Acting as a Broker.and Appraiser

[Couch Potato]

It is all about trust.

Do appraisers have fiduciary duties?

Certainly. The client is trusting us to perform our appraisals consistent with the laws an regulations. They expect an appraisal free of bias, as a disinterested party without regard to the interest of anyone. That is what USPAP is all about - public trust.

On the other hand, a agent is at all times acting in the best interest of their client. One cannot very well act in the best interest of a client and disregard their interests at the same time.

 

[Kevin A. Spellman]

You can do an appraisal for your listing everyday if you choose to do so, but you cannot use your valuation service for a federally related transaction if you are being compensated from the transfer of a title.

If your peers perceive your two services as unethical, then it will be a good chance you could be charge with a violation from either license you hold. Until the states prohibit an individual from holding two separate licenses it comes down to your ethics and also who is your client.

 

[J Adair]

Whiteout....lol

 

[Mike Garrett RAA]

USPAP 2006, Ethics Rule, Management...page 8, line 269...

"2. a direction in assignment results that favors the cause of the client;".

Would that not be the exact opposite of a fiduciary obligation?

Ethics Rule, conduct, USPAP 2006, page 7, line 241....

"In appraisal practice, an appraiser must not perform as an advocate for any party or issue".

Would that not be the exact opposite of a fiduciary obligation? USPAP, Fundamentals of Real Estate Appraisal, and other appraisal texts fail to include the definition of Fiduciary obligation in the Definitions or Glossary.

fi·du·ci·ar·y (f¹-d›“sh¶-µr”¶, -sh…-r¶, -dy›“-, fº-) adj. 1.a. Of or relating to a holding of something in trust for another. b. Of, relating to, or being a trustee or trusteeship. c. Held in trust. 2. Of, relating to, or consisting of fiat money. 3. Of, relating to, or being a system of marking in the field of view of an optical instrument that is used as a reference point or measuring scale. --fi·du·ci·ar·y n., pl. fi·du·ci·ar·ies. One, such as an agent of a principal or a company director, that stands in a special relation of trust, confidence, or responsibility in certain obligations to others.

I know my real estate course text and the Real Estate Manual for the State of Colorado makes a big issue out of it for REAL ESTATE BROKERS.

Inquiring minds really do want to know.

 

[TXCBoy36]

Hoo---Rah!

You can do an appraisal for your listing everyday if you choose to do so, but you cannot use your valuation service for a federally related transaction if you are being compensated from the transfer of a title.

If your peers perceive your two services as unethical, then it will be a good chance you could be charge with a violation from either license you hold. Until the states prohibit an individual from holding two separate licenses it comes down to your ethics and also who is your client.

Totally Agree!

JC:new_smile-l:

 

[DTB]

Certainly. The client is trusting us to perform our appraisals consistent with the laws an regulations. They expect an appraisal free of bias, as a disinterested party without regard to the interest of anyone. That is what USPAP is all about - public trust.

On the other hand, a agent is at all times acting in the best interest of their client. One cannot very well act in the best interest of a client and disregard their interests at the same time.

A fiduciary duty is the highest standard of care imposed at either equity or law. A fiduciary is expected to be extremely loyal to the person to whom they owe the duty (the "principal"): they must not put their personal interests before the duty. ( i.e. an appraiser's requirement to be an unbiased party precludes the basic concept of fiduciary)

1 above requires unbiased opinion, not fiduciary level of care.

2 above requires client's best interest placed above your own, fiduciary care.

Public trust does not create a fiduciary relationship.

 

[Pat Butler]

We're in a mandatory state where any value given by a credentialed appraiser has to be USPAP compliant. That means anyone, such as myself, who is also a broker HAS to comply with USPAP. If it can't be done then every broker/appraiser in the state would be out of the real estate business.

Yes, it can legally be done. Why do you think SR2-3 allows for the disclosure of a present or prospective interest? Not only that, but the same certification requirements also require the appraiser to affirm that they are unbiased. So USPAP recognizes that it's possible to have an interest in the property and be unbiased at the same time.

We're also talking about providing a homeowner with an anticipated sales price indication, and not necessarily just market value. Therefore, it is in the appraiser's interest to not be biased because ultimately the appraiser-as-broker is attempting to sell the property, and the market will eventually show whether or not the appraisal was good.

And NO, we do not have a fiduciary relationship with our clients. Like Mike said, that is exactly opposite of what it means to be unbiased. If we did have a fiduciary relationship then it would be in our client's best interest to modify our value to suit their needs. In almost every profession that has a fiduciary relationship you'll see explicite mention of that fact in their licensing laws as well as extensive training as to the practical aspects of how that gets applied. To have a fiduciary relationship also means to be an advocate for our client. Read SR2-3 where you'll see the list of certs that all go against any notion of being an advocate for the client.

 

[Bama Bayou]

The AL appraisal board, which does an excellent job, has seven appraisers, one from each congressional district in the state. All but one has a brokers license.

Apparently they believe this can be done. I have always been taught that it is OK to have two hats, just don't wear both at the same time.

 

[Couch Potato]

USPAP 2006, Ethics Rule, Management...page 8, line 269...

"2. a direction in assignment results that favors the cause of the client;".

Would that not be the exact opposite of a fiduciary obligation?

Ethics Rule, conduct, USPAP 2006, page 7, line 241....

"In appraisal practice, an appraiser must not perform as an advocate for any party or issue".

Would that not be the exact opposite of a fiduciary obligation? USPAP, Fundamentals of Real Estate Appraisal, and other appraisal texts fail to include the definition of Fiduciary obligation in the Definitions or Glossary.

fi·du·ci·ar·y (f¹-d›“sh¶-µr”¶, -sh…-r¶, -dy›“-, fº-) adj. 1.a. Of or relating to a holding of something in trust for another. b. Of, relating to, or being a trustee or trusteeship. c. Held in trust. 2. Of, relating to, or consisting of fiat money. 3. Of, relating to, or being a system of marking in the field of view of an optical instrument that is used as a reference point or measuring scale. --fi·du·ci·ar·y n., pl. fi·du·ci·ar·ies. One, such as an agent of a principal or a company director, that stands in a special relation of trust, confidence, or responsibility in certain obligations to others.

I know my real estate course text and the Real Estate Manual for the State of Colorado makes a big issue out of it for REAL ESTATE BROKERS.

Inquiring minds really do want to know.

When we appraise a property, the client places the obligation of evaluating the market value of the real estate on us.

Even if you decide fiduciary is to strong a word on the appraisal side, it certainly fits on the agent side, and conflicts with the requirements placed on an appraiser.

 

[Bama Bayou]

Couch, the part about "In appraisal practice, an appraiser must not perform as an advocate for any party or issue" kind of tells the whole story.

Performing the duties of a broker is not appraisal practice. It is broker practice.