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Your appraisal order has been placed, the inspection has been done, and the appraiser turns in the report to Triserv. What are the next steps? What does your Quality Control (QC) review process entail?
The QC review is not an in-depth look at comparable sales or market adjustments, nor an evaluation of the final opinion of value. In Triserv’s QC reviews, we are looking for a specific set of details to ensure that the appraiser followed general appraisal guidelines and completed the necessary items for the appraisal report.
We also look for information to ensure the correct report was uploaded and the right lender was noted in the file; that it’s all aligned with the information provided in the original appraisal order. For the purposes of this article, we will only be discussing the main pages of the appraisal report. (Here’s more on How to Read an Appraisal Report.)
Our Review Department will confirm that the address of the appraisal report matches that of the order. They will also compare the order and the report to ensure the latter has the correct lender, purpose, borrower, contract information if a purchase, etc.
In addition, our team will confirm that specific comments are made in the report in regard to the land use, zoning, movement of the property values for the market area, highest and best use, improvements, utilities, site conditions, etc..
This is also the first look at the appraiser’s sketch to ensure that the bedroom/bathroom count matches.
Although the Review Department cannot determine if the comparable sales chosen are the best for the market area, they do take a look at some of the aspects of the Sales Comparison Approach. The team will look at the date of sale for the comparables to ensure they are within guidelines. They will review the direction of the adjustments that the appraiser has made, such as whether they added or subtracted based on the amenities, as well as if all line items have been bracketed. Our Review Department will also look at the sales price and adjusted values of the comparable sales to ensure that the appraiser has provided a reasonable estimate of value, and that it falls within the perimeters of those sales/adjusted prices.
Finally, they will review the various approaches (Sales, Income and Cost) and ensure that the items needed for the approaches are completed by the appraiser. They’ll also check that all of the approaches that the appraiser chose to complete were appropriate (i.e., investment property order, income approach completed; new construction order, cost approach completed).
Most lenders require the appraiser to note a site value, and the team will review those lender-specific instructions to check that the necessary information is in the report. Another key field for this page is the economic life reported by the appraiser. This page may also contain commentary that the team will look over. In addition, the reviewer will see that the PUD section has been completed, if applicable.
The last page of the appraisal report to be reviewed is the Signature Page. Are the effective date and signature date included? Reviewers are looking to see that the appraiser’s license has not expired, and the report is signed. In addition, they’ll check that the AMC information is correct.
After our Review Team has worked through the appraisal report, there are a few final items they will look for to ensure they’re included and accurate.
Required items like the maps, sketch and photos are checked to see that all the necessary pages are included. Is there a site map? Are all necessary photos of the subject property and comparables included? Do the photos of the subject line up with the rooms within the sketch?
Along with reviewing these items, if the team notes possible questions that may occur, they will see if the appraiser already commented within the appraisal report. Most appraisals will have a lot of standard commentary that’s included in every report. All of the addendums and comments are not read line for line, but reviewed for specific commentary.
Given that this is a Quality Control review, there are a handful of items that our Review Department does not or cannot review within the appraisal reports. Our team cannot review the accuracy of the information entered within the appraisal report. We cannot determine if the Tax ID is correct, if the market boundaries are accurate, nor if the year built was entered per the tax records. We simply do not have access to this information. As stated previously, the reviewer cannot confirm if the comparable sales used are the best for the market area or subject property. Since the reviewers are not local to the subject property’s geographic area, we do not confirm if the measurements are correct for the sketch, if the photos for the subject or comparable sales are accurate, nor even if the photos are of the right house.
If the assigned reviewer feels that any of the required items that are reviewed were not met, they will require “QC Conditions” from the appraiser prior to sending out the appraisal report to the lender. Should the items not be value-related, the lender may get a preliminary report to start their process while the appraiser is making revisions.
The appraiser is considered the eyes and ears for the lender and borrower, and we rely on our trusted team of appraisers to input the information correctly. We assume they have done just that. Our Review Department is always here to help answer questions and clarify items that may not be clear within the report.
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