eBook - Real Estate Appraisal from A to Z

Appraisal Report Writing

We've pretty much covered just about every aspect of the real estate appraisal business, and the appraisal process itself. Now we'll talk about writing up the appraisal report after leaving the job site. Don't hand the client a checklist style appraisal report at the site. You have to think about what you're going to write in your report, before you mail it out to your client. In my opinion, any appraiser that gives a brief checklist style report to their clients, gives a black eye to the whole profession. Appraisers who give their clients a brief, meaningless checklist report should be embarrassed!

An "A to Z Appraiser" provides a written appraisal report that's informative and useful to their clients. Your written report has to have narrative comments to assist the client and explain everything in an easy to understand fashion. That's why the checklist style reports are such a joke. Checklist style reports don't tell the client anything about the house! A narrative report will educate the client about the subject property in a manner that is easy for an average person to understand. Also, remember not to use construction jargon terms or have comments that only a professional in the industry will be able to understand. When writing your reports you have to think about what you want to say and think about the person who will be reading it.

I'll use an analogy from high school that you probably can relate to. Do you remember when you were in school and you were given a homework assignment to do a written report? Well, you didn't give the teacher your report at the end of the class did you? You had to go home and think about what you were going to write so that it would be a quality homework assignment. (Or at least you should have). If you shouldn't cut corners for a written report for school, then you shouldn't cut corners for a written report for an appraisal client.

A very important point to remember is this: What you put in the written report is what you will be held accountable for!!!!  This simply means, that I don't care how many times you told the client over the phone that the railroad tracks in the guy's back yard have a negative impact on market value. If you don't put it in the written report, then you have no defense when you get an angry client calling you up 10 months later about not being able to sleep because the trains pass by his house every night at 3:00 in the morning and toot their horns! You won't even remember the house, let alone the locational problems of it 10 months earlier.

In appraisal reports, you're required to disclose everything that you know which has an affect on the market value of the subject property. Everything must be disclosed in a way that can't be misinterpreted or twisted around. You should always have a notepad at the job site and you should be taking field notes throughout the appraisal. Don't make the mistake of leaving anything to memory. You'll find out the hard way that when you get back to your office to write the report up, you'll have forgotten a lot. Moreover, you won't remember some of the details clearly. This is even more true when you start to get really busy and you sometimes have to do two appraisal inspections in one day. You'll have a hard time remembering if a problem condition was in the first or second house you inspected that day. That is, unless you have very detailed notes from the job site.

Organize your notes and your appraisal so that you don't forget to include anything in the written report. Make sure you take your time at the job site and in writing the report so you don't leave anything out. When you take field notes and write your report make sure to include anything the client mentioned that concerned them or that they had questions about. When the client is concerned about a particular aspect of the house or condo, then it's an indication that this is an item they'll expect to see in the report. The client will also become angry if they buy the house and discover that you improperly evaluated the item. For example, let's say the client asks a few questions about any possible easements in the front yard. Well, you better make sure you evaluate the deed and all other pertinent documents at town hall to try to figure out if there's an easement. On top of that, make sure your conclusions are put in the written report. If you don't, the client may buy the house and discover you missed this item during your appraisal and didn't mention it in your report. When this happens, then at the very least, you'll have a dissatisfied client who won't recommend you.

I'm not trying to scare you. I'm just telling you the facts. Cover Your Assets in all of your written reports. You basically try to CYA on all appraisals due to the possibility of unreasonable clients. While taking the appraisal courses one of my instructors told me about a very good commercial appraiser who was threatened with a lawsuit by an unreasonable client. Apparently there were many loan foreclosures on properties taken back by this particular mortgage lender. The lender was threatening to sue many of the appraisers they had hired for the original market value estimates. This lender was claiming that these appraisers over estimated the market value at the time of the original appraisal reports. Many of these appraisers gave in to that type of threat. They just had their E and O insurance carrier payoff the lender to get rid of the matter rather than spend a lot of money on legal fees defending themselves. This particular appraiser knew he was right and simply told the lender that he was going to fight them in court. This appraiser also didn't want a "black mark" on his record for something that he didn't do wrong.

I take my hat off to that appraiser for having the guts and determination to stand up for what he knew was right. Coincidentally, the lender dropped the lawsuit because they had no case against the appraiser. Do you believe that! Some people (like that client) have no concept of logic and they can be so unreasonable. An unreasonable client, such as the one in this case, will rationalize their actions by saying to themselves:  "Well, let's sue everybody in sight and see who breaks under the pressure and pays us a few bucks for nothing."

• < Prev
• Next >