As a real estate appraiser, much of your success relies on your reputation as a competent professional. Unfortunately, certain appraisal violations are quite common—including errors in appraisal reports. Make sure you’re aware of these mistakes so that you can avoid them. Here’s a compilation of the most common errors and deficiencies found in appraisal reports by reviewers, regulators, and appraisal boards.
- Not stating the report option utilized.
- Not providing enough analysis for the intended user or reader to understand the report properly.
- Inconsistencies between the description of the subject property in the improvements section and the photographs, sketch, sales comparison grid, and other areas in the report.
- Inappropriate use of boilerplate commentary in the appraisal report to describe the neighborhood or to explain the reconciliation of the sales comparison approach.
- Failure to summarize the support and rationale that supports the highest and best use opinion.
- Not complying with the most current USPAP.
- Failure to explain the exclusion of the cost and or income approaches.
- Failure to analyze any listing, option, purchase agreement, or prior transfers of the subject.
- Not providing any explanation or the reasoning behind the adjustments.
- Failure to support the value of the site.
- Inadequate or no reconciliation in the sales comparison approach.
- Zoning is not confirmed and the zoning description indicated does not match the local zoning classifications.
- Inadequate recognition of significant professional assistance provided in preparing the appraisal report.
- Failure to reconcile the quality and quantity of data available and analyzed within the approaches to value used, as well as the applicability or suitability of the approaches used.
- Failure to recognize, analyze, and report changing market trends and to report those trends in a consistent manner throughout the appraisal.
- Modifying the predominant price and age of the neighborhood to match the subject property.
- Limited description of the subject property’s amenities, features, and condition; especially a lack of describing deferred maintenance, recent remodeling, or upgrades.
- Inappropriate replacement costs that cannot be reproduced using the cost data source cited.
- Not estimating depreciation in the cost approach for external and functional depreciation.
- Failure to report and adjust external obsolescence or to play down the effect it has on market value or marketability.
- Adjusting site differences based on size differences only and not considering or adjusting for differences in site utility.
- Failure to support the gross rent multiplier in the income approach.
- Not reporting the opinion of exposure time when it is required.
- Not properly identifying the intended use, intended user, and the purpose of the appraisal.
- Failure to report the scope of work.
For more in-depth info on appraisal violations, enroll in our top-rated CE course, That’s a Violation, taught by instructor Dan Bradley.
The above list was compiled from several appraisal regulatory boards’ lists. Avoiding these common errors in appraisal reports will help you build and maintain your reputation as a competent appraiser—one whom clients will happily refer to others in need of appraisal services.
Editor’s note: This blog post was originally posted on April 23, 2019. It has been updated slightly.
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