I remember writing essays on historical figures for school when I was younger. I would spend hours in the library going through the card catalog using the Dewey decimal system to find the material I needed to complete my assignment. Once I had gathered all of my information, I could complete my report based on my opinion of the information I had gathered. If the teacher wanted to validate any of my findings, they would need to go through the same painstaking process I had gone through, although, they would at least have the page numbers. In the end, my report was an artistic interpretation of data that I had accumulated, and it was not easily validated.
Valuation review was similar when I got into this business. Preparers of the valuation had access to data that I did not, and their value was an opinion based on the data they were able to review. People had to be taken at their word and their opinion was all we had. As a reviewer, we simply had to ensure that the report made sense within itself. There was no other data to be found without a substantial amount of effort. Valuations were an art, and a reviewer was at the mercy of the artist, only seeing what they allowed us to see.
As with most things, the development of the internet changed everything. The information age enabled us to see the market activity at a glance. Gone were the days of the market expert having exclusive rights to data, it was available for the all to see in many areas. That same paper I would have to spend hours on in my school days, I could complete in half the time by eliminating the steps it took to find the information I needed. A quick web search and I can gain a degree of competency on almost anything. More importantly, so could my teacher. It would become increasingly more difficult to take liberty with my interpretation; I would need to ground my report in the facts and hard evidence, while painting an accompanying picture with my experience.
The same thing happened in the world of valuation products. The public domain houses details about neighborhoods including market statistics, property photos, and MLS remarks. Easily accessible websites can help a reviewer gain a degree of competency about some of the market information. As is the case with most things, more choices and more data can complicate things. Seemingly contradictory information can point to differing results. This is why the most crucial part of the equation is the producer of the report. It is important to detail the nuances that can only be obtained by actively working in a particular market.
Today, appraisers must leverage and communicate their expertise in their reports more than ever. If a seemingly comparable property is closer in proximity to than one you chose, why was it chosen? Explaining the comparable selection is as relevant as the selection process itself. What are the major value influencing features of the property? What can the reviewer not see through an online search? These are the questions that should be considered when preparing a valuation. The last thing your report should do is cause questions for the end user. Clarity is pivotal when dealing with a valuation. As elevated criticism continues to surround our industry, building confidence is the best way to combat it.
The development of a valuation is still an art form; however, it is no longer simply an interpretation of data held exclusively by the preparer, but an explanation of data that can be viewed by the end user. You will need to paint a credible picture, make sure your signature equates to a masterpiece.
Brandon Winters is the Quality Control Manager for eMortgage Logic, a Fort Worth, Texas based national valuations provider. Brandon is responsible for the fulfillment and quality of valuation products such as BPO, Appraisals, and Recons at eMortgage Logic. He has over 10 years of real estate valuation and review experience. For more information, visit www.emortgagelogic.com
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