Evaluations

[Dale Floyd]

An Appraiser that signs an Evalution acting as an Appraiser completed an appraisal, I think.

An Appraiser acting as an Evaluator should not sign the report with their appraisal credentials.

The word appraisal should appear at least three times, in my opinion.

For example,

This form is designed to be used to make a Real Estate Evaluation Report as defined by the Federal Reserve Board and other federal agencies for transactions which do not require a real estate appraisal.

This is not an appraisal performed in accordance with the Uniform Standards of Professional Appraisal Practice

In Tennessee, appraisers can perform evaluations without complying with USPAP by law. Trying to sign as something other, conflicts with the law allowing us to do them in the first place.

The TN Real Estate Appraiser Commission says our license can be put in our reports reflecting that we are indeed appraisers as well.

 

[glenn walker]

The Certification what it says controls the USPAP issue. The ones I've seen are not Certifying it as an appraisal. But I don't know why Tennessee want's an appraisal license attached. Seems misleading to the public. Would I attach a brokers license and a lawyer's licence too if I held multiple licenses? Lmao

 

[Dale Floyd]

I meant to say license number.

My point - If we are allowed to do them legally, there is no reason to hide what we are when we complete them.

 

[glenn walker]

I meant to say license number.

My point - If we are allowed to do them legally, there is no reason to hide what we are when we complete them.

I think i would run that by your E & O provider because it could change things in the rare case where someone said they believed it was an appraisal and was even signed by Lic# X.

I don't know but our attorney a family member always told us to only use the licence for what your licensed to do or practice otherwise you are declaring a level of expertise that may be misleading because the average user doesn't know tye difference between a evaluation and an appraisal.

knew appraisers that got in trouble by completing BPOs and not being Licensed Brokers but the AMC ordering them said they could sign and use their appraisal license. I was Broker so I signed as broker not as appraiser.

I'm not saying your wrong but I would want some clarifications on what happens if someone claims I completed
a poor Evaluation and your license is attached and signed as appraiser Lic X

 

[Dale Floyd]

I appreciate what you are saying, but don’t overthink all of this.

No further clarification needed, as we already have a letter from the attorney general. We already have rules and procedures stating all this from our Real Estate Appraiser Commission. E&O doesn’t apply, because these are not appraisals, and appraisers are legally allowed to do them which is stated clearly in our laws. The TN Department of Financial Institutions already define evaluations as being different from appraisals. Regulators from the OCC do as well for our financial institutions sporting a federal charter. This has been in place since 1991, without any problems. Perhaps all others should take lessons from Tennessee.

Our licenses are not attached, because that’s irrelevant. But doing so wouldn’t matter because whether the signer is an appraiser or not doesn’t matter either, (although we and other real estate professionals are the most qualified to do them). Appraisers are not locked into a procedural jail cell in Tennessee dictating that the only pieces of paper we are ever allowed to sign are USPAP compliant. That’s just silly.

If somebody wanted to bring a lawsuit, what would the charges be? The numbers shown are not to be relied upon as appraisals. The document is not an appraisal. Appraisers can’t be held liable for doing them as they can for a true appraisal. Can they be used by a court from document discovery? Of course, but so can tax assessments, insurance quotes, listings, and (wait for it), Donald Trump’s loan applications expressing a value opinion.

 

[Terrel L. Shields]

Perhaps all others should take lessons from Tennessee.

In Arkansas, you have to drop your appraisal license to do evaluations without conforming to USPAP. I know several people who did that. One does commercial evaluations for $500 each.

For banks, the issue can be that if you are holding collateral with evaluations and the bank gets in a tight spot, the examiners can require you to revalue all property with a bona fide appraisal. I and my assistant kept busy in 2008-10 revaluing existing loans for 2 banks on the FDIC's naughty list. I had some commercial property valued at $100,000 by the in-house evaluator that I appraised for less than $30,000. I saw banks talk someone into taking over a failing poultry farm at 100% LTV only to see farm values fall and the bank have to repo them even though the borrowers had never missed a payment. It was a bloodbath for both banks. One bank was literally at the point of failure when another bank bought them and the other had an associated separately chartered bank in Oklahoma which raised investor money and merged the two banks. The board of directors of the bank in trouble were forced to resign and banned from banking for life. Another loan officer was banned for life and fined $5000 for making a loan that he was forced to make by the board. The property involved was a huge poultry egg complex of some 10 barns. The guy was failing largely due to back injury but they extended a loan beyond the value of the properties so he could process eggs as well as run the layer operation. This worked for a while until the egg prices dropped, and he folded up. He lost his farms, and they sold for about 15 cents on the dollar. A couple of the farms never returned to production and serve only as hay barns.

 

[Dale Floyd]

In Arkansas, you have to drop your appraisal license to do evaluations without conforming to USPAP. I know several people who did that. One does commercial evaluations for $500 each.

For banks, the issue can be that if you are holding collateral with evaluations and the bank gets in a tight spot, the examiners can require you to revalue all property with a bona fide appraisal. I and my assistant kept busy in 2008-10 revaluing existing loans for 2 banks on the FDIC's naughty list. I had some commercial property valued at $100,000 by the in-house evaluator that I appraised for less than $30,000. I saw banks talk someone into taking over a failing poultry farm at 100% LTV only to see farm values fall and the bank have to repo them even though the borrowers had never missed a payment. It was a bloodbath for both banks. One bank was literally at the point of failure when another bank bought them and the other had an associated separately chartered bank in Oklahoma which raised investor money and merged the two banks. The board of directors of the bank in trouble were forced to resign and banned from banking for life. Another loan officer was banned for life and fined $5000 for making a loan that he was forced to make by the board. The property involved was a huge poultry egg complex of some 10 barns. The guy was failing largely due to back injury but they extended a loan beyond the value of the properties so he could process eggs as well as run the layer operation. This worked for a while until the egg prices dropped, and he folded up. He lost his farms, and they sold for about 15 cents on the dollar. A couple of the farms never returned to production and serve only as hay barns.

Wow, that's just crazy... You and I probably could tell lots of these stories we've witnessed over the years. Where there is greed or power, there is the potential of real abuse. That's true whether we are talking about banking, appraisals, or politics. And I think you and I agree on most perspectives involving all three.

Evaluations were initially intended to be used as an "Abundance of Caution" situation when something was needed for the audit file without concern about value or security. (Like a $200,000 line of credit secured by a 1st lien on a property purchased for $800,000 three years ago.) I know many banks, especially the smaller ones, who use them for every inhouse mortgage they have on file. And there are certainly misbehaviors out there, probably that would make the S&L crisis blush a little. We've also been hired to reinvent whatever wheel banks used to justify their mortgage decisions of the past. Audits uncover some of that, but not much. There are a number of risks that most could not comprehend unless they've been on the other side of the wall.

In my view, most mortgages need a full appraisal by a qualified and licensed appraiser. I would say the same for inventory loans and personal property appraisals too, but you find very little of that being done on the lending side either. Evaluations by a non-biased real estate professional are okay too in rare cases when only audit information is needed (my perspective). In our market, we have to survive as a company, and sometimes we are asked to do evaluations. Ours are more in-depth, than some appraisals. We are very cautious no matter what - Reputation is everything.

 

[J Grant]

What is the typical fee for an evaluation of a noncomplex residential property? $50? $100?

Anybody care to post a sample of what the evaluation form looks like ? I have never been asked to do one, and do not know any appraisers who have done one. If a bank or lender can hire an "analyst" to churn them out on staff, why would they hire an appraiser to do them on a fee, and why would an appraiser choose to do one ?

I assume, like all these short-form churn products, the fees are low, at which point it makes sense to drop the appraisal license, if one pursues that path.

 

[Zoe]

Evaluations are great for appraisers who do them and are allowed by their state. Evaluations are NOT appraisals and carry no liability to the appraiser in Tennessee. Back in the days when I was young and beautiful at the bank, we called them Collateral Reviews and were only useful when a full appraisal was either overkill or unnecessary.

They've always been around in one shape or another, although not called the same things. Tennessee did a pretty good job nailing that board down when the licensing laws first came to be.

That was mainly done for licensed appraisers that were also licensed real estate agents.

 

[Zoe]

As far as I know, Realtors (or anybody ) can offer a value opinion or a value estimate - they just can't represent themselves as a licensed appraiser if they are not - or call it a certified appraisal.

I have never seen an evaluation - what is the statement at the end , how is the $ amount phrased, (as a price or as a value- an opinion or an estimate? ) and does the analyst sign it ?

On a BPO it is a price opinion. It is not a market value opinion.

I can remember back around the last crisis going to a FNMA meeting in Nashville on how their reos were doing and comparing real estate agents to real estate appraisers on their reos. Real estate agents doing reos for fannie went one day and appraisers went the next day. FNMA made it very clear that appraisers were doing better on valuation than bpos from real estate agents. They told both groups the same message.

Some people who were both licensed real estate agents doing bpos and licensed real estate appraisers doing appraisals went both days.