As a fee appraiser that provides commercial appraisals for numerous financial institutions, I get it. Running a $500 million bank’s appraisal department using our appraisal workflow and management software platform YouConnect, I get it. Both sides of the fence could use a cup of coffee, and have a conversation about communication of being in the other’s shoes.
We all know that the intent of Dodd Frank (as it relates to our world) was for the lender not to have influence on appraiser selection. However, this law, much of which has been incorporated into bank policy, has created a vow of silence for commercial fee appraisers, which has not helped either side of the fence.
The cloistering of commercial appraisers has diminished their capacity to hear. Many of the details get lost. The absence of perspective is not productive. A chief appraiser at a large bank recently said he thought 25% of all commercial appraisals had errors, many of which were bleed through mistakes like: appraisers using old Word reports and typing over them for the new assignment. RealWired offers report writing software and a comp database to help reduce these errors.
When I was ordering appraisals for a bank through our YouConnect system, I sometimes had to deal with the loan officer uploading very little details. I had to call them on the phone (actually faster than email) to get the specifics in order to properly order an appraisal. On the other side of the fence, fee appraisers get very busy and sometimes miss what the bank wants and needs.
Best practices suggestions from chief appraisers to fee appraisers include:
- Communicate, communicate and communicate some more.
- Read the engagement letter.
- If there is any issue of circumstance, see No. 1.
- Consider the intended users (talk to the reader in your report like it was your own money at risk doing your own due diligence in an unfamiliar market).
- Understand what the bank wants and be a team player, see No. 1.
- Be aware of the changing bank requirements due to updated regulatory directives or supervisor agency examinations.
- Get to know your bank contacts personally. Go out to lunch with them.
- Be aware of specific bank requirements beyond your boilerplate.
- Write your reports so they can be understood by non-appraisers.
- Streamline your reports to provide relevant analysis and conclusions with timely market data.
I think commercial appraisers are starting to get the point that no one wants to read unnecessary report filler and irrelevant statistics. Many are starting to turn to technology to make that happen. Understanding both sides of the fence will result in a successful professional relationship doing all the things you should be doing like comply with USPAP, Interagency Guidelines and periodic commercial appraisal directives from the agencies.