What is an Appraisal Review?
The 2016-2017 Edition of the Uniform Standards of Professional Appraisal Practice (USPAP) defines an appraisal review as “the act or process of developing and communicating an opinion about the quality of another appraiser’s work that was performed as part of an appraisal or appraisal review assignment.” Standard 3 of USPAP provides mandatory guidelines for real property appraisal review, development and reporting.
In general, there are two types of reviews – desk and field – and each requires its own scope of work. It is important to note, however, that neither of these requires the reviewer to reach an independent conclusion of value. Should an independent value conclusion be requested of the reviewer, the scope of work must be adjusted to include a valuation component. This, in turn, triggers Standards 1 and 2 of USPAP, which present mandatory guidelines for real property appraisal, development and reporting.
The reviewer’s scope of work for a desk review does not include an inspection or viewing of the subject property or the comparable properties included in the appraisal. This type of review is most often used by financial institutions to assure that the appraisal complies with USPAP, FIRREA, and other requirements specific to the lender client. Also checked are mathematical calculations and the overall credibility of the reported value conclusion.
The reviewer’s scope of work for a field review includes inspection of the exterior and sometimes the interior of the property appraised and possibly inspection of the comparable properties to confirm the data provided in the appraisal report. This type of review is not typically ordered by lenders. It may be used by attorneys for legal support in trial situations, or by public agencies in eminent domain proceedings.