Low Cost E&O
Insurance for appraisers from OREP
“The USL Documenter provides
professionalism to my appraisals and keeps me from worrying about liability
issues.
I wouldn’t send out an appraisal without it.”
- Greg Beck
Editor’s Note: According to the developer David Braun, MAI, SRA, the Report Documenter Software operates in any modern Windows environment and no longer requires MS Excel to run. For more on the USL Documenter II software program, click here and download the free “Quick-Start Guide” and/or the audio tutorial for more information and to purchase this software.
Making Scope of
Work - Work for You
Introducing New USL Report Documenter II Software
by David A. Braun, MAI, SRA
Appraisers may
be getting tired of hearing about Scope of Work but there are several reasons
why they cannot afford to keep sweeping it under the rug.
This is pretty much what has been happening since 1999 when USPAP began
requiring appraisers to report Scope of Work (SOW). There are several real
benefits that can result from a well-documented appraisal report; especially
with respect to SOW. Here are a few: liability management, being able to
showcase your appraisal product to clients and dealing successfully with
compliance issues.
Liability Management
Complying with SOW requirements can be time
consuming. However, it is also the perfect place to protect yourself by adding
statements to help prevent lawsuits. For example, Fannie Mae does not allow
appraisers to add "limiting conditions" or "general assumptions," however Fannie
does allow the appraiser to expand on the SOW that is pre-written
into the forms. This is a great place for the appraiser to clarify exactly what
he/she did. Because this expanded SOW is not prewritten in the form, you can
exercise some freedom in what is said, how
it is said, and where it is located in the report. An example of
such a statement follows:
The intended user should be aware that the term "Inspection" may be found on this standard appraisal form. The appraiser is required to use this form, and cannot modify it. The term inspection found anywhere in this report is to mean a "Personal Visual Inventory" of the subject's or comparable property's components. This is opposed to a "Home Inspection," which investigates the appropriateness and soundness of various components of the improvements.
A few phrases like this, that do not imply less SOW than Fannie intends, can be huge in the prevention of lawsuits and settlements.
Showcasing your Appraisal
Product
Another perk
is that SOW can be a place to showcase the quality of your appraisal product. If
the appraisal you do is better than your competition, this is the place to show
your clients. If you drive by the sales, report it. If you complete interviews
in your data gathering, report them. If you do extra analysis, report it.
USPAP Compliance
If USPAP compliance is not a high priority
for you, it should be. Many state appraisal commissions are focusing on SOW
reporting. Federal agencies, regulating federally-insured lenders, hold lenders
responsible for making sure that the appraisals they process conform to USPAP.
Appraisers are feeling greater pressure to do things by the book. If you
successfully document your appraisal reports, including SOW and other issues
required by USPAP, you can worry much less about client reviews and your state
appraisal commission. Now that you are convinced of the benefits of improving
the documentation of your reports, how do you do it?
Improving Documentation
Improving the documentation of appraisal
reports is a problem facing many appraisers, especially since the new version of
USPAP went into effect July 1, 2006. This can be a fairly complex task,
depending on the assignment. The number one rule of a well-written SOW is that
it is customized. It should never contain phrases like, “The appraiser
may have……”, or “The appraiser performed either task A or Task B.” This means
you cannot include one overarching “canned” phrase, or copy over the SOW you did
in the last report.
If you are an appraiser who has attempted to write a SOW from scratch, you know
how difficult and time-consuming it can be. First, you need a checklist so
nothing is left off. Next, you need to pull a previous appraisal to reuse a
wonderfully written phrase from a report with a similar SOW and that somehow
escapes you now. Then, you need to print off a standardized form so that you
can leave off the items that the form already addresses. Then there are
Supplemental and USPAP standards that can be very confusing. An hour later, in
frustration, you may simply give up. Is there a solution? I think there is.
Evolution- New USL
Report Documenter II Software
In 1999 my
appraisal office began using perhaps the first computerized SOW checklist. It
was a list of possible appraisal tasks. The appraiser-user would check the tasks
completed and mark the level of “thoroughness” for each task.
The appraiser provided specific information to the program that enabled it to
identify the tasks that the appraiser had to do. The program then reported only
the tasks the appraiser did. In 2002 we developed a superior product to report
SOW and expanded it to address most all compliance issues. In addition, we
provided the program with items that were already addressed on most standardized
forms. Instead of a checklist, this system managed a series of canned phrases
that could be added, deleted, modified, etc.
As the concept of SOW evolved, so did the program. In 2005 we began designing
and developing the USL Documenter II. This is our latest version of the
appraisal report documenter. Today we have a very professional software program
that does not require MS Excel to run. It runs on most any modern Windows
platform.
What it is and
Isn’t
This program is not a lot of things.
It is not a substitute for understanding appraisal reporting requirements. It is
not a magic way to produce report documentation. It does serve as a good
checklist; it micro-manages a series of pre-written phrases allowing you
to quickly craft verbiage specific to the report. This feature is
very flexible, very controllable and very fast to use. It will copy into most
standardized appraisal forms or into a word document. Also, it will create a
complete restricted use report.
How it Works
The USL Document Wizard asks some questions
such as: Report Type, User/Supplemental Standard Type and Form Type.
Then it asks a series of yes or no
questions, such as: are there any hypothetical conditions? Are there
extraordinary assumptions? Are there any previous sales to report?
Then it structures a document that conforms
to the rigors of your specific appraisal assignment. The program produces a
document in three text colors.
* Red text represents issues that the Report Wizard believes you must address.
* Gray text represents issues you may want to address.
* Black text represents issues that the Report Wizard feels you do not have to
address. It automatically includes these in the document.
The text in black can be modified or added to. If it is changed, the program
will ask if you want to save the changes for future use. If you say “yes,” then
the phrases in black text will have those changes the next time you open the
report.
Phase Builder
Phrase
Builder allows you to address those specific tasks
colored in red and gray with individual phrases (that you create) for each
specific issue. The users of the USL Documenter II are beginning to send me
suggestions for phrases which I will be sharing with current users.
Summary
With the USL Documenter II you will quickly
produce a very professional looking document that you can either print out to
insert into the appraisal report or copy into your standard form report. When
needed, it will produce a complete stand alone Restricted Use report.
This is what Greg Beck of Florida has to say about the USL Documenter II:
“The USL Documenter provides professionalism to my appraisals and keeps me from worrying about liability issues. I wouldn’t send out an appraisal without it.”
For more on the USL Documenter II software program, click here and download the free “Quick-Start Guide” and/or the audio tutorial for more information and to purchase this software.
Appraising in the New Millennium: Due
Diligence & Scope of Work
“The book is very informative and easy to read.”
- Carol Barngrover
“Absolutely first-rate ‘SCOPE’ book.” — Leroy Michael Eide, CC
David A. Braun, MAI, SRA also authors Appraising in the New Millennium: Due Diligence & Scope of Work-Second Edition. This guide is an excellent way to understand the basic concepts of SOW, while the USL Documenter II provides the means of putting that knowledge to practical use. Over 13,000 appraisers downloaded the first edition of the book. The new edition is updated for USPAP 2006. You can learn more about the book and order it here.