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Preparing for Your Deposition
By Phil Spool, ASA
As an appraiser, there are typically two reasons why you could be deposed: as a defendant or as an expert witness. We will refer to a “defendant” as someone who has to appear at a deposition to defend their report/value typically as a result of a lawsuit or complaint filed against them by a state board. The “expert witness” role is if you are compelled to appear at a deposition to explain your own appraisal report/value or your review of a defendant’s appraisal report/value.
I have personally been deposed numerous times and, at the request of clients, have also sat in on many depositions of an appraiser who is a defendant in a lawsuit to observe their testimony. It is amazing how little care or concern is taken by some appraisers in discussing their appraisal report and support for their value. They don’t realize that their lack of preparation for the deposition matters and can end up influencing their attorney’s decision to negotiate a settlement rather than risk a trial. What you say at the deposition is very important and so is your preparation and support within your workfile.
There may be a time when you get a subpoena where you are the defendant in a lawsuit. If this is the case, the plaintiff’s counsel, also referred to as the opposing counsel, would more likely be interested in your appraisal report and how you arrived at your value. This includes the support for your value, which should be maintained in your workfile, and all correspondence with your client and others pertaining to the appraisal and appraisal report. Remember, the appraisal is the act or process of developing an opinion of value and the appraisal report is any communication, written or oral, of an appraisal that is transmitted to the client upon completion of an assignment. Alternatively, you might get a subpoena as an expert witness and be deposed to discuss your review of someone else’s appraisal report with your value conclusion. If this is the case, opposing counsel will be very interested in how you arrived at your market value, including support for your adjustments and conclusions.
Whether or not you are the defendant in a lawsuit or the expert witness, if the issue is value, what you need in order to defend your appraisal report and value are the same. At the deposition, the defendant needs to support his or her value. The expert witness, who has performed an appraisal review that disagrees with the original value, also has to support his or her value. Keep in mind that it is the opposing counsel’s job to try to discredit you, either as the defendant or expert witness. This will be done by attacking your appraisal report, value and methodology, in addition to any lack of support for your value. The attorneys on your side will tell you that you shouldn’t take it personally, but that is easier said than done. Therefore, the more prepared you are, the more difficult it will be for the opposing counsel to discredit your report and value.
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What’s a Good Workfile?
A deposition that ends well begins with a good workfile. While an expert witness knows ahead of time that he or she is likely to be deposed, the average appraiser does not expect to have to defend every report he or she writes at a future deposition—but it is a good idea for you to appraise as though you might. It is a lot easier to defend your workfile if you build it with proper support at the time of the report writing. Some appraisers don’t bother building a good workfile. They believe they can “fill in the gaps” with missing data later if they receive a subpoena or a complaint is filed against them. Unless the opposing counsel permits that, don’t even consider “filling in the gaps.” Besides, you’d have to go back to find the data and altering a date only compounds the cover up.
What should be in your workfile? Your workfile should contain data in these four areas: (1) correspondence, (2) subject property information, (3) backup data, and (4) supportive data. Correspondence is the written communication between you, your client and other entities regarding the appraisal assignment.
Subject property information should include public records, legal description, and if the subject property is a purchase, a fully executed signed and dated contract for sale. Backup data pertains to the detailed information of the comparable sales, such as the recorded deed, public record information, MLS data sheet and photos. The photos of the comparable sales are very important as more than likely you were not able to see the interior or rear of the comparable sale, and you need support for your statements whether the interior is renovated or if the property has a swimming pool, covered patio or any other structure you cannot observe when looking at that comparable sale. I don’t know how any appraiser can make a quality or condition adjustment without backup photos of the comparable sales, especially the interior photos. Conversations with the listing agent are not enough.
Finally, supportive data for the adjustments that are made include sales concessions, market conditions (time) and other line-item adjustments. Support for your line item adjustments is a lengthy discussion in itself. To understand how to properly support your adjustments, I recommend you take Richard Hagar’s online CE course on How to Support and Prove Your Adjustments.
Any unsigned draft copies of your report that have since been revised should not be maintained in your workfile once your appraisal assignment is completed. Currently, USPAP does not specifically require that preliminary communications be retained. However, an exposure draft of the 2018–2019 USPAP’s Conduct section of the Ethic’s Rule is proposing that all communications of preliminary assignment results be clearly identified as such (e.g. draft, preliminary, subject to change, etc.). For a more in-depth understanding of what is considered a good workfile, refer to my article What’s In Your Workfile?
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What to Do When You Get a Subpoena
In order for opposing counsel to be effective in his/her case, the attorney must obtain the facts and opinions that you used to form your opinion of value of the subject. The process for obtaining that information is referred to as “discovery” and it is obtained through a subpoena. Subpoenas will notify you of your required attendance at a deposition regarding your appraisal report or one you’re reviewing. Take the subpoena seriously. If there is a conflict regarding the date and time of the deposition, notify your attorney to make alternate arrangements. You cannot ignore a subpoena.
Some subpoenas state “subpoena duces tecum.” A duces tecum is a subpoena ordering the witness to appear and to bring specified documents, records or other items. Keep in mind that once you receive the subpoena, you cannot discard anything from your workfile, printed or electronically. You should ask your attorney about anything you are uncertain about submitting. Typically, if a document is marked “attorney’s work product” or “confidential,” the attorney will want that removed. Don’t take it upon yourself to make that decision.
One subpoena duces tecum I received listed 15 items for me to bring to the deposition. If you are an expert witness, the request for documents can be more detailed than for the appraiser being deposed as the defendant. Additional documentation asked of an expert witness can include a list of court cases you have appeared in, whether it was a deposition, court trial or a hearing. This would include the court case number, the name of the judge and attorneys involved, and the type of case (civil, criminal, bankruptcy, family division or deficiency judgment case, etc.).
How to Conduct Yourself
The deposition is either taken in the opposing counsel’s office or in a court reporter’s office. Most attorneys like to have the deposition in their office but if the attorney’s location is far from you, they have the ability to come to a neutral location nearby. A deposition is far more informal than the actual hearing or trial. For your deposition, wear appropriate attire, not clothing that gives the impression that you are about to head out to the beach, such as shorts and sandals.
Prior to the deposition, discuss the case with your attorney. Ask your attorney to provide you with a possible list of questions that you might be asked. Usually, the deposition starts out with you being sworn in by the court reporter. Then the attorney will ask you about your educational background and appraisal qualifications, such as how many appraisals you have performed, how many appraisals similar to the type of property in question and how many in the subject’s neighborhood or condominium building. They are trying to establish your competency level, both in appraisal theory and in geographical location.
Wait for the question to be asked; don’t rush to answer—instead pause and then answer. Give solid answers but don’t be arrogant. You are not there to impress anyone. The attorney does not care how great you are or that you have done thousands and thousands of appraisals. During the deposition, just answer the questions and don’t elaborate. Some attorneys are detailed in the questions asked while others ask minimal questions at the deposition and save their zingers for you at the time of trial. I also recommend having a bottle of water with you. If you are nervous, you might end up with a dry mouth and water will help relax your throat and avoid giving the appearance that you are nervous. Appearing nervous can indicate to others that you have some doubt about your appraisal report or review.
If you made a mistake in your report, don’t expect sympathy as an excuse for your lapse in judgment. For those who are thinking of becoming an expert witness, I highly recommend the book Applications in Litigation Valuation, A Pragmatist’s Guide, by Jeffrey A. Johnson, MAI and Stephen J. Matonis, MAI, MRICS, published by the Appraisal Institute.
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How To Support and Prove Your Adjustments
Presented by: Richard Hagar, SRA
Must-know business practices for all appraisers working today. Ensure proper support for your adjustments. Making defensible adjustments is the first step in becoming a “Tier One” appraiser, who earns more, enjoys the best assignments and suffers fewer snags and callbacks. Up your game, avoid time-consuming callbacks and earn approved CE today! Sign Up Now! $119 (7 Hrs)
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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 23 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 firstname.lastname@example.org.
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