When we hear that there may be changes to the industry’s standard appraisal reports, we’ve grown to expect a fair amount of stress and unrest. Change is never welcome and generally not easy for anyone. It’s no wonder no one wants to hear that changes are coming. Now, the way appraisers are required to report their results is changing again.
As a technology provider, we know the chaos that can erupt whenever we have to make changes to something as fundamental as the report form itself. It helps to remember that the form isn’t the process, it only summarizes the key findings of our process.
As a professional appraiser, I know that most of us have spent our entire careers perfecting a process that allows us to arrive at an opinion of value with every required step. I don’t want anyone messing with my process and I don’t blame any other professional appraiser for feeling the same way.
However, that’s not what’s happening when the appraisal report changes. Changes to the report are designed to make it easier for lenders, our customers, to use the information we provide to better manage risk. That’s what our reports really are, risk management tools. From time to time, as our customers change, we too need to adjust.
The fact that the report is currently undergoing some adjustments is a sign that the form is not as effective as it could be at communicating the conclusions the professional appraiser has worked hard to capture in the report. It’s an important risk management tool that has been sent back to the shop for some adjustments.
As appraisers, we focus on the subject property, the neighborhood, and the comparables to provide opinions of value, not only based on our experience, but on our ability to effectively communicate market activity and behavior to the reader. We are all about what the property is worth right now.
Lenders don’t have the luxury of staying in the present. They have to think about all the things that can go wrong, both now and in the future. That’s where risk mitigation starts. The changes we have seen—and will likely continue to see—in the appraisal report are designed to make it easier to do that job well and effectively.
Improving our business won’t depend on the final form of the appraisal report. Rather, our future success as appraisers lies in removing inefficiencies from our process, choosing better tools to help us in our work and optimizing those tools for our process. I’ll talk more about that in my next post.
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