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Real estate appraisal boilerplate can be an advantage! Yet, it can save time, money, and effort. These are a plus to any appraiser, right? But is there a downside? Are there circumstances when boilerplate could be a problem? Unfortunately, yes, there are. While boilerplate has its advantages, it has some strong disadvantages, too. So strong, in fact, you may want to take a close look at your reports. It is way too easy to let generic boilerplate replace critical thought and analytics. When that happens we are not appraising. We’re just filling out a form. An AVM can do that – for a whole lot less money than we charge!
So, which real estate appraisal boilerplate should we avoid? In letters of transmittal, it’s common to read the appraiser engaged in an economic analysis of the subject’s neighborhood. Really!? That is a statement of fact. Per SR2-23 it therefore must be both true and correct. Really, did that appraiser carry-out an economic analysis of the subject’s neighborhood? Maybe. But likely not. With rare exceptions, appraiser are not trained in the econometrics and statistics of such an analysis. To make that statement means those analyses are in the workfile. All the state investigator must do is find them. And if those analyses are not there? Let’s just say that appraiser is going to have the opportunity to learn the depth of USPAP’s definition of misleading. Is that the kind of learning experience the boots-on-the-ground appraiser really wants?
Is there another example of real estate appraisal boilerplate? Highest and Best Use is another area to be careful of! There are at least three (3) B&BU models. In the 15th ed. of The Appraisal of Real Estate is the traditional four-component model (made even more complex by expanding to to an eight-component model. USPAP [see SR1-3(a)(i-v)] has a five-step model. But it is different from the model in the 15th edition. Fannie Mae has her own model, too. She says stop once you’ve shown the improvements add at least one net dollar to the value of the underlying site. But she is totally silent on which model to follow to conclude the H&BU of the vacant site. Remember, SR2-2(a)(x) obligates us ethically relative to H&BU. We have to summarize the support and rationale we developed to support those opinions. (Opinions?! Yes, both as vacant as as improved).
Your software does not do this. Only you can write that summary and make it market- and subject-specific
Real estate appraisal boilerplate is what you make available to your state board with every report you submit. You say, “Hello state appraisal board! Here’s my boilerplate!” How deeply the state chooses to investigate is the state’s call. But before you submit your next report, perhaps you’ll want to ask yourself a question? Is that boilerplate relevant to a credible value conclusion? Or is it there because some long-past mentor told you to put it in? Does your boilerplate lead your client step-by-step to your value conclusion? If it does not, why is it in the report? If it does not, are you misleading your client by not leading the client anywhere at all? Think about it!