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Mentoring Fellow Appraisers
By Phil Spool, ASA
I never had a mentor. But I wish I did. I wonder, was your experience like mine? In the beginning of my appraisal career as a trainee, I was told what information to put in the appraisal report and “don’t ask questions; just do it.” I had taken appraisal classes that taught me about appraisal theory, particularly the three approaches to value and the reconciliation process. But the classes never taught me how to research comparable sales, select comparable sales, make adjustments or how much of an adjustment to make and the reconciliation process.
My appraisal class taught the Cost Approach in one day. I was never taught when the Cost Approach is appropriate or applicable, how to get land sales or if there are no land sales, how to use the extraction method. I was never taught how to obtain the replacement cost new for the subject and the proper way to calculate the three types of obsolescence (physical, functional and economic). Classes never taught me real life experiences. Supposedly, I learned all of that from my first supervisory appraiser. When I started doing the appraisals on my own, it didn’t matter if my supervisor was correct, why he chose the sales he selected or how to make the adjustments. He gave me a list of adjustments to make and apply them in the sales comparison approach. He never bothered telling me the proper procedure for anything. Does this sound familiar?
It took a few years and several supervisors to realize that each appraiser has their own way of doing things. Eventually I got the hang of it through the help of seasoned appraisers, by looking over their reports and by asking questions. But since the beginning of my appraisal career, I set my goals to constantly improve myself to become a better and better appraiser. I have been appraising since 1973, which will be 45 years in February 2018.
I started teaching beginner appraisal classes for Miami-Dade College as an adjunct faculty member in 2003. Two years later I also began teaching the advanced appraisal classes for those trainees who wanted to become a Certified Residential Appraiser. Some of the students in the advanced class were students from my beginner classes but the bulk of my students were trainee appraisers. At that time, there was a great demand for Certified Appraisers.
I started to realize that many of my students had never learned the application of appraisal theory and were just “form fillers.” I had to convince them that they are responsible for the information in their report and their conclusion of value even though a Certified Appraiser was “reviewing” their work and signing off. These trainees were doing a minimum of five appraisals a week and some as many as 10. Ironically, some of my students started questioning their supervisors, which resulted in the supervisors seeking my advice on how to handle certain appraisal assignments they had.
By 2007 I became an expert witness for the Division of Real Estate for the state of Florida. When a complaint Fall 2017 Working RE 33 was filed against an appraiser, I had to review the appraisal report and workfile to see if there were any violations of the Uniform Standards of Professional Appraisal Practice (USPAP). Eventually I decided to also represent appraisers when charges were made against them, if they were unjustified. That rounded out my experience as an expert for the plaintiff (against the appraiser) and for the defendant (for the appraiser). Either way, I strove to be impartial. I stuck to whether the appraiser violated USPAP and I did not get involved in the appraiser’s opinions unless they were unjustified.
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It was at this time that I realized even a seasoned appraiser may not understand how to write a supportable appraisal report, how to explain the reasoning in their report, or how to justify their reasoning in their workfile, if it had not already been explained in their appraisal report. It seemed that many appraisers were taking shortcuts and would only examine things when a complaint or lawsuit was filed against them.
I began to mentor ex-students and others who got into trouble with their appraisal reports. I chose to limit my mentorship to only five Certified Residential appraisers at a time because it can be time consuming and I don’t charge for my mentorship services. The payback is seeing their improvement and appreciation. I don’t mentor state-registered trainee appraisers as I believe that is the responsibility and purview of their supervisor, no matter how good or bad he or she is.
Mentoring vs. Training
Mentoring is not the same as training a person to become an appraiser. The appraiser you are mentoring already has experience as a state-certified appraiser, whether it is one year or ten. Your job as a mentor is to help this seasoned appraiser change any bad habits, whether it is researching for comparable sales, comp selection, understanding what verification is about, knowing what to look for when doing the subject appraisal inspection or observing the comparable sales, adequately describing the subject and comparable sales when out in the field, writing up the report, making reasonable adjustments or understanding how to reconcile the sales comparison approach to arrive at a conclusion of value.
Observation at the Subject
Sometimes the best way to mentor an appraiser is to separate the process into different components. Rather than providing guidance on all aspects of the appraisal process at once, start off by going with the appraiser to the subject property they are appraising.
A house is probably the best starting point. Since the appraiser is usually by themselves when out in the field, start off by observing the appraiser measuring the house. See if they “square off” the measurements. Squaring off is adding the dimensions on the front of the house and comparing it to those on the back side of the house. The same goes for both sides of the house. See if the appraiser looks at the condition of the exterior for potential deferred maintenance issues. Does the appraiser observe what kind of property is behind the subject house? See if the appraiser writes up adequate field notes about the interior and asks questions of the owner, Realtor or whoever let the appraiser into the house, regarding updates, renovations and possible roof leaks and/or plumbing problems. See if the appraiser is looking at the ceiling for signs of water stains. Make sure that the appraiser observes every room in the house.
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Observing the appraiser at one of their assignments is better than the appraiser observing you at one of yours. You don’t want the appraiser to be a “mini you” but rather see if you can improve on what they already do and know.
It is very important to observe the appraiser as they make notes at the comps. Most appraisers I know use the local Multiple Listing Service (MLS) data sheet as their primary source of information when they are looking at the sales they select as comparables (comps). Make sure the appraiser takes adequate notes about the comps, such as observable condition of the exterior, and most importantly, if there are any changes to the house or landscaping that are different from what’s in the MLS data sheet. As a mentor, you have the experience to know what to look for and this is the best time to give the appraiser your suggestions.
In just about every case where I was an expert witness, the appraiser who was in the hot seat had a workfile that had either no notes or inadequate notes taken at the comparable properties and/or no indication of who they spoke to when verifying the sales. When that is the situation, the defense of their appraisal report is diminished tremendously. Help them understand the importance of note-taking on their data sheets.
The appraiser’s workfile should be adequate enough to re-create the appraisal report. See what the appraiser has in their workfile. Make sure an exact copy of the appraisal report which was sent to their client is in the workfile and make sure it is signed, not left blank. If left blank, that is a USPAP violation as that appraisal report is not an exact copy of the appraisal report sent to their client, which was signed.
If the appraiser prepared the Cost Approach for the assignment, see if there are any land sales or if the extraction method was completed and placed in the workfile. The same goes for the replacement cost new for construction costs. After all, the appraiser has stated in their appraisal report that they either relied on land sales or the extraction method and cited their source for the replacement cost new. Citing their source in the report does not mean they actually have it in their workfile. Some appraisers don’t have a printed workfile. They keep their workfile “in the cloud” or in a PDF format. That’s fine. However, when it becomes necessary to support the value indicated in the appraisal report, one way or another, a workfile has to be presented in a printed format.
I realize it is time consuming for the mentor to review the workfile but if you are serious about helping this appraiser, take the time to look over their workfile and offer suggestions to help them to provide the evidence to support their appraisal report. If the appraiser resists, I would move on and mentor another appraiser who wants to improve their reports.
In conclusion, mentoring appraisers is both time consuming and rewarding. Don’t think about the appraiser being competition to your business but instead, think about the legacy you are providing.
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About the Author
Philip G. Spool, ASA, is a State-Certified General Real Estate Appraiser in Florida, appraising since 1973. Formerly the Chief Appraiser of Flagler Federal Savings and Loan Association, he has been self-employed for the past 25 years. In addition to appraising, he is an instructor with Miami Dade College, teaching appraisal courses and continuing education classes. He is also the Vice President with the Greater Miami Chapter of the American Society of Appraisers. He can be reached at email@example.com.
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