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How to Improve Commercial Appraisal Report Accuracy
Accuracy [ak-yer-uh-see]
[fusion_dropcap boxed=”no” boxed_radius=”” class=”” id=”” color=””]D[/fusion_dropcap]ictionary.com, defines accuracy as “… the condition or quality of being true, correct, or exact; freedom from error or defect, precision or exactness; correctness.” As appraisers, we strive for accuracy in each of our appraisal reports. What are the common issues that get in our way, and how do we avoid them? A few months ago, our office implemented realquantum. It caused us to make some positive changes to our process, and it improved commercial appraisal report accuracy across our company. Here are 9 ways any office can get tripped up and how we avoid them.
1. Lack of consistency throughout the report
Appraisers who follow the typical word processor & spreadsheet method duplicate data from one place in the report to another. All other commercial appraisal products on the market need to sync data between a database and a spreadsheet to accomplish the same thing. That’s not much better. On the other hand, realquantum stores data only in one place. It does not need to be refreshed from one app to another because everything is in one place. realquantum has increased consistency in our work and avoids math errors.
2. Missing information
Appraisers can cause problems with data integrity by inadvertently leaving key data fields blank. Realquantum requires several key fields to be input before a record can be stored. This helps users avoid forgetting data before running the report. On the other hand, sometimes not all data is relevant to all reports. So, realquantum avoids the incomplete look caused by labeled fields with no data. It only prints relevant fields in the final report.
3. Failure to identify and follow the proper scope of the appraisal
realquantum commercial appraisal report writing software was designed with a behavioral psychologist/user experience expert to follow a logical path to complete an appraisal. Once an assignment is created, the first entry is “Appraisal Scope” – which forces you to think about the proper scope at the beginning. However, if you determine a different scope is required after completing more work on the assignment, the scope can be easily changed. Approaches can be added or deleted with a simple click. Other products make it very difficult to add back an approach that has been deleted.
4. Poor comp selection, as they say, “Garbage in, garbage out.”
As commercial appraisers, we try hard to bracket our subject property with comps that are both overall inferior and superior to our subject. We choose properties that would be considered by a potential buyer or tenant of the subject. If certain property characteristics differ from our subject, we try to find comps that bracket the subject specifically in those characteristics. For example, if a subject property was built in the 1980’s, but the only available comps were constructed in the 1970’s and 1990’s, we include both the 1970’s and 1990’s comparables. In the future, I would like the software to provide some automatic feedback on the appropriateness of the selected comparables and to suggest better comps or point out that more explanation is advisable.
5. Boilerplate report formats that make it difficult to comply with USPAP
The realquantum product team keeps up with changes in USPAP to help users comply with USPAP. It provides an outline that highlights important elements of the appraisal and helps automate the certifications.
6. Narrative does not match adjustment grids
Other products allow users to mistakenly hide rows in adjustment grids. Adjustments can become unlinked from the proper comparable when a comparable is added or deleted. These errors have caused many commercial real estate appraisers to receive calls from reviewers in the past. However, realquantum avoids these errors and improves the accuracy of the final appraisal report. At our office, we also follow the practice of having a second party compare the narrative on adjustments to the adjustment grids before an appraisal is finalized. This combination of good software and smart teamwork is the best way I’ve found to improve commercial appraisal report accuracy.
7. Writing over old reports and forgetting to update portions of the appraisal
There are certainly trade-offs between writing over an old report (and forgetting to make changes that apply to the new property) and having to re-enter much of the data by starting from scratch. Realquantum allows us to have multiple past appraisals open in different tabs of our browser and be able to cut and paste section by section into a new assignment. There is no need to open any additional applications or refer to old printed reports. It’s the best of both worlds.
8. Last minute changes that do not flow through the report
Last minute changes to comparables inevitably occur. Often, we confirm information that may cause us to change a component of one of the sales after several of the reports have been nearly finalized. Rather than make the change on the web, send the changed file to a spreadsheet, send the spreadsheet to the word processor, receive the spreadsheet file into the word processor, send the changes from the web to the word processor, and reprint the report as a .pdf file (whew…). Now with realquantum, we simply make the change to the sale on the web and reprint the appraisals. Done.
9. Using a spreadsheet created by someone else and not understanding the underlying calculations
Have you ever shared spreadsheets with other appraisers in your office and later found that a cell had become corrupted or another appraiser made a change to a calculation without telling you? It’s happened to us. In realquantum, the calculations are hard-coded. Spreadsheets can still be used for unusual assignments and added to the report as images. However, they should be checked with a hand calculator each time – something that is not necessary with the hard-coded calculations. So, commercial appraisal report accuracy comes at a cost using other methods versus realquantum.
Our office has been using realquantum and these are some of the ways we are seeing the product reduce the chances for errors that make it into our final reports. Our company’s reputation, like any commercial real estate appraisal office, is built on trust. We’re finding realquantum makes it easier to maintain that trust.
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Dan Craig, MAI
About the Author
Dan is COO at realquantum and the director of the Kansas City market for commercial real estate appraisal firm Keller, Craig and Associates. Read Dan’s profile here.
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