Appraisal Report Corrections Protocol
30 76 16 4 2 4 3 4
For some time, appraisers have written or called me, asking about how to do report corrections, or respond to client requests – after an original report has been sent in. I decided to distribute these suggestions to encourage a uniform procedure across the appraiser universe. I don’t recall ever seeing anything published about this topic.
- Disclose, don’t bury – modifications, corrections or responses to the original report, or even subsequent changes. I have seen too many reports where the appraiser hides changes within the body of the report as if those were part of the original, when in fact they were later additions.
- Remember that once you sign and deliver a report with appraiser certifications included, that becomes a ‘legal’ document. Itemize anything done to update or add to the report after the original submittal date. Read on for how and where.
- I suggest all reports contain a Table of Contents page. This TOC should include reference to all pages before it, and of course, after it. Some reports have a Cover Page with subject photo, date of appraisal, value, etc. as the first page. Put the TOC page after that, but be sure the TOC shows the Cover Page as the first page.
- Have your report software number each report page in sequence, with the numbering shown on each page – normally in the upper right corner – as Page X of Y Pages. This allows a reader to look at the TOC page and then flip to the desired page easily. This is also important to help discourage report tampering by anyone upstream from the appraiser – which has been a problem in the past.
- Now that those basics are implemented, here’s how to do corrections, changes, modifications, client responses, etc.
- Anytime you need to do anything as noted AFTER the original report was submitted, insert a separate Addendum page with signature block as the page IMMEDIATELY AFTER the TOC page. Don’t put the change notice Addendum and extra pages at the end of the report, because you want the readers to know exactly what was done, and when. (Note that the following page numbering will automatically change.)
- On the new Addendum page, upper left, write the date in BOLD TYPE you received the request, etc. from the client. “Received”, not the current date, because sometimes these modifications are not done for one or more days after receiving the original message.
- Skip 2 – 3 lines, then write “On the date above, the appraiser received from the client a (message or request) to do “XYZ.” This is where you tell the reader what the client requested of you. If justified, identify the actual person who sent the request….but most often you can just say ‘the client.’
- If in this process, you need to make changes to the body of the report, in any of the fields or comment boxes, or add something you may have originally forgotten, tell the reader what was done, and make corrections / additions as necessary.
- However, if the request has to do with ‘change the sale price’ in the report due to a re-negotiation AFTER your original report was submitted, DO NOT change the sale price on the form page. Instead, write a description of what occurred, and also include the PRICE CHANGE ADDENDUM (usually supplied with these requests) as the page following the new Addendum discussed above. FNMA has issued a notice that they do not want original reports changed when this occurs. So this process complies, and it will also satisfy other users such as FHA, VA, etc.
- Anytime a client provides you additional written documentation, include that as an additional page following the new Addendum page. Print it as a PDF to include, or else scan it in as a Scanned Document. Make sure the Addendum references the additional page by a name, so that the ToC will show it properly. Sometimes this occurs when an original report is written “Subject to” an inspection by another qualified party. That party supplies a written document to the lender, who sends you the document and asks you to change the report to “As Is.” I think this is perfectly fine, as long as the process is described on your new Addendum and the other party’s document is included in the revised report.
NOTE: just because you write a report “Subject to” inspection does NOT automatically trigger the need for a 1004D Completion to be done. That’s a lender decision, not yours.
- ROV requests: lenders are allowed (by Dodd-Frank) to send you additional APPROPRIATE sales for consideration. The word ‘appropriate’ is in the law, but most often these are just higher priced properties or have other amenity differences that do not make them ‘comparable’ to the subject. Sometimes you are directed to put these inappropriate sales into a grid page, do all the calculations, and then explain why they are NOT or ARE appropriate. Well, guess what – you are the appraiser and you decide how these are to be handled.
- ROV properties ‘not’ comparable: I say nuts to putting those into a grid. Just identify each one by address in Bold Type on your new Addendum, and describe why it/they are not comparable. (I recently had this occur.)
- Comparable ROV properties: this can be become somewhat of a sticky situation. If it becomes obvious that an Opinion of Value change will be necessary (higher or lower), it is best to notify the client that the original report is no longer valid, and a brand new report under a different appraiser file number will be submitted. This is because of how the UCDP process with UAD works (and with FHA and VA submittal portals also). If a ROV property is determined to be comparable and is included in the report grid… but NO VALUE CHANGE will be made, I think you can appropriately describe what you did in that analysis in the new Addendum, and re-submit the report under its original appraiser file number. However, you could also send in a ‘new’ report with a different appraiser file number, just to keep things neat and tidy. (This also helps comply with USPAP, where we are directed to keep copies of ALL submitted reports separately.)
- Once you have worked through the above steps, it’s time to finalize the new Addendum. After your last comment entry describing what was done, skip a few lines, and then write “This page (and the following page) and the noted “corrections / additions / modifications” are the only changes made to the original report. No change to the OMV has been made.” Then skip one line, and write “A new signing date of XYZ has been applied to this report.” The signing date may be different from the ‘receiving date’ of the request. I put the above lines in Bold Type just so they stand out.
Following a protocol such as the above makes your reports look very professional. It makes it easy for report users to follow the process that was done. By disclosing everything, the user does not have to wonder about details, especially if they already have the existing report and suddenly another report for that same subject property shows up.
I have used the above process for years. No one has ever questioned a re-submitted report when they can see exactly what was done.
By the way, use this process if you find a problem with a submitted report after delivery, but before the client makes any response. None of us are 100% perfect. Sometimes we miss things, overlook items, or make typos, etc. Use the process I have described, be upfront about what was originally done, make corrections, describe what you did, and send back a corrected report. In other words – just be honest and ethical. You will be appreciated for that. Don’t fear admitting a mistake was made.