AI-GRS cheat sheet

Review is a process of forming an opinion about the adequacy and appropriateness of another appraiser's work; it is not a re-appraisal unless the reviewer is engaged to also provide a value opinion.

Three review levels: (1) administrative/compliance review (checks completeness and form), (2) technical review (tests methodology, data, and reasoning), (3) review with independent value opinion (reviewer takes responsibility for a value conclusion).

Scope of work in review must be determined by the reviewer based on the review's intended use and purpose; it may range from desk review to field review to full re-appraisal.

Reviewer must identify the subject, the report being reviewed, the date of review, the intended use, and the reviewer's scope.

Reviewer must assess whether the original report complies with USPAP (if applicable) and whether the analyses and conclusions are credible and supported.

Reviewer must not simply substitute judgment; must cite specific deficiencies and explain why they affect credibility or value.

If the reviewer develops an independent value opinion, the review report must comply with all applicable USPAP reporting requirements for an appraisal.

Reviewer must disclose any prior involvement with the property or the appraiser that could affect independence.

Reviewer must consider extraordinary assumptions and hypothetical conditions in the original report and whether they are reasonable and disclosed.

USPAP Ethics Rule: an appraiser must not misrepresent the value, must not be biased, and must not accept an assignment with a predetermined value or direction in value.

USPAP Competency Rule: an appraiser must have the knowledge and experience to complete the assignment competently, or disclose the lack of competency and take steps to complete it competently (e.g., associate with a competent appraiser, do research).

USPAP Scope of Work Rule: the appraiser must determine and disclose the scope of work necessary to produce credible assignment results; scope must be sufficient for the intended use.

USPAP Jurisdictional Exception Rule: if any law or regulation preempts USPAP, the appraiser must comply with the law and disclose the exception.

USPAP Record Keeping Rule: appraisers must retain workfiles for at least five years after delivery of the report, or two years after final disposition of a judicial proceeding, whichever is later.

USPAP Reporting Standards: the report must be clear, not misleading, and contain sufficient information for the intended user to understand the appraisal; specific reporting requirements depend on the report type (Appraisal Report vs. Restricted Appraisal Report).

Reviewers must comply with USPAP when performing a review; Standard 3 governs appraisal review and requires a review report that states the reviewer's scope, opinion, and basis.

Independence and objectivity: reviewer must not have a conflict of interest; must disclose any fee contingent on the outcome (not allowed for review assignments).

Sales Comparison Approach: value is estimated by comparing the subject to similar properties that have sold, adjusting for differences; adjust the comparable to the subject (not the subject to the comparable).

Cost Approach: value = cost new (replacement or reproduction) minus depreciation (physical deterioration, functional obsolescence, external obsolescence) plus land value.

Income Approach: value is based on the present value of future income; direct capitalization uses V = NOI / R; yield capitalization uses discounted cash flow (DCF) analysis.

Gross Rent Multiplier (GRM) = Sale Price / Gross Monthly Rent; used in sales comparison for income properties.

Reconciliation: the reviewer must assess whether the appraiser's reconciliation is reasonable, considering the quality and quantity of data in each approach and the property type.

Highest and Best Use analysis: must be legally permissible, physically possible, financially feasible, and maximally productive; the reviewer must check that the appraiser's HBU conclusion is supported.

Adjustment techniques: paired sales analysis, regression analysis, grouped data analysis, and cost/income-derived adjustments; reviewer must evaluate whether adjustments are supported by market evidence.

Capitalization rate derivation: band of investment, debt coverage ratio, and comparison methods; reviewer must check that the cap rate is consistent with market and risk.

Depreciation: curable vs. incurable; physical deterioration (deferred maintenance), functional obsolescence (design, superadequacy), external obsolescence (economic, locational).

Review report must clearly state the reviewer's opinion of the original report's compliance with applicable standards and the credibility of its analyses and conclusions.

Review report must include: identification of the subject and the report reviewed, scope of review, date of review, reviewer's opinion, and basis for opinion.

Reviewer must use clear, professional language; avoid vague criticisms; cite specific sections or data in the original report.

If the reviewer finds the original report deficient, the review report should explain how the deficiency affects the credibility of the value opinion.

Reviewer must not disclose confidential information from the original report without authorization, except as required by law or USPAP.

Reviewer must include a statement of limiting conditions and extraordinary assumptions if applicable.

Reviewer must sign and certify the review report; certification must include statements of independence, competency, and compliance with USPAP.

Reviewer must communicate the review findings in a manner appropriate for the intended user; the level of detail depends on the review's scope and intended use.