Quality Control Procedures

Quality Control Goals

The technology used by RSDS, LLC plays an important role in Appraisal quality. Our appraisers are  required prior to delivering their finished reports to the client, to run the QC commands in the appraisal software, which triggers a set of rules to go against the appraisal report that will checked.
Every appraisal report is matched against UAD customized data points to ensure accuracy, consistency, and quality of work.  The rules set will alert the appraiser if there is an issue with the report. The rules are robust and will identify everything from issues with the analysis to simple oversights such as missing photos.  The software application is a strong tool to assist appraisers to continuously provide high quality reports as well as an invaluable tool for the RSDS, LLC Quality Control team.

Quality Control Team

Every Appraisal report managed by RSDS, LLC undergoes a Quality Control check prior to delivery to the Client.  RSDS, LLC has three proficiency levels in our QC team.  The depth of experience enables escalation at any point, and thereby reflects a risk-focused QC approach.  Management is specific that the person performing the Quality Control Analysis must have the necessary education, expertise, and competence appropriate with the complexity of the appraisal assignment, property type, market, geographical area, intended use, and analytical methods. Or must escalate the report to the next higher level of a more experienced QC Team.

 

Level I   Performs an administrative review for client-specific non-material related deficiencies, such as correct spelling of borrower’s name, correct spelling of property address, typos, incomplete address, product type ordered, missing sketch, location map, inadequate photos, use of comparable sales over 12 months per FNMA/FHLMC guidelines and or client requirements. In addition, check for possible red flags issues, such as line-item adjustments, net and gross adjustments per underwriting guidelines, the reasonableness of distance of comparable sales, large acreage, declining market areas, etc.

 

Level II  Performs a technical appraisal review, escalated to this Level from Level I. Typical concerns

such as complex appraisals, severely rapidly changing markets, lack of support in the appraiser’s opinions and conclusions are reviewed at this level.

 

Level III Escalated critical concern to Senior Management. The escalation process is flexible to the assignment conditions and elements and can occur at any time during the QC process, meaning it does not need to go through all levels to get to Senior Management. An appraisal report can be escalated from Level I to III, directly to the Senior Management.

 

Escalation Process

Once the file is escalated from Level I to II or III, the QC Team will properly communicate with the appraiser, who will then formulate a response that addresses the specifics in the communication received.

Quality Control Checklist

Ensure that the completed report is run through alamode application software and all the rules results that need fixing are fixed.

  • Verify typical secondary market standards and guidelines, such as sales date within one year, net and gross adjustment within guidelines, subject’s past three years analyzed in the report.
  • Evaluate the reasonableness of the report including support, methods, assumptions, and data sources in the context of the intended use.
  • Unacceptable deficiencies would require the QC Team to send the report back for revision.
  • Any exclusion of the approaches to value (cost, income, and sales comparison) that is necessary to the assignment and no disclosed rationale in the report for the omission of that approach to value.
  • Did the appraiser analyze and reconcile the information from the approaches to arrive at the estimated market value?
  • Reflect an opinion as to the highest and best use of the property.
  • Reporting whether or not the subject property was inspected and whether anyone provided significant assistance to the appraiser signing the appraisal report.
  • Incorrect Subject Information
  • Closer in proximity
  • Similar features/view/amenities/size/age/quality features
  • Have a routine audit at times BEFORE the report goes to the client
  •  Systems in place where the trainee signed reports get more audits or scrutiny

Sales Comparison Grid Check List

  • The address is USPS standard for Subject and Comparables
  • Address City is accurately reported
  • Proximity to the Subject is 1 mile or less, if not explanation is provided
  • Data Source(s) provided
  • Only Arm’s Length sales were used for Comps 1-3
  • Sale/Financing adjustments were applied to seller paid closing cost if needed
  • Sale/Financing was accurately reported “FHA”, “VA”, “Conv”, etc.
  • Sale/Financing was avoided if reported as “Other” or “Owner Finance”
  • Time adjustments were made accordingly and are consistent and explanations were made in summary
  • Location adjustments were made as needed i.e.: “busy street”, “golf”, “water”, etc.
  • Only Fee Simple homes were considered
  • Site/Lot adjustments are supported
  • View adjustments were made as needed i.e.: “mountain”, “water”, “woods”, etc.
  • Design Styles are accurately reported: “Detached,” “Attached,” “Semi-Detached”
  • Design Styles are consistently labeled across the board
  • Condition and Quality adjustments are consistent
  • Explanation in the summary for differences in Condition and Quality adjustments
  • Age adjustments were made if needed, or support why there were not needed
  • Appraiser bracketed the BR and BA counts
  • The appraiser bracketed the GLA
  • Basement adjustments were made and were consistent i.e.: “walkout vs interior only”
  • Consistent below-grade room count adjustments for baths and beds
  • 0 sf was used for homes with no basement
  • Energy Adjustments: Double-check accuracy for “Solar” or “Geothermal” and other green features
  • Garage adjustments are consistent
  • Accurate and consistent Porch/Patio/Deck adjustments
  • Provide support for pool and outbuilding adjustments
  • Consistent adjustments or explanations on why they are inconsistent
  • “0” are used for lines that vary from the subject but did not require an adjustment
  • At least one Sale Price is above and one below your opinion of value
  • At least one Adjusted Sale Price is above and one below your opinion of value
  • The Sale price range is Greater than the Adjusted Sale price range
  • Single line adjustments don’t exceed 10% or an explanation was made
  • Net adjustments don’t exceed 15% or an explanation was made
  • Gross adjustments don’t exceed 25% or an explanation was made
  • A transfer in the past 3 years was indicated for the subject; the Price of Prior Sale/Transfer must be provided
  • A transfer in the past 1 year was indicated for a comparable sale/listing; the Price of Prior Sale/Transfer must be provided

Audit Process

RSDS, LLC also performs a weekly self-audit for two completed appraisals on an on-going and as needed basis, for multiple situations, including but not limited to client specific, geographic market area, property type, high dollar value properties, and internal per trainer.  If a Trainer successfully passes the Weekly audit 4 times, then move on to Bi-weekly audits, then after 4 Bi-weekly audits they move to Monthly audits.

Client Specific Audits

RSDS, LLC conducts a specific periodic self-audit for select clients based exclusively on their completed appraisal order volume, with specific sample strategies and reporting criteria, which we accommodate, for which clients reviewed and/or obtained a review which identified the appraisal to possibly be deficient to their specific standards.  We also periodically conduct a random post-audit sample selection that includes representation from each client, as well as representation from any of our appraisers. On a periodic basis, the client may conduct its own random Audit of files completed through RSDS, LLC for this client. RSDS, LLC encourages our clients to report the results of their findings. If the findings are provided to RSDS, LLC, we will provide an action plan to correct the deficiencies reported in the findings, including communication, if necessary, to the specified appraiser enumerating results that were unacceptable. The appraiser who performed the unacceptable report is required to provide a written response addressing the concerns raised in the client’s audit. The Chief Appraiser, in conjunction with the QC Team, drafts an action plan, and the action plan is submitted back to the client. The client in turn addresses the action plan as acceptable or not and further expects a response to the follow-up. The follow-up addresses the findings. On a periodic basis, RSDS, LLC provides a document showing what the action plan was and the various components implemented. Third-party tools and databases and other available ancillary sources may be utilized to verify the information supplied in the findings and to determine those that warrant escalated review by the QC Team. Repetitive failures by an appraiser or any appraiser who has a report identified with severe deficiencies, including fraud intent, material USPAP breach, ethics, and competency rules will prompt a referral to Senior Management for the best course of immediate action.

Trainee-Trainer Quality Assurance Program

RSDS, LLC fosters a business environment where a learning relationship between a trainee and their trainer (certified appraiser) requires supervisory role to oversee the trainee’s work, so trainees may grow their knowledge, experience and understanding of the appraisal process.

 

RSDS, LLC policy requires trainers to commit to be available to the trainee for live training, assistance with questions and careful review of the trainee’s work.

 

RSDS, LLC policy enables our trainers (certified appraisers) to determine when the trainee, unlicensed, uncertified appraiser, or an appraiser trainee completes the property inspection, and the trainer (supervisory appraiser) is not required to also inspect the property. Our policy allows a trainee, unlicensed, uncertified appraiser, or an appraiser trainee to complete the property inspection when the client allows. This is based on increased growth in competency and the degree of independence and latitude allowed for, in the judgment of the supervisory appraiser.

 

RSDS, LLC quality assurance program provides processes for identifying, assigning, overseeing, and reviewing complex and non-complex assignments in compliance with secondary market underwriting guidelines, laws and regulations, standards, and rules.

 

By the end of our training period, trainees are given more responsibilities who demonstrated competencies in:

  • Market Area Analysis to include degree of growth development rate, trends in property values, demand/supply, marketing time, and predominant price range.
  • Market analysis for Over-Improvements/ADU, if applicable, data collected, analyzed, and described in the report.
  • Highest and Best Use Land Analysis.
  • Competencies in RSDS, LLC “Property Inspection” protocols and etiquettes as described in our training manual.
  • Competencies in “The 7 Internal Training STEPS at RSDS, LLC as described in our training manual.