sought after where the answers would be found and gathered it all together to arrive at the opinion of value that was placed in the report.

    “Prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must properly identify the problem to be addressed and have the knowledge and experience to complete the assignment competently”

    No where does it say the Appraiser should be an expert in every facet of being a contractor, realtor, mortgage broker, ect. He has to know where that information is located and how to get at it to build the research needed. If you have never spoke to anyone to gather further information needed to solve your question you are a far better Appraiser than I.

  3. Sounds like Dustin got burned due to the fact his AMC profile was set to auto-accept. When he churns out 4 to 9 appraisals and goes to the office one time a week, combined with virtual assistants from around the globe typing the reports, a few are going to slip through the cracks.

    Seek the truth.

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