How To Develop And Communicate A Professional Appraisal Review

117 Pages·2014·6.93 MB·English

by  Lisa Perry

How To Develop And 
Communicate A Professional 
Appraisal Review
1 Who The #%&*# Are You To Tell Me How To Do An Appraisal!
2 Short History of Appraisal Report Review
Appraisal Association Peer Review Committees
Appraisal Reviewers as Facilitators
Experience Requirements of the Review Appraiser
3 Thought versus Dogma
4 Three Pillars of Appraisal Review Nomos, Ethos, & Logos
5 Role of Ethos in Appraisal
6 Logos and Logical Fallacies
7 The Review Paradigm
7 Precision, Probability and Significant Digits in Appraisal
8 The Role of Appraisal Standards
9 USPAP Apologia
10 SIVS, IFRS, GAAP, FASB, AICPA, and Convergence or
Non-Vergence The move towards global standards
Let us start with the most obvious question..
Who is qualified to critique another
appraiser’s work?
Then, we will address the history of the
review process, appraiser cultural conflicts
and dogma, then to the three pillars of
appraisal review, and eventually finish up
with a look at some appraisal that you can
critique.
Who is qualified to perform appraisal
reviews?
It is more likely that MOST appraisers do not like criticism. Be aware
that your work as a review appraiser is often confrontational.
Something like being stopped for speeding. Angry driver, “I wasn’t
speeding!” Police, “I clocked you driving 15 miles over the limit!”
The Big‐Dig, as it was called, was a 
construction project that removed the 
overhead highway and put it under ground. 
Tax payers, including you, paid $14.6 billion 
for the project. Nearly $100,000,000 was 
spent on appraisal work and related 
payments for various property easements. 
I was a contract review appraiser for the 
MBTA which owned the train stations and 
subway system and other property.
In the review of a questionable appraisal, I 
experienced this harsh reality.
Help me 
understand 
the reasoning 
for the 100% 
and 200% 
adjustments?
I could have made it 500%!   Who the #*^%@ 
are you …to tell me how to do an appraisal!!!
The fact of experiencing an appraisal review is relatively
common on the real estate side of appraisal practice.
Appraisal Review is uncommon for business valuation,
art, antiques, machinery, or jewelry appraisals.
Over the years, I have experienced several critical reviews.
In the long run the reviews taught me how to perform an
appraisal better than I had been performing before the
review experience.
However, some appraisers have a difficult time
accepting criticism in any form, whether that criticism
is diplomatically given or otherwise.
1. Competency in the underlying STANDARDS OF PRACTICE
2. Competency in DEVELOPING AN APPRAISAL ARGUMENT
3. Competencyin COMMUNICATING THE APPRAISAL OPINION.
An appraiser needs to master two basic sets of skills. One is the
RULESi.e. Standards that govern the work of an appraiser. The
second skill is the ability to write a narrative argument.
Appraisal Review requires reading and critiquing a written appraisal
report. Therefore, what you write as an appraiser depends on who
your audience is. For example, if you’re a fine arts, machinery
appraiser, real estate appraiser or business appraiser, will the person
reading what you write understand what you’re talking about? You
need to think about that.” The writer should strive for “coherency,
clarity and conciseness,”
The three basic elements are: knowledge of Standards;
knowledge of Argument; and knowledge of Writing a
narrative report.
The majority of appraisals are governed by USPAP,
therefore, the reviewer must understand USPAP and
the meaning and the role of rule-based standards.
The reviewer should have some grounding in i.e.
understanding of, argument and logical fallacies.
A review appraiser has to steadfastly maintain an
objective attitude and have competence in the
particular appraisal discipline under review.
An appraisal review is not a subjective exercise. It is
not the act of criticizing the appraisal because it does
not meet your particular likes, dislikes, or your mode of
presentation.
It is an objective exercise MEASURING the work
against established standards and logic.
What elements of an appraisal do 
review appraisers critique?
In several courses and writings, I have dwelled on the
importance of appraiser’s credibility, i.e. that the
messenger is as important as the message.
The statement of qualifications of an appraiser or a
review appraiser can go a long way to establishing his
or her credibility.
Try to think of that document not as a resume or CV,
but as a statement of your training, experience, and
education. It answers the question as to why you are
reasonably qualified to do what it is you do.
Appraisers unlike doctors, lawyers, and CPAs,  
are not publicly perceived as competent in their 
field. You do not commonly ask a doctor for a 
copy of his/her statement of qualifications. 
Because appraisers are not publicly ascribed 
knowledge or professionalism as doctors, 
lawyers, and CPAs might be… the appraiser’s 
report should include an objective truthful 
statement of his or her qualifications to perform 
the particular appraisal task. Appraisers 
generally err in presenting a CV/resume.  Think 
of it as your statement of qualifications.
A format for a Statement of Qualifications
1. Specific experiencerelative to the current assignment (answers competency 
question)
2. Formal and specialized appraisal education(competency)
3. Professional Associations, include activities, (competency)
4. Published materialswhere and what you published (competency)
5. Instructor ExperienceTeaching peers (competency)
6. Expert witness experiencewhat court, case, judge, issue (competency)
7. Work experiencerelative to appraisal (competency)
Let me illustrate by using the instructor’s statement of 
qualifications relative to the subject of appraisal review.
Statement of Qualifications Roger Durkin J.D., M.S., FASA
Specific Experience Real Property: Review appraiser for the Massachusetts 
Office of Inspector General, MBTA and MassPortduring the big dig 
construction project. Types of property appraised include: the real 
property, equipment, and enterprise value of the Fore‐River Quincy 
Shipyard facility for the U.S. Maritime Administration, the former Soviet 
Academy of Sciences Pharmaceutical facility in Riga, Latvia for the Republic 
of Latvia, the valuation of James J. “Whitey” Bulger’sreal property and 
liquor business for the U.S. Attorney. Primary emphasis is real property 
valuation involving litigation issues including environmental damages, 
diminution value of stigmatized property including contamination of 
chlordane, oil spills, proximity to crematoriums, easements and commercial 
and residential property involving divorce, IRS challenged decedent estate 
values, charitable donations, and gift tax issues. 
If I were appraising personal property, I would not include my 
experience in the valuation of business enterprises or real 
property. 
Statement of Qualifications Roger Durkin J.D., M.S., FASA
Specific Experience Personal Property: He has been a contract 
appraiser for the U.S. Customs (approximately 15 years) for the 
Port of Boston, Hartford, and Port of Baltimore, and Buffalo for 
seizures of tangible personal property including fine art, coins, 
artifacts, jewelry, and antiques. He was employed by U.S. 
Customs in determining the value and provenance in United 
States v. Arnold Katzen& Shirley Sack, (2004) wherein two art 
dealers attempted to sell an AmedeoModigliani and Edgar 
Degas painting for $4 million cash to undercover Federal Agents. 
He was lead appraiser in Levin v. Dalva Brothers, Inc., 459 F3d 68 
where the federal trial and appeal involved fine art, French 
furniture, decorative accessories and New York Art Law. He valued all 
personal property contained at Babson College including the Sir Isaac Newton 
collection; the extensive fine art collection contained in the 11‐story US Trust 
headquarters in Boston; the entire furniture and art collection at Aetna’s Insurance 
Hartford headquarters; the entire art collection for the Phoenix Insurance in Albany 
New York and Hartford Connecticut, all of the property contained in 34 offices of the