How To Develop And Communicate A Professional Appraisal Review PDF
Preview How To Develop And Communicate A Professional Appraisal Review
How To Develop And Communicate A Professional Appraisal Review 1 Who The #%&*# Are You To Tell Me How To Do An Appraisal! 2 Short History of Appraisal Report Review Appraisal Association Peer Review Committees Appraisal Reviewers as Facilitators Experience Requirements of the Review Appraiser 3 Thought versus Dogma 4 Three Pillars of Appraisal Review Nomos, Ethos, & Logos 5 Role of Ethos in Appraisal 6 Logos and Logical Fallacies 7 The Review Paradigm 7 Precision, Probability and Significant Digits in Appraisal 8 The Role of Appraisal Standards 9 USPAP Apologia 10 SIVS, IFRS, GAAP, FASB, AICPA, and Convergence or Non-Vergence The move towards global standards Let us start with the most obvious question.. Who is qualified to critique another appraiser’s work? Then, we will address the history of the review process, appraiser cultural conflicts and dogma, then to the three pillars of appraisal review, and eventually finish up with a look at some appraisal that you can critique. Who is qualified to perform appraisal reviews? It is more likely that MOST appraisers do not like criticism. Be aware that your work as a review appraiser is often confrontational. Something like being stopped for speeding. Angry driver, “I wasn’t speeding!” Police, “I clocked you driving 15 miles over the limit!” The Big‐Dig, as it was called, was a construction project that removed the overhead highway and put it under ground. Tax payers, including you, paid $14.6 billion for the project. Nearly $100,000,000 was spent on appraisal work and related payments for various property easements. I was a contract review appraiser for the MBTA which owned the train stations and subway system and other property. In the review of a questionable appraisal, I experienced this harsh reality. Help me understand the reasoning for the 100% and 200% adjustments? I could have made it 500%! Who the #*^%@ are you …to tell me how to do an appraisal!!! The fact of experiencing an appraisal review is relatively common on the real estate side of appraisal practice. Appraisal Review is uncommon for business valuation, art, antiques, machinery, or jewelry appraisals. Over the years, I have experienced several critical reviews. In the long run the reviews taught me how to perform an appraisal better than I had been performing before the review experience. However, some appraisers have a difficult time accepting criticism in any form, whether that criticism is diplomatically given or otherwise. 1. Competency in the underlying STANDARDS OF PRACTICE 2. Competency in DEVELOPING AN APPRAISAL ARGUMENT 3. Competencyin COMMUNICATING THE APPRAISAL OPINION. An appraiser needs to master two basic sets of skills. One is the RULESi.e. Standards that govern the work of an appraiser. The second skill is the ability to write a narrative argument. Appraisal Review requires reading and critiquing a written appraisal report. Therefore, what you write as an appraiser depends on who your audience is. For example, if you’re a fine arts, machinery appraiser, real estate appraiser or business appraiser, will the person reading what you write understand what you’re talking about? You need to think about that.” The writer should strive for “coherency, clarity and conciseness,” The three basic elements are: knowledge of Standards; knowledge of Argument; and knowledge of Writing a narrative report. The majority of appraisals are governed by USPAP, therefore, the reviewer must understand USPAP and the meaning and the role of rule-based standards. The reviewer should have some grounding in i.e. understanding of, argument and logical fallacies. A review appraiser has to steadfastly maintain an objective attitude and have competence in the particular appraisal discipline under review. An appraisal review is not a subjective exercise. It is not the act of criticizing the appraisal because it does not meet your particular likes, dislikes, or your mode of presentation. It is an objective exercise MEASURING the work against established standards and logic. What elements of an appraisal do review appraisers critique? In several courses and writings, I have dwelled on the importance of appraiser’s credibility, i.e. that the messenger is as important as the message. The statement of qualifications of an appraiser or a review appraiser can go a long way to establishing his or her credibility. Try to think of that document not as a resume or CV, but as a statement of your training, experience, and education. It answers the question as to why you are reasonably qualified to do what it is you do. Appraisers unlike doctors, lawyers, and CPAs, are not publicly perceived as competent in their field. You do not commonly ask a doctor for a copy of his/her statement of qualifications. Because appraisers are not publicly ascribed knowledge or professionalism as doctors, lawyers, and CPAs might be… the appraiser’s report should include an objective truthful statement of his or her qualifications to perform the particular appraisal task. Appraisers generally err in presenting a CV/resume. Think of it as your statement of qualifications. A format for a Statement of Qualifications 1. Specific experiencerelative to the current assignment (answers competency question) 2. Formal and specialized appraisal education(competency) 3. Professional Associations, include activities, (competency) 4. Published materialswhere and what you published (competency) 5. Instructor ExperienceTeaching peers (competency) 6. Expert witness experiencewhat court, case, judge, issue (competency) 7. Work experiencerelative to appraisal (competency) Let me illustrate by using the instructor’s statement of qualifications relative to the subject of appraisal review. Statement of Qualifications Roger Durkin J.D., M.S., FASA Specific Experience Real Property: Review appraiser for the Massachusetts Office of Inspector General, MBTA and MassPortduring the big dig construction project. Types of property appraised include: the real property, equipment, and enterprise value of the Fore‐River Quincy Shipyard facility for the U.S. Maritime Administration, the former Soviet Academy of Sciences Pharmaceutical facility in Riga, Latvia for the Republic of Latvia, the valuation of James J. “Whitey” Bulger’sreal property and liquor business for the U.S. Attorney. Primary emphasis is real property valuation involving litigation issues including environmental damages, diminution value of stigmatized property including contamination of chlordane, oil spills, proximity to crematoriums, easements and commercial and residential property involving divorce, IRS challenged decedent estate values, charitable donations, and gift tax issues. If I were appraising personal property, I would not include my experience in the valuation of business enterprises or real property. Statement of Qualifications Roger Durkin J.D., M.S., FASA Specific Experience Personal Property: He has been a contract appraiser for the U.S. Customs (approximately 15 years) for the Port of Boston, Hartford, and Port of Baltimore, and Buffalo for seizures of tangible personal property including fine art, coins, artifacts, jewelry, and antiques. He was employed by U.S. Customs in determining the value and provenance in United States v. Arnold Katzen& Shirley Sack, (2004) wherein two art dealers attempted to sell an AmedeoModigliani and Edgar Degas painting for $4 million cash to undercover Federal Agents. He was lead appraiser in Levin v. Dalva Brothers, Inc., 459 F3d 68 where the federal trial and appeal involved fine art, French furniture, decorative accessories and New York Art Law. He valued all personal property contained at Babson College including the Sir Isaac Newton collection; the extensive fine art collection contained in the 11‐story US Trust headquarters in Boston; the entire furniture and art collection at Aetna’s Insurance Hartford headquarters; the entire art collection for the Phoenix Insurance in Albany New York and Hartford Connecticut, all of the property contained in 34 offices of the
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