Amy McClellan on review appraisal, AMC regulation and financial safeguards.
Appraisal Institute: Residential appraisers face unique challenges and opportunities. What has your experience been?
Amy McClellan: Residential work has become more complicated since the Uniform Appraisal Dataset was put into practice because there seems to be more emphasis on fitting the form than on explaining the property being appraised. Residential appraising has become more data driven, with lenders using valuation models to verify appraisals. That makes it much harder for appraisers working in rural markets because of large variations in property types and the lack of comparable sales.
AI: As a review appraiser, what advice do you have for writing top-quality reports?
AM: Appraisers must fully understand and follow the requirements of the Uniform Standards of Professional Appraisal Practice, and they need to verify all data used in a report. It's also important for them to explain things in a way that helps the intended user of the appraisal understand where there are weaknesses and how the appraiser dealt with them.
AI: What are some misconceptions about review?
AM: A big misconception involves appraisers feeling like they are being reviewed and not their work. The review appraiser is not out to get them. Appraisal reviews are simply a review of the appraisal, not the appraiser. When a review is requested--and all lenders are required to review a percentage of the appraisals they request--an appraiser's name often is redacted for just this reason.
AI: Is there a difference between appraisal review by lenders and appraisal review by regulators?
AM: When an appraisal board receives a complaint, the first step involves review of the appraisal to see if it meets minimum USPAP requirements. This can be done by a board member or by an outside review appraiser. Most of the reviews I'm hired to perform involve USPAP verification. If issues are found during this initial stage, the board may engage an appraiser to complete a field review, which involves verification of everything in the appraisal report--basically producing another appraisal.
Lenders also complete reviews to ensure appraisals meet minimum USPAP requirements. Lenders often require a reviewer to agree or disagree with the opinion of value as part of the review, and once a reviewer agrees or disagrees, they have completed an appraisal and must comply with USPAP requirements for completing an appraisal even if it was a desk review. This step has caused confusion because some lenders and review appraisers do not realize that agreeing or disagreeing with the opinion of value constitutes having completed an appraisal.
AI: Each state must enact legislation to regulate appraisal management companies. What challenges do you see there?
AM: Because many states already have legislation in place to regulate AMCs, I don't foresee many challenges beyond writing the legislation. States that have enacted such legislation now find it much easier to respond to AMC complaints.
AI: Do you have any particularly memorable assignments?
AM: There have been many over the past 20 years, but I think chief among them was an assignment to appraise a residential property that consisted of a train car sitting on the track with a permanent addition built on slab set on a 200-acre parcel.
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|Title Annotation:||For What It's Worth: THE FINAL WORD IN VALUATION|
|Date:||Sep 22, 2017|
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