Appraisal Review
Definition
An appraisal review is an assessment of the completeness, accuracy, and compliance of an appraisal report. The primary purposes of such reviews are to ensure that the appraisal conforms to established standards such as those set forth by the Uniform Standards of Professional Appraisal Practice (USPAP) and to verify the reliability of the value estimate provided. It may involve a narrative commentary or a structured checklist highlighting any discrepancies or areas of concern.
Types of Reviews
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Desk Review
- Prepared with or without validating the data in the appraisal report. Often involves a checklist reviewing the adherence to standards.
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Field Review
- The review appraiser conducts an on-site examination of the property to validate the accuracy of the appraiser’s observations and data collection.
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Full Review
- The appraiser independently collects data to either confirm or challenge the original appraisal report’s conclusions.
Example
West Side Savings had a valuable tract of land appraised. To ensure that the appraiser’s valuation and methodology were appropriate and compliant with USPAP, West Side Savings commissioned an AI-GRS–designated appraiser to perform an appraisal review.
Frequently Asked Questions (FAQs)
What is the purpose of an appraisal review?
The main purposes are to verify compliance with USPAP or other relevant statutory requirements and to provide additional assurance that the value estimate in the original appraisal is accurate and reliable.
Who is qualified to conduct an appraisal review?
Ideally, the reviewer should have qualifications that are at least equivalent to those of the appraiser who completed the appraisal. Specialized designations such as AI-GRS (Appraisal Institute’s General Review Specialist) are often preferred.
Is the review appraiser required to agree with the original appraisal report?
Not necessarily. The reviewer can agree, disagree, or take no position on the value estimate. If they don’t concur, they must clearly state the reasons for their disagreement.
What guidelines must be followed during an appraisal review?
Standard 3 of the Uniform Standards of Professional Appraisal Practice (USPAP) provides guidance for conducting an appraisal review, covering aspects like the scope of work and disclosures.
When is a field review warranted over a desk review?
Field reviews are warranted when there is a need for physical verification of the property characteristics and conditions reported in the appraisal report. This might be necessary for complex properties or high-value transactions.
Does an appraisal review affect the original appraisal report?
While a review does not alter the original appraisal, it does offer a secondary perspective and may lead to a revised valuation or an additional report clarifying aspects of the original appraisal.
Related Terms with Definitions
- Appraisal Report: A document that provides an opinion on the value of the specified property, prepared by a licensed appraiser.
- USPAP (Uniform Standards of Professional Appraisal Practice): A set of guidelines and standards for carrying out appraisals, established to ensure consistency and reliability in appraisals.
- AI-GRS: The Appraisal Institute’s General Review Specialist designation, signifying advanced expertise in the review of appraisal reports.
- Valuation: The monetary estimate of the worth of a particular property, typically arrived at through appraisal procedures.
- Review Appraiser: An appraiser who performs appraisal reviews to ensure accuracy, compliance with guidelines, and validity of the appraisal report’s conclusions.
- Compliance: The adherence to laws, regulations, guidelines, and specifications relevant to appraisal practices.
Online Resources
- Uniform Standards of Professional Appraisal Practice (USPAP): Official website providing access to the standards and guidelines set forth for appraisals.
- Appraisal Institute: Institution offering resources, courses, and professional designations for appraisers, including the AI-GRS.
- The Appraisal Foundation: Non-profit organization that promotes professional standards for appraisals and offers educational materials and publications.
References
- Uniform Standards of Professional Appraisal Practice. Available from: https://www.appraisalfoundation.org/
- Appraisal Institute. Professional Designations and Certifications. Available from: https://www.appraisalinstitute.org/
- The Appraisal Foundation Publications. Available from: https://www.appraisalfoundation.org/
Suggested Books for Further Studies
- Standards of Valuation Practice by the Appraisal Foundation
- Real Estate Appraisal by Steven V. Brown and François Gregoire
- The Appraisal of Real Estate, 14th Edition by the Appraisal Institute
- Real Estate Valuation Theory by Ken Harta and David Topper
Real Estate Basics: Appraisal Review Fundamentals Quiz
