The Method to the Madness

by Stan Choate

Operations Manager

May 2022

At Spurgeon Appraisals, we not only care about providing thorough, high-quality appraisals, but doing so in a process as smooth and transparent as possible. To that end, we try to answer each question brought to us by our customers. Helpful as that may be, our customers may benefit more from knowing the answers ahead of time, so that no confusion nor misunderstanding arises at all. In this month’s newsletter, we will answer some of the more common questions we receive from our clients. The appraisal process can only benefit from a mutual understanding between appraisers and appraisal customers.

#1 Can you provide a verbal opinion of value before finishing the appraisal report?

Sometimes our customers begin to feel the pressure of a looming deadline and want to expedite the appraisal process by requesting a verbal opinion of value before we are finished with the actual appraisal report. In those cases, the expectation is that the appraisal report is just paperwork and that we know the market value of the property before the report is finished. In reality, the report actually helps us determine our opinion of value. The software we use to create our reports simultaneously helps us with the calculations for establishing market value.

That being the case, we are truly not able to provide a reliable opinion of value until the report is practically finished. The key word there is reliable. Since we care about maintaining public trust and a reputation for reliability, we do not disclose our thoughts about a particular property until all the work is done—and that means finishing the report. When we explain this to customers, they usually then ask for “at least an estimate” of what the opinion of value will be. It’s worthwhile to remember that our opinion of value is our estimate—and developing that requires a completed appraisal report.

#2 Why is there a separate fee for confirming the previous opinion of value, or updating it, during a final inspection?

Often one of our appraisers is asked to return to a property for a final inspection and certify the completion of improvements. During those assignments, our customers generally assume that our appraiser will be able to make some comment on the opinion of value, whether affirming that our previous appraisal is still accurate or even updating the opinion of value. We very often need to explain that a completion certificate is very different from commenting on an opinion of value, and that they are subject to different fees.

The confusion of our customers is understandable, mainly because of a particular appraisal form which serves double-duty, the 1004D. This form can be used either for completion certificates or for updating an opinion of value. Despite the dual use of that form, the two tasks require very different efforts. Visiting a property to see if everything has been built according to plan is relatively simple. But saying anything about the opinion of value—whether it has remained the same, whether it has changed, etc.—requires new sales research, which is the work of an appraisal. Commenting on the opinion of value requires more time and effort, and therefore it requires a higher fee, often equal to the fee for a new appraisal.

This answer leads into another question….

#3 If you’ve appraised it before, why are you charging a full fee?

Whenever we are asked to appraise a property we have appraised before, we usually ask two questions: Do you need an updated effective date? And does our appraiser need to visit the property again? Usually, the answer to both questions is Yes, in which case we almost always need to charge a full appraisal fee for that project. This often surprises our customers, who expect the fee to be lower due to our previous work. The reason for the full fee is twofold: if the updated effective date requires new sales research, and driving to the property usually takes a good amount of time, too. While we always try to keep our fees competitive, our fees also need to reflect the time we spend on the project.

In that way, you can always trust Spurgeon Appraisals to do the job competently, fully, and accurately. Email us today with your appraisal request.