From the Beginning - Who Decides?

[Mike Kennedy]

Technical USPAP Compliance Review Assignments on Residential Appraisal Reports do not require a Value Opinion by the Reviewer.

SOW for a SR3 Technical AND Value Review requiring Reviewers' compliance with SR1&2 when rendering a disparate Value Opinion is A SINGLE ORDER. There is no Contingent Second Assignment.

 

[Fred]

There is no Contingent Second Assignment.

It is contingent - on the review results. Contingencies can be ethical or unethical.

 

[Doug Smith SRA]

Hijack In Progress

Another thread hijacked by the cost approach and AO-19 crazies:new_multi:

It is like having a crazy aunt. No matter what the discussion, auntie returns to the same subject.

Of course it all could be genetic. There could be a cost approach gene; you are born to be predisposed to the cost approach. This gene lies close to the UFO gene.

 

[Fred]

Another thread hijacked by the cost approach and AO-19 crazies:new_multi:

It is like having a crazy aunt. No matter what the discussion, auntie returns to the same subject.

Of course it all could be genetic. There could be a cost approach gene; you are born to be predisposed to the cost approach. This gene lies close to the UFO gene.

This crazy would gladly apologize for sullying your thread - except Terry started the thread, mentioned me by name, and mentioned the cost approach in the same sentence.

 

[Terrel L. Shields]

mentioned me by name, and mentioned the cost approach in the same sentence.

I am sorry you feel so insulted to be named in the same sentence with your nemisis...

My point was simple. Since I do not feel that there is any consensus upon what constitutes the concrete requirements that 1-1a alludes to but does not identify, then I feel that someone who does not believe the Cost Approach should not be indicted on that issue. If you can point to an author or text with some credibility who also feels that way (and there are instances in the literature where people dispute the very validity of the Cost Approach) then I do not think that a board should take the step of threatening a sanction.

Most major textbooks include the Cost Approach. Most appraisers believe it is a valid approach to value. But this forum has a number of appraisers, none better known or more elequent upon the subject that Mssr. Santora, who eschew the use of the approach under the color of it failing its very mission - to determine market value.

Be it "The Appraisal of Real Estate" (any edition) or any similar text, there are no basic texts which do not cover that approach. But at the same time there is consideration opinionated literature, some published by the Appraisal Journal, which is published by the same folk as the "ARE"...that impeach the Cost Approach.

That does not mean I do not disagree with the anti-Cost crowd, but it means I do not think that USPAP can point to a benchmark from which to make its case that the Cost Approach has to be developed under any or all circumstances. Grasskamp once pointed out the weakness of both the Sales and Cost approaches with the question of whether that meant we had to fall back upon the Income Approach to verify value. He never answered that question. I don't think USPAP answered it therefore, I don't think boards should take people to task over it.

It is like having a crazy aunt. No matter what the discussion, auntie returns to the same subject.

:laugh: :laugh: I could rule the world if I could only get the parts...all on backorder.

 

[Austin]

Referring to Terrell’s question and ignoring all of the previous noise on the subject: How about this line: “Social change has also had an effect on theory and practice.” I can add one of my own: “Market conditions have also had an effect on theory and practice.” I say that because my methods and practice has changed to adapt to the new market conditions.
I have a good friend whose son just completed his medical training. The day after he finished his residency he went to Africa for six months and practiced prior to taking an ER job in a big hospital. He told me practicing medicine in Africa was a medical education in itself because he was free to practice medicine the way it was meant to be practiced. He said when he was a resident at the med school hospital it was their way or no way and in the real world that mentality gets in the way of good medical practice. Now he is free to practice medicine. It is between him and the patient with no third party looking over his shoulder.
I feel the same way about appraising. I think USPAP, at least the last version, is the greatest thing since sliced bread. I don’t have any problem with it. The reason I don’t have any problem with USPAP is that I don’t do work with people that cause USPAP problems, like the GSE’s. It is not up to the reviewer to decide which method or practice is appropriate, it is the purpose and intended use of the client. The problem is the review and regulatory process is not part of the profession and practice, they are ancillary to it and they are in fact the problem for that very reason.
I have heard on this forum recently that a former member of the state board stated that 80% of all problems were related to GSE appraising. There is a reason for that. I received an e-mail yesterday; I am sure all of you did too, from Henry Harrison’s wife inviting me to read Henry’s Q & A section and gave a link to it. If you want to know what is causing problems related to USPAP, methods and practices, go read those questions and answers. I think the first question was: “How do you adjust for specialty wiring in a house Henry? Henry: Matched pairs.” Listen to those questions and the mentality driving the questions Terrell and your question will be answered. Listen to the answers too.
Who is the profession: It is the people that know how to practice it one at the time and don't have to ask Henry.

 

[Fred]

I am sorry you feel so insulted to be named in the same sentence with your nemisis...

No need to apologize. I didn't feel insulted. Just making the point to someone else that I didn't hijack your thread.

My point was simple. Since I do not feel that there is any consensus upon what constitutes the concrete requirements that 1-1a alludes to but does not identify,

FWIW, I would tend to agree with criticism of the Comment to 1-1a, and think it should not be in the Standards.

this forum has a number of appraisers, none better known or more elequent upon the subject that Mssr. Santora, who eschew the use of the approach under the color of it failing its very mission - to determine market value.

I believe it is obviously an error to think that any approach has as a "mission" to find any one type of value. When insurers use the cost approach, they are not looking for market value.

that impeach the Cost Approach.

I suppose rhetorical excess makes a writer feel good, but I'll just keep responding by pointing out that just because screwdrivers and needle-nose pliers are suited to different taks, is not an "impeachment" of either tool.

I don't think USPAP answered it therefore, I don't think boards should take people to task over it.

I agree with you, but there is no stopping them from filling the void in the body of knowledge with their own biases. We have seen posts on this forum by board members threatening appraisers with enforcement of pet peeves called USPAP violations.

 

[Terrel L. Shields]

It is not up to the reviewer to decide which method or practice is appropriate,

there is no stopping them from filling the void in the body of knowledge with their own biases...

Too very good comments Mssrs. Austin & Santora...can I say that in one sentence?

 

[Couch Potato]

Good conclusion.

I have heard on this forum recently that a former member of the state board stated that 80% of all problems were related to GSE appraising. There is a reason for that. I received an e-mail yesterday; I am sure all of you did too, from Henry Harrison’s wife inviting me to read Henry’s Q & A section and gave a link to it. If you want to know what is causing problems related to USPAP, methods and practices, go read those questions and answers. I think the first question was: “How do you adjust for specialty wiring in a house Henry? Henry: Matched pairs.” Listen to those questions and the mentality driving the questions Terrell and your question will be answered. Listen to the answers too.
Who is the profession: It is the people that know how to practice it one at the time and don't have to ask Henry.

On the one hand I agree with your assessment of reading Henry’s Q & A, but on the other hand I don't think it is the cause of the "80%" you mention. I do not have the figures (and I am not going to compile them) but from my knowledge of the profession I would say it is likely 80% or more of the appraisal reports produced in this country are related to GSEs. A residential appraiser producing 8 reports a week is probably not working as hard as a general appraiser producing 2 reports a week. In terms of numbers of loans, GSE loans exceed commercial loans by a wide margin. Therefore, it is only natural that 80% of the problems would involve reports related to GSEs; there are just far more of them.

Having said that, I really like your bottom line of:
"The profession is the people who know how to practice appraisal one at a time, and don't have to ask Henry."

 

[Austin]

I am updating my list of regulations this morning that I keep in my copy of USPAP. Here is an interesting statement from OCC 12 CFR 34 Subpart C:



§ 34.41 Authority, purpose, and scope.
(a) Authority. This subpart is issued by the Office of the Comptroller of the Currency (the OCC) under 12 U.S.C. 93a and title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) (Pub. L. 101-73, 103 Stat. 183 (1989)), 12 U.S.C. 3331 et seq.
(b) Purpose and scope. (1) Title XI provides protection for federal financial and public policy interests in real estate-related transactions by requiring real estate appraisals used in connection with federally related transactions to be performed in writing, in accordance with uniform standards, by appraisers whose competency has been demonstrated and whose professional conduct will be subject to effective supervision. This subpart implements the requirements of title XI, and applies to all federally related transactions entered into by the OCC or by institutions regulated by the OCC (regulated institutions).


So much for certifications of value by independent appraisers. :Eyecrazy: