The review of property appraisals
| Pages | 59-67 |
| Date | 01 February 2002 |
| DOI | https://doi.org/10.1108/14635780210416264 |
| Published date | 01 February 2002 |
| Author | Anthony Andrew,Michael Pitt |
| Subject Matter | Property management & built environment |
Academic papers:
Property
appraisals
59
Journal of Property Investment &
Finance, Vol. 20 No. 1, 2002,
pp. 59-67. #MCB UP Limited,
1463-578X
DOI 10.1108/14635780210416264
ACADEMIC PAPERS
The review of property
appraisals
Anthony Andrew and Michael Pitt
Heriot-Watt University, Edinburgh, UK
Keywords Appraisal, Facilities management,Valuations
Abstract In the current climate of outsourcing services the extent to which facilities managers
make use of external contractors to supply property valuations and appraisals has grown
significantly. In-house facilities or property managers in the UK that are members of the Royal
Institution of Chartered Surveyors (RICS) are bound to the use of the RICS Appraisal and
Valuation Manual (the Red Book). This paper examines the roles of the Red Book for property
professionals involved in the review of appraisal reports and contrasts it with the Uniform
Standards of Professional Practice (USPAP) used in the USA. The paper concludes that the
Red Book in its existing form may inhibit any appraisal review process that any organisation may
try to implement.
Introduction
The review of property appraisals may be undertaken for a variety of reasons.
In the main most facilities managers will need to review the content of reports
and appraisals to ensure that the standard of service being provided by the
contractor is of a suitable standard. These reviews are undertaken by a wide
range of clients who depend upon appraisalresults. Reviews may be undertaken
by non-specialists in property such as banks, government officials, accountants,
businessmen and lawyers or by property professionals who may or may not be
chartered surveyors. USPAP defines this as ``administrative review'' (The
Appraisal Standards Board, 2000, AO-6 l.20) and administrative appraisers are
not bound by the USPAP guide-lines. Sometimes organisations employ trained
property specialists or valuers to do this task. USPAP 2000 terms this as
``technical review'' and the appraisers are constrained by the guide-lines. The
RICS Red Book covers the subject of appraisal review by valuers relatively
briefly. It seems anxious about valuers undertaking this form of peer review, or
second opinion. This leaves doubtas to whether appraisal review is a legitimate
function of chartered valuation surveyors in the UK. The ``Red Book'' could
usefully give more positiveguidance on how to perform this task.
The impetus behind the development of valuation standards in the UK has
been that clients found that the valuations they commissioned did not meet
their needs. This was exposed in the property crash of the late 1980s. The Red
Book was developed to set out mutually agreed standards so that clients
understood what basis the valuations rested upon, and obtained the
reassurance that a degree of uniformity of standard was in place. Valuers
benefited from knowing in explicit terms what was expected of them. This has
improved client-valuer communication.
Many institutions find that communications with the valuation and property
professions is facilitated by using dedicated in-house staff. Sometimes these are
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