Modeling Your Appraisal Report to Meet Your Client's Needs in the Commercial Marketplace

Modeling Your Appraisal Report to Meet Your Client's Needs in the

Commercial Marketplace

• Misa Zane, MAI CW Financial Services

Austin, TexasAugust, 5, 2014

• Nick Tillema, MAI, SRA , AI-GRSAccess Valuation, LLC

Modeling Your Appraisal Report…….

“Appraisal reports, due to their indication of market value, are often used by clients to recycle the report’s information. The panel will discuss the key areas in which clients focus their attention while providing insight as to how information on the subject property, marketplace and the analysis are utilized to streamline the client’s internal processes. The goal for this session is for appraisers to recognize the importance of an appraisal report in the capital marketplace.”

“If your only tool is a hammer, everything starts to look like a nail”

Modeling Your Appraisal Report…..


What is expected?

An un-biased, independent, and objective estimate of value(that is expected by your client, to further your client’s cause).

Your house as seen by you……

Your house as seen by your buyer……

Your house as seen by your mortgage lender…

Your house as seen by your appraiser……

Your house as seen by your tax assessor……


• Who Expects What?– Lenders– Tax Appeal Clients– Eminent Domain Parties– Litigation– Non-Cash Charitable

Donations– Government Entities– Private Citizens


Lenders

• Value• USPAP• Secondary Market • Government Regulations• Market Information• All Three Approaches• Sales Adjustment Grid• Combination


Property Tax Appeal

• County Assessor versus Property Owner

• Government Regulations• Value Standard• Mass Appraisal Techniques

versus the Three Approaches• Market Information• USPAP


Eminent Domain

• State (Government Entity) versus Property Owner

• Government Regulations• Value Standard• Partial versus Full Taking• Recognition of Severance versus

Consequential Damages• Value not affected by current

works project• USPAP


Litigation

• State (Government Entity) versus Property Owner• Government Regulations• Value Standard• Partial versus Full Taking• Recognition of Severance versus Consequential Damages• Value not affected by current works project• USPAP

Internal Revenue Service

• IRS versus private citizen?• Non-Cash Charitable

Contribution• Specific requirements

– Qualified Appraiser– Qualified Appraisal– Daubert

• USPAP

Government Entity

• Uniform Appraisal Standards for Federal land Acquisition (Yellow Book)

• Specific requirements– Format– Definitions– Before / After– Full vs. Partial Acquisitions– Review

• Standard of Value


Private Citizens

• Purpose?• Format?• Three Approaches?• USPAP?



Why is there a difference?•Because everyone has different interests.•Because everyone has somebody looking over their shoulder•Because everyone is looking out for their own best interest. •Because everyone has a different perspective of what an appraiser does.


What happens if you miss the mark?

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=H8rn-pjFPcxcOM&tbnid=EUQ4boJjGemzoM:&ved=0CAUQjRw&url=http%3A%2F%2Fmickm.deviantart.com%2Fart%2FTotal-Chaos-Logo-50071944&ei=85naU5OyK8iPyAT4gYKQBw&bvm=bv.72185853,d.aWw&psig=AFQjCNEIdAg44ZLDK0mWQbEA_HFIURpDYQ&ust=1406921554946367


What happens if you miss the mark?– Turning the appraisal in two days before a trial with a value

the favors the opposing side.– Realizing, after you submit the appraisal, that you

appraised the wrong property– Providing the right answer to the wrong question.– Providing the wrong answer to the right question.– Recognize some clients don’t really know what they want.

But that doesn’t relieve you from your obligation to define the problem and build a scope worthy of the problem.


How do you protect yourself?

Follow the Appraisal Process!


How do you protect yourself?Define the problem– Take as much time as necessary to understand

what the client wants.– Delve into the background– Understand the issues– Check for conflicts of interest– Write out your version of the client’s problem and

get the client to sign off.


How do you protect yourself?Develop a scope for the defined problem– Use the value methods best suited to the problem– Fashion the market analysis for the issue– Highest and Best Use concern– Talk to others involved in the field


How do you protect yourself?Intended Use and Intended User– Reports are to be written so the Intended User can

understand them – go to the lowest common denominator.

– Don’t try to be cute with double talk (Check out AO 20).

– Are you talking to a judge or to a jury? Underwriter or auditor?


How do you protect yourself?Writing the report– Explain everything – Logical explanations that are

wrong carry more weight than no explanation at all.

– Create a synopsis of the problem and your answer at the beginning of the report

– What to do when you’ve made a mistake?– Drafts?


Questions

Nick A. Tillema, MAI, SRA, AI-GRS, CCIMAccess Valuation, LLC

(317) [email protected]

mailto:[email protected]

Modeling Your Appraisal Report to Meet Your Client's Needs in the Commercial Marketplace

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