Contract Analysis Paralysis
The most critical failure found in appraisal reports that come before the Board, whether residential, commercial, or agricultural, is a lack of analysis. Appraisers seem to think that citing or reporting is synonymous with analysis.
Analysis – to study (something) closely and carefully: to learn the nature and relationship of the parts of (something) by a close and careful examination.
The URAR asks: I did or did not analyze the contract for sale for the subject purchase transaction. Explain the results of the analysis of the contract for sale or why the analysis was not performed.
Yet many will write: Standard contract. No concessions.
That isn’t analysis, is it?
Analyzing a contract begins with whether the appraiser has all of the pages, all of the riders, and whether it has been signed by all parties.
We rarely see a proper contract analysis.
Throughout the URAR and other forms appraisers certify that they: research, verify, and analyze data from reliable public and/or private sources.
That; I researched, verified, analyzed, and reported on any current agreement for sale for the subject property.
And; I researched, verified, analyzed, and reported on the prior sales of the comparable sales for a minimum of one year prior to the date of sale of the comparable sale.
USPAP uses the word analyze twenty times from the Defnitions on up through Standard 3.
Analysis requires more than empty sentences like:
“…the subject property has had updates since the short sale eight months ago.”
“…the subject’s market rent is derived from rental comparables on this form.”
Each appraiser who appears before the Board in a settlement conference says the same thing.
“I guess I should’ve written more.”
Filling the document with endless boilerplate about comps over a mile away or about digital signatures being fine and dandy in this day and age aren’t what your readers are looking for.
If a property’s sale price spikes 80% in a six-month period, yet the property’s condition is unremarkable, that’s going to need analysis.
Analysis is the reason behind the action or fact. The Board can see it a mile away.
By Lee Lansford – Illinois Appraiser Newsletters – Volume 7, Issue 2