An appraisal review, as the name indicates, is an evaluation of an assessment report, which ensures that it complies with specific interventions available and is the general part of a quality management program for the lender.
Moreover, appraisers are always closely scrutinized to provide accurate reports, and an appraisal review is one of the tools. If you have ever wondered who will check if the evaluator does a good job, then continue to read.
An analysis of all of the features of the appraisal report of another appraiser is an appraisal review.
Its function is to determine if the appraisal report contains the relevant data available. Additionally, it also determines whether the relevant evidence accurately associates the evaluator’s presumptions. Also, it is responsible for seeing whether the evaluation follows appropriate standards and strategies. Moreover, it also decides whether a sensible conclusion results from the reasoning and logic applied to data during the evaluation process.
The significant difference between an appraisal review and an appraisal is that the review is to analyze the features of the appraisal report and not to perform the appraisal of the property. Often, a slight difference exists between objectively assessing an appraiser’s reasoning and replacing a personal interpretation as a reviewer.
Furthermore, it should be an independent analysis of the overall work of another appraiser. Any missing review from the total work cannot be qualified as an appraisal review. If only sections of appraisal reports are analyzed, the total report is not to be judged on the foundation of limited parts by the reviewer.
Reviews can be tailored according to the client’s needs. It can be presented as a checklist or can be narrative. There are two different types of reviews, namely:
Let us further compare these two types of reviews and their differences.
The desk review is typically performed in the office and requires less time and energy. As performed on the desk, it does not require a property tour. The desk review requires only certain statistics to be observed and believes that the appraiser initially used the best tactics that could be available.
In the desk review, mainly, the technical aspects of the reports are being focused. Such as:
Moreover, the desk review highlights the reasoning and justification utilized by the evaluator in the analysis to achieve their final decision.
Desk reviews include scanning of literature, in addition to secondary data review, and the creation of a reference list for all documents. All the team leaders can analyze these documents as they are readily available.
An example: To see what a desk review appraiser might look for is how he made adjustments. For instance, the adjustments would be correct if the comparable was larger than the subject. To error is human, and appraisers may make a mistake by adding where subtracting was necessary. This can have a profound result on the final review.
The assignment of the appraiser is to narrate the complete history in a logical way that the reader will get the perception that was used. A review should look into how the quality has been met and what evidence supports it with complete satisfaction.
Its main purpose is to be sure that the appraisal was achieved as per USPAP guidelines. If it is discovered that the report was lacking in this regard, the lender can question the reviewer using the results and doubt the authenticity of the value assessed in the report. They can also use the report to actually “score” the output of the evaluators.
An in-depth analysis of an appraisal as compared to the desk review is called a field review. As you would have understood that the desk review is performed for a technically accurate appraisal, a field review, on the other hand, is to see whether the final evaluation is approved and, if not, to have another opinion of value.
Someone who may not be a part of his organization, who typically works from the executive office and HR., uses this method. The investigator evaluates an employee’s results through his reports and questions the ones being assessed as well as his supervisors.
A field reviewer expert visits the subject and comparable properties. The evaluator must not move into the subject property but only look at it from the road.
The sales are researched by the field reviewer and used in the report to check if the sales used were the best ones. If they find better than the ones used, they should be replaced by the reviewers. Same way, if the reviewer does not approve the appraised value, he may give his own opinion with assistance.
A field assessment requires as much time and effort as a regular evaluation for all practical purposes and is usually priced in a similar way for a complete appraisal. On the other hand, a desk review usually is cheaper.
Your decision as to what level of review to be chosen should not be taken lightly. This decision should be based upon the pieces of evidence you have, which would have been gathered from other appraisal review tools.
Lenders who do not have enough qualified employees should consider hiring individuals in this regard to help them decide as to which review tool would best serve their particular needs and requirements.
Many organizations now outsource professionals for quality control and appraisal reviews. Whatever tool is chosen, make sure that you get a complete evaluation report of your assignment under the guidelines.
In addition to this, it is important to keep in mind that due to differences in analysis methods, desk review is cheaper in comparison to field review. Now that you understand the differences, you better know your requirement of analysis and an official appraisal report to obtain a review.