Dr. Clifford A. Lipscomb
During the first day of the conference, there was a big topic that frequently came up across several different presentations. This recurring topic was centered on evaluation and the use of new fields of observation among valuation professionals. Sir David Tweedie, Chairman of the IVSC, discussed the fact that there are different fields of evaluation, but the general public has the perception that all valuation professionals have a homogeneous protocol for each valuation. However, it is simply not the case that the scope of work is exactly the same for every valuation assignment.
Differing scopes of work can be observed when considering two different forms of appraisals. For example, loan origination appraisals and litigation appraisals have vastly different scopes of work and require different information in order to be performed most reliably and in compliance with the U.S. Uniform Standards of Professional Appraisal Practice (USPAP) or other documents that provide guidance to valuers. Often, appraisals used in litigation matters include significantly more data and multiple elements of analysis. Litigation appraisals will often also include the use of data analytics to extract a number of data elements into a common format and then analyze those data. Another important aspect of litigation appraisals is the need to determine the credibility of the appraisal(s) in question. This often involves an intense appraisal review process where each section of the appraisal is evaluated on a very granular level. This kind of forensic review of appraisals often results in a determination by the review appraiser, for example, of whether the original appraiser provided adequate support for her adjustments to comparable properties. Because legal matters may have different purposes or claims, the scope of work in litigation appraisals can vary greatly from case to case.
On the other hand, loan origination appraisals for residential property are performed using a fairly similar scope of work with the same overarching goals in mind. However, appraisers and valuation experts offer an opinion of value for the subject property that is based, in part, on the experience and qualifications of the individual appraiser within the subject’s market area. Many times, two appraisers will determine different values for the same property as of the same effective date, all while maintaining compliance with USPAP. This can be due to the selection of comparable properties, adjustments made in the sales comparison approach, determination of site value, or a host of other differences.
Here at Greenfield Advisors, we are known for our valuation expertise in all types of real estate. We specialize in the most complex valuation assignments, and we have decades of experience in determining the right scope of work to meet our clients’ needs.
Contact us if we can apply our experience to your complex situation.
Contact: Cliff Lipscomb