Appraising for 20 years now and have never had a complaint. Do you recommend getting an attorney before they talk with you re possible uspap violation or wait until they interview you first?

Hi Mike, thanks for your great insight. Maybe giving a brief background will help explain what is going on. I am doing a house remodel, and adding square footage to my home, which would put it on par with the higher end homes in my local market, higher end meaning in the 400k-500k (high end for my measly salary). I couldn’t figure out why my appraisals were coming in lower than what is selling on the market for comparable homes, and after pouring hours into research, and looking at the appraiser blogs, I’ve narrowed it down to the GLA square footage adjustment being given. The most recent appraisal came in as $35/sqft, and the previous one came in as $50/sqft. When I inquired the appraiser that performed my last appraisal on how he came up with $35/sft, he stated that he did not do a market analysis, and rather used some static number based on a ‘standard’ value given. $35/sft for a GLA adjustment seems pretty low to me, when the GLA average square footage of comparables come in as $218/sft, and in a super hot market that people want to move into, but homes aren’t that big, so square footage is very highly prized.

Now when the appraiser starts adjusting based on $35/sft value, and as it happened, my house gets compared to another home that has 2 decks that get valued at $4500 dollars a piece, and they have 200 less square feet, that is where to me that doesn’t make any sense.

So that led me to look at this article:
https://singlefamily.fanniemae.com/media/15271/display

and this:
https://web.archive.org/web/20231206085140/https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B4-Underwriting-Property/Chapter-B4-1-Appraisal-Requirements/Section-B4-1-3-Appraisal-Report-Assessment/1032992431/B4-1-3-09-Adjustments-to-Comparable-Sales-01-31-2017.htm

Analysis of Adjustments
Fannie Mae does not have specific limitations or guidelines associated with net or gross adjustments. The number and/or amount of the dollar adjustments must not be the sole determinant in the acceptability of a comparable. Ideally, the best and most appropriate comparable would require no adjustment; however this is rarely the case as typically no two properties or transaction details are identical. The appraiser’s adjustments must reflect the market’s reaction (that is, market based adjustments) to the difference in the properties. For example, it would be inappropriate for an appraiser to provide a $20 per square foot adjustment for the difference in the gross living area based on a rule-of-thumb when market analysis indicates the adjustment should be $100 per square foot. The expectation is for the appraiser to analyze the market for competitive properties and provide appropriate market based adjustments without regard to arbitrary limits on the size of the adjustment.

When I am asking whether it is a USPAP violation, I meant, is doing any adjustments NOT based on market values a red flag, and something that shouldn’t be done any longer? And if it is performed that way, do I have a right to fight the appraisal, and have it done according to USPAP guidelines? Maybe a violation is too strong of a word, but do I have a case here to fight how the square foot adjustment was derived.
I am a consumer here, and not out to get appraisers in hot waters, I just want the appraisal done according to guidelines set by USPAP or Fannie Mae, and if the GLA adjustment is $40/sft, and it’s been calculated properly, documented, and supported by the local market, then yes, I will need to adjust my house remodeling scope, and just live with the appraisal.
I feel though there is a reason Fannie Mae sent out a letter (https://singlefamily.fanniemae.com/media/15271/display) stating that this static method of deriving at a value without market analysis needs to stop. I definitely can see why that has been done because the appraisals I’ve been given does not match up with what’s been selling out in my local market.

The problem with what I am going thru is that there isn’t a way for me to find out how the appraiser is going to calculate adjustments, so say I went to a new lender, and he hires another appraiser who doesn’t do market based adjustments, I’ll be down another $400-$500 dollars, and no recourse. It’s highly frustrating, both in time and money.

Another way to put it is, can an appraiser make adjustments NOT based on the local market, and make adjustment say based on some standard adjustment sheet he’s been using for 30 years. Is that up to the appraiser on what method he uses to come up with these adjustments, and doesn’t have to support it with data? If the appraiser has a right to come up with adjustments not based on local market value, than there is nothing I can do, except just live with what they say, or as you stated, hire a review appraiser, and have the appraisal analyzed.

Hi Jackson, I’ve only been an appraiser for a bit over 34 years now, plus 6 years full time RE sales (8 licensed) prior to that. There are a couple issues in your post worth noting.

1. Both the ‘method you cite and relevance of any kind of purported FNMA national averages regarding GLA adjustments is complete and utter garbage. No other way to say it. Its certainly not a relevant local area market indicator.

2. The lender is not an arbiter of what is or is not USPAP compliant appraisal steps. They may ask for clarification but that’s about it. Whether they ‘see an issue or not’ with your methodology is again irrelevant to whether the appraiser performed his job credibly and properly. IF there is an issue, why not obtain a USPAP SR3 and SR 4 compliant real estate appraisal review? THAT is the recognized procedure for determining if an appraisal is credible or not.

3. I’m concerned that you have ordered 2 appraisals and both have (in your view) been lower than you think your property is worth. Keep in mind that is the entire reason lenders order appraisals. To determine supportable market value.

4. You asked in you are off base or not. Largely it would appear so. The only proviso Id have is if the same lender using the SAME Appraisal Management Company (AMC) ordered both appraisals? (Some would be reluctant to have contradictory values).

Paying a higher fee should not alter the appraisal results, though it may well affect the quality of the appraisers the AMC is able to hire for the fees they are offering. AMCs rake off a fee from the total fee you pay. Sometimes it can run as much as 50%-60% of the total you paid. To facilitate this, they (some) will hire the cheapest appraiser around. Companies that do this cant be trusted to do anything right in the appraisal ordering process. They may ‘defend’ the prior value rather than seek an independent analysis of the appraisal.

From what you describe its likely the value is as reported by the other two appraisers. IF you think the hypothetical scenario I described may be a factor, then hire a review appraiser. IF the review comes back supporting the appraiser’s conclusions. That’s it. Accept it.

If it does not, then take that review back to the lender and AMC and insist that they either credibly refute the review or that THEY pay for another competent appraiser to appraise your property.

IF you paid for the appraisals you are entitled to have them properly performed. If they were “free” (paid for by the lender) then just dump that lender and deal with a reputable lender that doesn’t pretend there are no costs associated with refinancing.

Keep in mind YOU are not the appraisal client. The lender was. You MAY be the reviewer appraisal client though.

There are a lot of other variables that could have affected your appraisal. They can’t all possibly be covered here. There is NOTHING that you communicated that suggests USPAP guidelines have been violated.

Nothing. The ONLY acceptable (to appraisers) determination of USPAP compliance is a USPAP compliant appraisal review. Most lenders no longer have these performed. In fact, the lender review form (FNMA approved) is designed to tilt toward acceptance of an appraisal. You appear to need a real, USPAP compliant appraisal review…not a short-form report of one. Why not contact local certified appraisers in your area and discuss it with them? Good luck

In this report I used $35 per square foot as the GLA adjustment. It is very common to use a percentage of the price range of home that you are appraising and is generally in the .01% of the estimated value range.

This is also supported in the Fannie Mae selling guide that the borrower sent that indicates that the median GLA adjustment nationally is $30 in the $300-400K range.

Here’s an article I found in regard to this issue:
https://singlefamily.fanniemae.com/media/15271/display

The lender isn’t recognizing this as an issue, and the appraiser has not provided any support for a GLA square footage adjustment but in my mind is using an outdated method, which Fannie Mae isn’t supporting any longer. This of course is causing my house to be valued a lot below market value, and causing issues for my refinance. This is the second appraiser I’ve ran into that’s made the same type of evaluation on GLA adjustment without anything based on market value. Am I off base here? I am at the other end of the stick where I have no recourse besides to either live with the appraisal, or walk away, and do it again. But who’s to say I won’t run with a third appraiser that does the same thing, and I’ll thrown another $400 dollars away. To be honest, I’d rather twice the amount to get an appraisal done according to the USPAP, rather than to have to constantly deal with this. Interestingly, I’ve sent my lender my explanation, and they just ignore it, basically saying I am just complaining, and should just accept it. I’d understand if I fell in line with ‘my appraisal is low because I said so’, but I feel that the USPAP guidelines are being violated. Thoughts?

Sounds like you guys need liability insurance because of the issues that can go out of control. Thanks for your guidance. I sincerely appreciate it!

you are so kind to offer that

You’re welcome. Your concerns seem to reflect those that many of us hear on a regular basis.

The bottom line is that while we attempt to mimic market reactions, we are required to do so according to set standards and the further special requirements of the lender-clients. (Client is a whole other discussion-its not who ‘logic’ suggests it should be. It too is defined by law under USPAP (which states adopt and incorporate into their laws).

Anytime you ever have an appraisal question reach out and call me (714) 366 9404 after 10 AM pacific time. Seven days a week as late as is needed.

That was a lot of input, thank you very much!

YOPNoFB,

The dollar impact of the individual things you are talking about likely would have zero measurable impact on market value in most median price ranges across the nation. Simply not credibly measurable (yet we still see individual FP adjustments of $1500-$5000 in $500,000 property !)

OVERALL quality versus individual components are considered. Quality itself is not always separately measurable and may overlap into condition.

Zip codes don’t determine sales comparables relevance. In a perfect world, all comps would come from the same block, same development and all have sold in the past two weeks. That’s never going to happen.

In unique property types, we often have to go increasingly further away in order to bracket or identify a sale with one of more similar features. Sometimes these more distant sales are to satisfy a lender requirement. They may or may not have relevance in our reconciliation of data. Some properties require statewide consideration. Others are limited to the sub neighborhood they are in. There is no one size fits all.

Keep in mind that your home has a special appeal to you. We are projecting a perceived broad market appeal on your property based on historic sales, using a hypothetical “most probable” typical buyer…NOT that one special buyer that appreciates all your custom nuances the same way that you do.

Sometimes ‘special features’ that are important to you, have no real (provable) market value to others. We try to consider special appeal items in the overall property analysis.

…and yes, sometimes appraisers just flat out screw up. Some ARE less competent than required. Some are in an unpardonable hurry, that interferes with their ability to do what they should. Some have been beaten up so bad by lender loan officers pressure to hit the value that they cave in on issues they should not, and then a review comes along and ‘catches’ it. We’re ordinary people just like anyone else. We’re capable of making mistakes.

Honest appraisers acknowledge and correct these when identified and supported as being errors. Some don’t. ALL of us are expected to stand our ground if a desired or expected price point is simply more than our data supports. Contrary to agents belief, we are NOT expected to hit contract prices or needed refinance amounts.

If the house sits 150 ft back from the main road and all the other houses are 50 ft off the road, what you’re saying is the front of your house will then view the rear yards of the neighbors, this would have a negative effect. The additional land in the rear yard is basically additional land That potentially never gets used by the owners since it is such a large rear yard. It really depends how the appraiser considers this a benefit or a negative.

What about a unique qualty such as positioning on the lot. If it provided a extreme amount of extra privacy. An example being a street of 66×470’ lots and the houses on either side are 50’ off the road except this house it is 150’ off the road. This leaves you with a back yard that is far away from your neighbors. Housing against the back yard Also enjoys huge back yards leaving their houses 1000’ away from my back yard. This is a truely unique quality. It deserves significant value!

It all depends on the comps available for the appraiser to use, if the appraiser is “jumping” over settled sales closer to the subject, he is not doing his job, If the appraiser has no comparables close, we have to go further away…but always make sure the sales are from economic area similar to the subject’s area. Adjustment can be made in varying parts of the appraisal, unless you are looking at the report and reading the addendum, which most people don’t do, then it is common to have misconceptions of the thought pattern of the appraiser to get to the appraised value.

With all that said, that is for an appraiser who gives a crap, I have seen hundreds of appraisals were the appraiser simply has not down their jobs to the fullest extent. Most of that is due to the strict “Turn Times’ imposed on most of the appraisal community to make the management companies look “good” to the clients.

So you are saying appraisers with the courage of their convictions to support their beliefs are self-hating morons? Sophistry can be SO much fun! Let’s all play!

Not in Texas. Maybe some other states.

You point is valid Mike. As reviewers I assume we are acting for a client, so at least theoretically there’s a tie to the complaint and the client. I filed a complaint against the Clear Value hybrid appraisal author. (Currently still being analyzed by Georgia). Now, that’s a complaint that would never be filed by the client because of they are promoting that poor quality product to begin with.

So then the next appraiser is told: “Well everyone else does these, why can’t you?” SOME provision needs to be made to allow for other appraisers to file complaints. still. The difference being that we presumably know when a report appears to be bad and a vested interest borrower or agent does not, and does not care.

I don’t even think state regulator should be able to file complaints absent an actual independent outside complaint though. Too often used as a tool of intimidation or outright extortion. Tough problem to find a universal solution.

Support and absence of mistake is not enough…not if you are licensed in Oregon, Minnesota, Maryland or California.

Having said that, there is a cost in obtaining due process in Admin law courts. MOST states have a process so formal that it requires an attorney. E& O doesn’t come remotely close to covering attorney fees, and a soften as not urges settlement to minimize THEIR exposure.

SOME appraisers in SOME states have a fair shot at defending themselves…but not the majority. God help you if you are in a state that is trying to make up for lost license revenue with $10,000 fines. They have been known to simply declare USPAP violations by Divine Right!

My generic advice (unless you agree you actually DID violate USPAP) is to never accept a consent agreement-It will come back to haunt you tenfold and the wording of the stipulations are so horrible that John Dillinger looked like a choir boy in comparison.

Such agreements also take out a piece of your heart and soul. “Confessing” to something you did not do will eat way at you forever.

So, let’s recap:

1) Mike Ford makes a proposal about the way things should be in the future – that a fellow appraiser should not be able to file a complaint.

2) Mike Ford changes the subject when challenged about why this is a dumb idea – that we have to “operate in a system what is”. Not the discussion here. The discussion is about what is proposed for the FUTURE.

3) Mike Ford’s only substantive argument for his “proposal” is that “CoreLogic reviewers” might do bad things. No evidence or logic for why the ability to lock out large AMC reviewers justifies locking out ALL complaints of this type and how that helps the appraisal industry – just more irrational barking, as usual.

4) We’ve learned that when Mike Ford wants to try to sound intelligent he repeats forms of the word “sophistry” over and over again.

Here’s a new, simple word for you Mike – BULL SHIT. Past, present and future tense, written or verbal form.