Appraisal Reviews (Critiques)

Durkin Valuation Consultants provide objective analysis (critique) of appraisal reports prepared by appraisers of real estate, personal property and business valuation appraisers and/or business valuations prepared by CPAs.

Most legal cases involve property value issues whether the property is a business enterprise, real estate holding, art, antiques, or other personal property.

Education, Experience, and Training in Appraisal Report Critique

Durkin was an Appraisal Qualifications Board Certified instructor of Uniform Standards of Professional Appraisal Practice (USPAP) for 20 years all over the U.S., Toronto, Mexico, and Kaunas Lithuania. He was a nationally Certified Distant Education Instructor CDEI™.

  • Durkin wrote and taught Narrative Appraisal Report Writing, Appraiser as Expert Witness, and the American Society of Appraisers' 30-hour Appraisal Review courses ARM-201, ARM-203 (business valuation) and ARM-204.
  • He taught International Valuation Standards (IVS), AICPA Standards, and appraisal association valuation standards. He taught appraisal review courses throughout the U.S., in Toronto Canada, and Slovenia.
  • Durkin taught for the International Society of Appraisers, the American Society of Appraisers, the Society of Accredited Marine Surveyors, the National Auctioneers Association Appraisal Program, and the National Association. of Professional Appraisers.
  • Appraisal Review is a specialty within the appraisal profession. Some appraisal associations grant a Review Designation.
  • Durkin, who holds a master's degree in valuation theory and who is a practicing attorney. He holds a multi-discipline appraisal review Designation and was for four years the Chair of the American Society of Appraisers Appraisal Review & Management Committee (ARM).

The appraisal profession uses the term “Appraisal Review.”

We objectively critique an appraisal report against compliance with standards (norms), credibility (ethos) and against logic and evidence (logos)

Appraisal Standards of Practice

Basically, there are two sets of national generally accepted appraisal practice standards. The Uniform Standards of Professional Appraisal Practice (USPAP). In addition, many appraisal associations have additional standards requirements. Some of the appraisal association standards conflict with the nationally recognized generally accepted standards.

An appraisal report critique measures the appraisal report against the required appraisal standards (norms)

The generally accepted appraisal standards are known as the Uniform Standards of Professional Appraisal Practice (USPSP).

USPAP defines:

APPRAISAL: (noun) as the act or process of developing an opinion of value. It is an opinion of value

APPRAISER: is one who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective.

APPRAISAL REVIEW: (noun) is the act or process of developing an opinion about the quality of another appraiser's work (i.e., a report, part of a report, a workfile, or some combination of these), that was performed as part of an appraisal or appraisal review assignment; (adjective) of or pertaining to an opinion about the quality of another appraiser's work that was performed as part of an appraisal or appraisal review assignment.

USPAP is enforced by four powers.

  1. USPAP is statutory requirement for state licensed real estate appraisers performing appraisals for mortgage lending, i.e. federally related transactions.
  2. Where an appraiser signs a Certification that he/she performed in accordance with USPAP.
  3. Most appraisal association compliance committees enforce USPAP, and
  4. Appraisals for IRS related work require compliance with USPAP.

AICPA is the American Institute of Certified Accountants.

The AICPA has an extensive Code of Professional Conduct and Business Valuation Standards titled “Statement on Standards for Valuation Services No.1

The AICPA Code of Conduct ethical requirements are enforced by the state license Boards of Accountancy, The Securities and Exchange Commission (SEC), The Public Company Accounting Oversight Board (PCAOB), The Government Accountability Office (GAO), The Department of Labor (DOL) and Federal, state and local taxing authorities.

Why Not Challenge the Appraiser's Judgment?

It is not impolite to challenge an expression of judgment. Judgments are only as good as the evidence that supports them. History and science are filled with examples of judgments based either on insufficient evidence or by a narrow interpretation of evidence. In many cases such judgments did significant harm to people who relied on the appraisal. Most times the harm (damages) happens because other appraisers were too timid to challenge those faulty appraiser judgments.

Durkin Valuation Consultants are regularly engaged to critique appraisal reports in negotiated disputes and in litigated disputes. Shareholder disputes involve the valuation of the underlying enterprise. Divorce actions involve the division of marital assets. We are often engaged to value the party's interest in a business enterprise, the marital home, the antiques, art, jewelry, and sometimes the pension or stock options. IRS challenged appraisals in decedent estates, gift taxes, and non-cash charitable donations. We provide appraisal report critiques for attorneys in litigation where a plaintiff or defendant has obtained an expert appraiser.

Examples of Appraisal Review Work

The Trans Alaskan Pipeline runs some 850 miles through the State of Alaska. The State government of Alaska, every citizen of Alaska, and every municipality receives money from the Alaska Pipeline business. We were engaged by the Anchorage

Alaska attorneys representing the pipeline owners to provided appraisal review critique of defense and plaintiff appraisal reports relative to an assessment dispute with an ad valorem valuation range of $850,000 to $1.5 billion. The appraisal report we reviewed included reports prepared by plaintiff and defense appraisers

BP Pipelines (Alaska) Inc., ) Conoco Phillips Transportation Alaska, Inc., Exxon Mobil Pipeline Company, Koch Alaska Pipeline Company, LLC, Unocal Pipeline Company, And Alyeska Pipeline Service Company, Appellants and ) Cross-Appellees, v. State of Alaska, Department of Revenue, and State Assessment Review Board. Appealed to the Supreme Court of The State of Alaska. Nos. S-14095/14116/14125. Superior Court No. 3AN-06-08446 CI. Opinion, No. 6867 February 19, 2014. Original Case State of Alaska Superior Court. Alaska Pipeline v. State of Alaska Department of Revenue, State Assessment Review Board and North Slope Borough. Case No 3AN-06-08446 CI Consolidated 2007 to 2015.

Verizon California Asset Valuation. We were engaged for the defense to critique a $6.5 billion ad valorem assessment dispute appraisal report prepared by BCRI Valuation Services who had valued all real and personal property owned by Verizon in California from 2001 to 2014. California State Board of Equalization (SBOE) v. Verizon California Property. Assessment Dispute for all real and personal property owned by Verizon in California 2001 to 2014.

CPA Forensic Reports in Complex Embezzlement Issue. We were engaged to critique three different CPA reports. Durkin testified for the defense on financial analysis methodology against the three CPAs who were employed as experts by the plaintiff. Techno Magnetic Media and Computer Supplies, Inc. v. Linda Williams and LW Financing LLC and a cross claim, Linda Williams as a member of Dafna, LLC, v. Moshe Kedar. Cook County Circuit Court, Chancery Division No. 09-CH-44544.

Crematorium Stigma Issue. We were engaged to critique plaintiff's expert report and to prepare an appraisal report all relative to alleged diminution in market value of neighborhood residential property. Michaels et al v. Lakeside Cemetery Corporation, Massachusetts Land Court Misc. No. 282161

Nuclear Power Plant Storage of Spent Nuclear Fuel. We were engaged to critique plaintiff's expert report on allegations of a

diminution in value causally connected to the cask storage of nuclear waste at the site of the nuclear power facility. We were also engaged to prepare an appraisal report and to testify as to whether there was a diminution in market value of all residential real estate within two miles of the stored nuclear fuel waste. Christine A. Bostek, et al., v. Entergy Nuclear Generation Company, et al. CA No. 13 MISC 47028-RBF

Casualty Insurance Plaintiff Claim Dispute. We were engaged as umpire in a million dollar plus casualty insurance claim relative to damage to a large baseball card collection. The “appraisal” clause called for the insured and the insurance company to separately appraise the alleged damage loss and if the two appraisers could not agree they would name a third appraiser. Where two appraisers agree on the value loss, that would be the final damage figure. We reviewed/critiqued the two underlying appraisers and developed our opinion of the casualty loss. Union Mutual Fire Insurance v. Anthony and Susan Pate, Bristol County Rhode Island Superior Court. CA No. 13-1620 2016.

Titanic Artifacts Bankruptcy. Appraisal. RMS Titanic, Inc. filed for Chapter 11 Bankruptcy protection. Titanic, Inc., as part of

their reorganization plan wanted the court to allow them to sell $10 million of the artifacts. Titanic engaged an appraiser to value the company's artifact assets. The artifacts were appraised for $250 Million. We were engaged to critique the appraisal report prepared for Titanic, Inc. and to prepare our own valuation opinion. We identified the legal interest of Titanic, Inc. and discovered that there was a covenant in the title that precluded Titanic from selling anything less than all the artifacts. Re: RMS Titanic, Inc. Chapter 11, Case No. 316-bk-02230 PMG, US Bankruptcy Court, Middle District of Florida Jacksonville, Florida

Criminal Copyright Infringement and Counterfeiting. U.S. Customs tracked the source of hundreds of hoodies embroidered with the Bill Cosby Fat Albert character that were being sold at flea markets and hip-hop shops. The defendant

was found guilty. The defendant's sentence was based on the value of the infringed goods. The government's expert opined that the value was based on the manufacturer suggested retail price (MSRP). The defendant was facing a four-year federal prison sentence based on the MSRP. We were engaged to critique the government's value opinion and to testify in federal court sentence hearing. Durkin determined that MSRP did not apply to domestically manufactured copyright material and that market value was the appropriate type of value. The defendant sentenced was reduced to two years in federal prison and deportation at the end of his sentence. United States v. Steve Kim, et al. N.D. Atlanta Georgia NO. 1.06-CR-ODE/JF

South Carolina Estate Tax IRS Challenge to Art Appraisal. The attorneys for the estate hired an appraiser to provide an appraisal of several oil paintings. The appraiser valued one of the paintings by Natalia Goncharova (1881-1962) for $375,428.50. Less than a year later the painting sold at public auction for $3,000,000. The IRS challenged the appraisal. We were engaged to critique the appraisal report and prepare our own opinion as to whether the painting was undervalued. We succeed, based on extensive research, that the market for Goncharova painting had been at the time of the appraisal in the range of the appraised value and that the market value significantly increased several months later and that the increase was not foreseeable.

Stuart Florida Estate Appraisal. An appraiser/auctioneer was engaged by attorneys for an estate to value the residential contents of a decedent for use in filing federal estate tax return. After the completion of the appraisal, the appraiser/auctioneer told the estate's attorney that he would not charge for the appraisal if he could auction the property. His community reputation was good, and the attorney agreed to let him auction the property. He had appraised a Chippendale Style table for $3,500. He sold the table at his auction for $1,650. Twelve days a Massachusetts country auction. the table sold for $1,300,000. Maine Antique Digest wrote the story. The IRS then challenged the appraised value. The $1.3l million sale pushed the estate into a higher tax bracket resulting in the estate owning about $700,000. The appraiser was liable. We were engaged to critique the appraisal.

Machinery & Equipment Appraisal for Lender. A lender foreclosed on a collateral loan relating to an appraisal of thirty-one rail passenger cars at an Orderly Liquidation Value of $19,255,000. We were engaged by the appraisal company to determine if there were factors that would defend the appraisal. We found several defenses. Patriot Group, LLC, v. Hilco Appraisal Services, LLC, et al.

Deconstruction Appraisals. The ReUse People of America located in California engaged Durkin Valuation to review two dozens appraisal reports relative to IRS non-cash charitable donations of building materials taken from residential home tear downs.

Art Law Million Dollar Fake Antique Funiture. We were engaged to review a half dozen appraisals relative to French and Italian Antique Furniture. New York Art Law applied. We testified in federal court. Levin v. Dalva Brothers, Inc., 459 F3d 68, Boston, Counterfeit Antiques

Why Splitting the Value Difference Is an Unwise Decision?

Divorce proceedings are often emotionally charged. The spouse's business and the marital home are usually the largest joint assets to deal with during a divorce. Knowing exactly how much the assets are worth is essential to the fair division of assets.

Marital Residence Appraisals.
In the process of divorce, either the home will be sold or one of the spouses will buy the other spouse's equity. If the property is to be sold, that sales price less any existing mortgages and closing costs will be the dollar amount equitably split. If one of the spouses is to buy out the other, then a qualified appraisal by a qualified appraiser is in order. Here in lies the problem. The marital residence is likely the most valuable asset in the marital estate. Finding a qualified appraiser requires due diligence.

Each side has their own appraiser, or the parties chose one appraiser. Which every method is used, the appraisals should be critiqued to protect the parties! It is not uncommon for one appraiser to come in low and another come in high. Sometimes this happens because the appraiser forgets his or her requirement to be independent and objective. The appraiser becomes a biased advocate. Choose an appraiser that will perform a narrative appraisal report and choose the appraiser based on his or her Statement of Qualifications that demonstrates experience in divorce appraisals. And have the appraisal or appraisals critiques. In the final analysis, the parties are dividing a significant asset.

This cautionary statement applies to the appraisal of the spouse's business enterprise or private practice. Have the appraisal professionally critiqued.

What is a Qualified Appraiser and Qualified Appraisal?

The U.S. Treasury Notice 2006-96 defined the terms qualified appraisal and qualified appraiser. Qualified appraisal is one conducted by a qualified appraiser in accordance with generally accepted appraisal standards. It will be treated as meeting generally accepted appraisal standards if, for example, it is consistent with the substance and principles of the Uniform Standards of Professional Appraisal Practice. A qualified appraiser is an individual who regularly performs appraisals for compensation and who has earned an appraisal designation from a professional appraiser organization or has met minimum education and experience requirements as set forth in regulations.

There are many licensed real estate appraisers who perform poorly. Durkin Law, P.C. represents appraisers before the state license board and represent plaintiffs against negligent appraisers. The primary work performed by licensed real estate appraisers is appraisers for mortgage lending. Marital estate appraisal, bankruptcy, and decedent estate related appraisals have different value definitions and different state and federal regulations. Lawyers favor the use of a Fannie Mae Form type appraisal on a mortgage form mainly because the cost is $350 to $450. Courts too regularly accept Fannie Mae Form appraisal. The marital estate residence is likely the largest asset. Whether the property is a single-family home or a 20-unit apartment complex, the appraisal should contain sufficient evidence and logical argument to support the value opinion.

The Uniform Standards of Professional Appraisal Practice (USPAP) requires “An appraiser must determine, prior to agreeing to perform an assignment, that he or she can perform the assignment competently. Competency requires: 1. the ability to properly identify the issue/problem to be addressed; 2. the knowledge and experience to complete the assignment competently; and 3. recognition of, and compliance with, laws and regulations that apply to the appraiser or to the assignment.” The mortgage appraiser is generally not familiar with the laws and regulations relating to divorce, decedent estates, or bankruptcy. Hence, the need to have any appraisal critiqued especially those appraisals involved in the division of property.

Most state laws require a real estate appraiser to be licensed to perform real estate appraisals for lenders, banks, mortgage brokers in any federally related transaction. Many states do not require a real estate appraisal license for non-federally related transactions.

A Person Does Not Need A Real Estate Appraisal License in Massachusetts to Perform a real estate appraisal for divorce, bankruptcy, land court, etc.

In Massachusetts, and in most states, a real estate appraiser need not be licensed to perform appraisals for non-federally related transactions, e.g. divorce, IRS decedent estates, bankruptcy, land court, and probate court. [Mass. Gen. Laws Chap 112 § 174 C states, “The certification and licensing provisions of this chapter shall not apply to transactions exempted from the requirements of Title XI.] Maine claims to be a mandatory state wherein any real estate appraisal must be performed by a Maine license real estate appraiser. In Tax Court federal judge found that because the appraisal in question was not for a federally related transaction, that the appraisal did not fall under Maine Appraisal Law. [Utilicorp United Inc. & Subsidiaries v. Comm'r of Internal Revenue.104 T.C. 670 (U.S.T.C. 1995]. In a similar case, The U. S. Federal District Court Judge in Fidelity National Information Systems v. Sinclair stated, the legislative history point to a singular purpose to comply with FIRREA, which is not to regulate the entire real estate appraisal process, but instead to protect federal financial institutions from the dangers associated with fraudulent or poorly executed appraisals. [Fidelity Nat'l Info. Solutions, Inc. v. Sinclair, 2003 U.S. Dist. LEXIS 369 (E.D. Pa., Jan. 8, 2003 March 31, 2004)]

The property owners need an objective appraisal that will stand up to critical review. In divorce appraisals and shareholder disputes, the appropriate type of value is called “Fair Value”. Fair value is based on the high fiduciary duty of fairness where the interest of each party is the prorate share of the whole property. Fair value does not consider minority or marketability discounts, does not consider hypothetical buyers and sellers. Appraisals are prepared for a wide range of issues and each ‘use” may have a different type and legal definition of value.

Durkin wrote three Appraisal Review Textbooks. Two were written for the American Society of Appraisers two 30-hour courses.

One was written for use in a 7-hour seminar.


  1. Appraisal “Review” is the term used in appraisal practice. The term Critique is a more formal word that refers to a careful judgment in which someone gives an opinion about something. Review can refer to an essay analyzing a literary or artistic work and can also imply a more casual opinion. One general problem with appraisal “review” work is this casual opinion approach. Appraisal Review is governed by USPAP Standard 3 and 4.  
  2. Ruggiero, Vincent, The Art of Thinking, 9th Ed. Pearson Education, 2009
  3. Title XI of the Financial Institution Reform, Recovery, and Enforcement Act (FIRREA) protects banks by requiring any appraisal used in federally related mortgages to be performed by a state licensed real estate appraiser. The appraiser must perform in accordance with Uniform Standards of Professional Appraisal Practice (USPAP) and meet the license requirements established by the Appraisal Qualifications Board.

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