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“What’s in your workfile?” An even better questions might be, “What’s is not there“. A follow-up question to each is “WHY?” Scrutiny of what we do now comes from clients, from state appraisal boards, from GSEs, and from HUD. We appraisers will soon see scrutiny from the Department of Justice, too! So, what’s an appraiser to do? An appraiser’s best defense against a complaint or a lawsuit is a thick workfile. Remember those two words: THICK WORKFILE. So, “What’s makes a workfile thick?”, you ask. There is no cut-and-dried answer to that question. Each appraisal assignment is different, and will have a different scope or work. Is your assignment a cookie-cutter house in a cookie-cutter subdivision? Great! You need a thick workfile. Is your assignment a custom-designed and custom-built mega-mansion in Wyoming near the Grand Tetons? Great! You need a thick workfile.
What’s in your workfile will vary from assignment to assignment. But there are some contents that need to be in there no matter the assignment. To bulk-up that workfile with relevant data and analyses requires you have a complete history of your scope of work. WHY? You say you have all of the necessary MLS printouts in the workfile? Great! But those printouts are just not enough support. What the appraisal police are demanding from us now are our iterations. And those are…what? Suppose the market does not speak clearly on the GLA adjustment. Your analyses show that adjustment could be from $75 to $95 per square foot. Which do you use? The short answer is iterations. Go thru them all to see the bottom line they produce. When one makes more market-sense than the others, you use that one.
You need a thick workfile. That’s an appraiser’s best defense. Keep those iterations in the workfile