Together forever: the relationship between review appraisers and appraisers is crucial but often misunderstood.
"If appraisers do these things on a consistent basis, they'll get plenty of work," says Michael D. Sullivan, MAI, SRA, AI-GRS, a senior commercial review appraiser who works in the Denver office of Bank of the West.
Reviewers typically bid out jobs to three or four professionals on a bank's approved list of appraisers, which often includes hundreds of names. In deciding who to request bids from, review appraisers tend to go back to appraisers they have found to be the most competent and most professional to work with, also considering such factors as expertise in a particular property type and the physical location of a property.
"If we get the best appraiser up front, then the appraisal tends to be supported in the end," says Curt R. Kolell, MAI, AI-GRS, chief appraisal officer at Associated Bank of Green Bay, Wisconsin.
Reviewers say they prefer to give a turnaround time of three weeks or more when possible; however, a shorter timeframe sometimes is necessary, depending on such factors as the reason for an appraisal, the area of the country in which the property is located, the time of year and the competition. When review appraisers ask for an unusually fast turnaround, they say it's not unusual for appraisers to request a higher fee for their work.
Quality Is Key
Bidding requirements vary by lender, and while reviewers say their processes typically are straightforward, appraisers who receive assignments from multiple lenders sometimes express frustration navigating the different systems. Reviewers say that they appreciate getting feedback about their processes and are happy to answer appraiser questions at any point in the process.
"We appreciate it when someone calls and asks a question. Sometimes it's about something we didn't even think about," says Justin D. Slack, MAI, SRA, AI-GRS, AI-RRS, commercial appraisal manager at HomeStreet Bank in Seattle.
Appraisers also note concern about banks seeming to always choose the lowest bid, but reviewers interviewed for this article say the lowest bid is not always the winning bid. They say it is a balancing act, and if absolutely everything else is equal, the lower bid does usually win. But, reviewers also give high marks for quality, consistency and past experience with an appraiser, along with an appraiser's expertise with a particular area or property type.
"If we go with the appraiser with the lowest fee but who we know has had problems in the past, then that's an opportunity cost that is going to hurt us on the back end," says Slack.
Reviewers also appreciate working with appraisers who hand in quality work the first time around and who are amenable to making corrections or providing clarifications when necessary. They say they generally are willing to overlook small things (the occasional misspelling or typo), but they won't overlook bigger issues such as inconsistent values used throughout the report or conclusions that are based on incorrect or out-of-date information.
Working Together, or Not
On rare occasions, relationships need to be discontinued when there are too many issues, according to Melanie Sieger, MAI, vice president of the Real Estate Services unit at Pacific Western Bank in Chevy Chase, Maryland. For instance, she once dropped an appraiser who appraised a parcel of land in Florida as if immediate development was feasible when it was not. After several failed attempts to seek revisions, she rejected the report and never engaged the appraiser again.
Reviewers also appreciate appraisers who create reports that flow well and are supported by applicable market data. "If you have the data in the work file, it may only take a minute for you to put it in, but it makes it a much better report," Sieger says.
In short, appraisers who develop a good working relationship with bank reviewers are more likely to get repeat business. "You want to work with someone who's willing to work with you and produces the best product," says Julie R. Battaglia, MAI, AI-GRS, a senior reviewer with BMO Harris Bank in Tampa, Florida.
AT THE HEART OF THE RELATIONSHIP
Most of the time, reviewers say they have good relationships with appraisers. Here are a few tips to make the process smoother:
1 Carefully read the engagement letter.
Failure to thoroughly read the engagement letter is a major no-no, according to Justin D. Slack, MAI, SRA, AI-GRS, AI-RRS, commercial appraisal manager at HomeStreet Bank in Seattle.
He recently worked with an appraiser whose report included a value conclusion that the bank hadn't asked for. Another appraiser had to request an additional two weeks because she didn't give the bank anything it had asked for when she delivered a completed appraisal. Slack is willing to be lenient--up to a point. However, if appraisers routinely don't follow instructions, Slack won't call on them again if he has other options.
2 When in doubt, talk it out.
Problems can crop up when the scope of work isn't completely understood, especially when the assignment involves an atypical appraisal problem. Andy P. Mantis, MAI, SRA, AI-GRS, a vice president in the real estate appraisal department at BankUnited in New York, advises appraisers to speak with him first so they understand what's expected.
"One of the most important things between the bank and the appraiser is communication," he says.
Julie R. Battaglia, MAI, AI-GRS, recalls a complex appraisal that her bank recently handled. She initially didn't have a lot of information about the property, but she worked with an appraiser who frequently kept in touch through email and phone calls. As a senior review appraiser for BMO Harris Bank in Tampa, Florida, Battaglia really appreciated the back and forth dialogue because she knew what to expect. "It would have been a lot harder to do the review otherwise," she says.
3 Submit clear and concise reports.
Review appraisers themselves are not always familiar with a particular location or specific property type, so while an appraiser's report may be accurate, it can be hard for a reviewer to follow if the opinion of value isn't supported with market data, explains Curt R. Kolell, MAI, AI-GRS, chief appraisal officer at Associated Bank of Green Bay, Wisconsin. "The reader of the appraisal report should be able to follow all of their logic," he says.
It's particularly important since a reviewer doesn't get to visit the property like the appraiser does. "I should be able to pick up the report and read it and understand that it's a reasonable opinion of value," says Battaglia of BMO Harris Bank.
4 Double check your work.
This advice sounds like a no-brainer, but small mistakes can understandably slip through, so the goal should be to get reports as close to perfect as possible before submitting them.
"When they don't read it, I say, 'shame on you,'" says Mantis of BankUnited. At the same time, he understands that mistakes happen in the development and preparation of an appraisal report, and so he tends to let the small things slide. "Everybody makes mistakes. That's why there are erasers on pencils," he says.
5 Timeliness counts.
Reviewers understand that unexpected delays can arise, but if reports are going to be turned in after the deadline, tell reviewers so they don't have to chase after them.
If missing deadlines becomes a pattern, the appraiser probably won't be considered for future opportunities. "If other appraisers are available, we would most likely choose someone else," says Kolell of Associated Bank.
For more information on the review appraisal process, read Appraising the Appraisal: The Art of Appraisal Review, second edition, which is available in the Appraisal Institute bookstore www.appraisalinstitute.org/ appraising-the-appraisal-the-art-of-appraisal-reuiew-second-edition.
GET ON THE LIST
A bank's list of approved appraisers is periodically updated. Additional names usually come from referrals. Before adding a new name to the list, banks usually consider an appraiser's credentials, work samples, regional coverages, typical projects and the level of complexity they usually deal with.
Keep in mind that names also can be taken off the list, or sink to the bottom, if appraisers consistently get rated poorly by a reviewer for their work.
"Once you get on an approved list, make sure to keep up the quality and service because we track those things," says Michael D. Sullivan, MAI, SRA, AI-GRS, a senior commercial review appraiser in the Denver office of Bank of the West.
Cheryl Winokur Munk is a West Orange, New Jersey-based freelance writer and editor whose coverage focuses on the financial services industry.
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|Title Annotation:||FEATURE: mind your business|
|Author:||Munk, Cheryl Winokur|
|Date:||Jun 22, 2015|
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