69% of Reviews Completed Show Negligence

A large part of our business is to complete valuation reviews that were originally developed  from  2005 - 2008.  During the month of March, we completed 32 appraisal reviews and found that 69 percent of these appraisal had misrepresented the value by 10 percent or more.

The most common occurrence involved the appraiser (a supposed unbiased third party to the transaction) selecting comparable sales that were not suitable for the assignment.  In many cases, the appraiser chose to utilize sales data from a superior area and ignoring the sales located on the subjects street in an effort to support their opinion of value.   This occurred in 44 percent of the appraisal we review.  The next most common occurrence was the appraiser not reporting the subjects listing history.  For instance, one property was listed for sale asking $429,000 yet the appraised value was $500,000.

Among our observations, we noted that several appraisers did not report the true condition of the subject property.  In these cases, the appraiser reported that the subject was maintained in "good" condition yet their MLS listings state that the property "needs work" or "needs TLC".

While I do not believe that the appraisal industry was totally at fault for their actions, it is apparent that many appraisers were part of the problem.