Adam Johnston, SRA, is a long time appraisal veteran, and currently a chief appraiser for a national real estate settlement services company (and a longtime fan of Soapbox). On a daily basis, he speaks with appraisers and lenders across the country having observed the rise and fall of the sub-prime lending market. I am glad to have him share his views with us …Jonathan Miller
There has been some recent discussion regarding the process of disputing an appraisal. As expected, this topic tends to illicit passionate responses.
As a profession, we like to believe that appraisers opinions are formed from a rigorous examination of the market and a boundless understanding of market forces and dynamics. We believe that people should unequivocally respect an appraiser’s opinions. Unfortunately, some appraisers believe that such respect is demonstrated by insulating appraisers from critical questioning or examination. These same appraisers tend to believe that questions pertaining to the accuracy of the value opinion or report content are tantamount to an attack on the appraisers integrity and aptitude. Any such questions are met with moral objection and are viewed as insipid and inherently sinister.
To start, I believe that an appraiser must render appraisal services as
a unbiased professional, without advocacy or favor. An appraiser, much
like in scientific discovery, must seek the truth from the data. To
this end, I believe that the appraiser should independently gather and
examine data without the injection of influence during the development
of the appraisal. Some entities and organizations offer a codified
venue for ostensibly biased individuals, including borrowers and real
estate agents, to submit uninvited data to the appraiser during the
development process. By doing this, I believe that these entities and
organizations are potentially facilitating the co-opting of the
appraiser into a suggested outcome. In contrast to this practice, I
believe that all petitions and value reconsiderations should be
prohibited until the appraisal report has been completed and delivered.
In this way, we engage a process where the appraiser’s opinions and conclusions are based upon an independent data gathering process, unaffected by the uninvited supplications of others.
However, once the appraisal report has been completed and delivered, I
fully support a restrained process by which individuals may entreaty the
appraiser to consider alternative data and arguments. This would
encompass both value reconsiderations and disputes related to any other
elements of the appraisal report or development process. I recognize,
as should every reasonable professional, that perfection is elusive.
Additionally, maturity teaches us to consider the opinions of others, regardless of how objectionable they may seem. It is my opinion that a prudent and professional appraiser, while acting within the bounds of a proper appraiser-client relationship, should be willing to consider argumentative data and probable conjecture, regardless from whom it originates.
Please understand that I am not suggesting that an appraiser be compelled to consider an endless stream of data and arguments without just compensation. However, because compensation is a matter of business negotiation and therefore subject-to the savvy and preferences of each appraiser, it must be neutralized for this discussion. In an ideal scenario, all value reconsiderations and supplemental data should be screened prior to submission to the appraiser by persons having sufficient appraisal knowledge and training. This method will reduce the incidence of irrelevant and non-persuasive data reaching the appraiser. In addition, threatening or objectionable matter could be censured. I am firmly opposed to commissioned or quota based mortgage salespersons directly interacting with appraisers. In addition, I question the wisdom of empowering anyone with negligible formal appraisal training to interpret, screen or supply data and value appeals directly to the appraiser. Although it may involve additional cost, I submit that regulated mortgage lenders should be expected to employ licensed/certified appraisers to manage post-delivery value reconsiderations and dissenting arguments. Anything less constitutes an unacceptable sacrifice of lending prudence, often for the primary benefit of constricting payroll. As we have seen from the recent residential lending implosion and epidemic over valuations, the cost of lax controls is disastrous and far outweighs the added payroll burden of qualified appraisal staff.