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[The Hall Monitor] Appraisers As Advocates (AAA)

Todd Huttunen began appraising more than 20 years ago with a few years off in between to pursue a career in cabinet making. He relegated that to hobby status and is currently an appraiser in an assessor’s office. His best friend dubbed him The Hall Monitor because of his rigidity and respect for rules. He offers Soapbox readers tongue-in-groove insight on appraisal issues. In this post, Todd wonders why dilligent, honest and hard working appraisers don’t get the most of the tax assessment assignments and perhaps comes up with a name for a new appraisal society. …Jonathan Miller


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All right, a tiny minority of appraisers are nothing more than whorish advocates for their clients. But due to some kind of statistical anomaly, a disproportionate number of the appraisals I review, for assessment grievance purposes, come from this tiny minority and it gets a little frustrating after a while. Why is it that the vast majority of appraisers – who are diligent, honest and hard-working – get so few assignments in my town?

One recent example of appraisal garbage was prepared on behalf of the owner of a newly constructed single family house which we assessed at its full value in 2006. The owner filed a grievance, as was his right, and hired an appraiser who happens to be an MAI. His appraisal included six comparable sales, but what bothered me the most was the sale, of the house next door, which was not included in his appraisal.

Back when I started work as an appraiser in 1985 I had the good fortune to work for a small, family owned company with an unusually tight-knit group of appraisers and staff. And even though we came from different religious backgrounds, we shared a common belief in one God, to whom we lovingly referred as the God of the comp next door. Every assignment whose subject is blessed by the God of the comp next door is easier than it would otherwise be, and my faith is as strong today as it ever was.

Unfortunately, the MAI was not a believer and explained his position thusly – “THE APPRAISER NOTED A LACK OF CLOSED COMPARABLE SALES WITHIN THE SUBJECT’S MORE IMMEDIATE AREA” Regular readers of The Hall Monitor already know how I feel about appraisers whose reports are written in ALL CAPITAL LETTERS. Leaving that aside, in this case the subject was a new house and the renovated house next door had sold seven months earlier. But this sale was not used in his appraisal. Interestingly enough, his appraised value for the subject (new house) was 35% below the sale price of the “effectively new” house next door, which had the same number of bedrooms and bathrooms, but was a few hundred square feet larger, better quality construction, and had superior curb appeal (my appraisal had adjustments for these differences but they didn’t amount to 35% of its selling price).

The appraiser also claimed that the “subject suffers external obsolescence because it backs up to a busy street”. Guess what folks – the house next door, which he didn’t use, backs up to the same busy street. The inclusion of the sale of that house on the grid would have illustrated that the “busy street” adjustment was bogus. I’m sure that’s one reason he didn’t use the sale.

This same appraiser considered the functional utility of the (new) subject, with its open kitchen/dining room layout, to be inferior to those of his comparable sales, two of which were 55 year old houses whose formal dining rooms are separated from the kitchens by an actual wall. I was taught that “new” houses, built to current market standards, usually represent the highest and best use while “old” houses which have not been renovated are the ones suffering from physical and/or functional obsolescence. The subject’s open, less formal floor plan reflects the design standards of today. One would think that if a functional utility adjustment is appropriate in comparing an old house with a new house, the old house should be adjusted upward, rather than downward. That’s what I believe, but then I’m not an MAI.

I don’t personally know the appraiser who represented the homeowner in this case. And although I have no way of knowing for sure, I do not believe that his honest opinion of value was the same as what he indicated at the bottom of page two. I don’t think he thought the house was over-assessed. He didn’t use the best comparables and his adjustments were inappropriate. His appraisal was, in my opinion, a deliberate attempt to mislead. I think he gave the client what the client wanted.

The fact that users of appraisals attempt to influence the work of appraisers is nothing new. There’ve been a number of stories in the media lately expressing concern about loans, particularly in the sub-prime market, that have been made as a result of pressure exerted on appraisers to make the number.

Perhaps the answer to the problem of appraisal pressure (whether upward or downward) is to have two appraisals done for every property. Tell one appraiser it’s for the mortgage and tell the other one it’s for the assessment. That way, you can average the two values reached by the two advocates and you’ll end up with something close to market value.