A Simple USPAP Question On An " Appraisal Report"

[Terrel L. Shields]

the data analyzed was MLS data, you can just reference the data that way,
ABC MLS #223236 XCY MLS #55445

I agree but....

disagree with Marion that reference to MLS is sufficient, but I could be wrong and she could be right.

...having seen a board suggest they want the MLS NUMBER on the report and a copy of the PRINTOUT, to be safe rather than sorry, I print it off.

My original Mentor was a MAI at a Savings and Loan and he would not allow us residential guys to make view adjustments

View should be incorporated into the site value thus you would be in danger of double dipping by separating the two.

Based on my experience doing similar properties in this neighborhood" might be the truth. But if the there isn't data to support that conclusion in the workfile, it could be questioned.

I understand that thought process and for residences I think you usually would have info, but sometimes some item clearly adds value. The problem relates to how to support it. Some appraisers apparently use the Sgt. Schultz method and ignore it. But generally a tangible item can at least be cost adjusted. Things like view or location? You may have two widely different indicators...say, a lake "view". One lot sells for a much different price from another, both unique but distant. Do you pick one or the other? Or, pick something blindly in-between? Do you pick as a fixed $ or as a percent? It is the appraisers choice, but some might argue it differently resulting in widely varying estimates.

 

[George Hatch]

..having seen a board suggest they want the MLS NUMBER on the report and a copy of the PRINTOUT, to be safe rather than sorry, I print it off

That isn't a minimum in USPAP. It's an extra the board has added; most likely on a Dean Wormer Double-Secret Probation basis that their licensees only find out about after the fact.

In other words, it's a USPAP-competency problem at the board level, which speaks to an issue that is completely separate from what USPAP does/doesn't require.

 

[hastalavista]

I understand that thought process and for residences I think you usually would have info, but sometimes some item clearly adds value. The problem relates to how to support it. Some appraisers apparently use the Sgt. Schultz method and ignore it. But generally a tangible item can at least be cost adjusted. Things like view or location? You may have two widely different indicators...say, a lake "view". One lot sells for a much different price from another, both unique but distant. Do you pick one or the other? Or, pick something blindly in-between? Do you pick as a fixed $ or as a percent? It is the appraisers choice, but some might argue it differently resulting in widely varying estimates.

I agree that there are a lot of additional methods to provide support beyond the paired-sale comparison. Sometimes they are the most valid methods.
And, as a reviewer for clients (not a state investigator), I can be persuaded by the logic/rationale of why an adjustment is warranted and why the adjusted amount is reasonable without hard-core data support/back-up (obviously, the more material the adjustment, the higher the expectation for data support and not just "take my word for it"). But I'd like to read that rationale/logic in the report.

Unfortunately, sometimes I read a report and there is no why/wherefore to support the adjustment. It is just stated. Maybe for some types of assignments and their intended use, detailed explanation and inclusion of the support for that adjustment isn't necessary.
Do I have to provide the same level of support for adjustments in a report that is destined to go to a homeowner who is thinking about selling her house vs. a lender who is making a loan? No; indeed, there is no requirement I make any adjustments in the former but a well-known expectation that I do provide a grid and adjustments, if necessary, in the later.
But for both assignments, I need to have the data in the workfile to support those adjustments.. made or unmade.


It sounds, based on what Elliot has posted so far, that what may be in play here is a zealous state investigator who is holding the appraiser to a standard higher than what the Record Keeping Rule actually requires.
If I were the appraiser subject to that, I would not go down without a fight.

 

[Terrel L. Shields]

it's a USPAP-competency problem at the board level, which speaks to an issue that is completely separate from what USPAP does/doesn't require.

Isn't that why appraisers need to know how their boards actually perform? How many appraisers have overturned board decisions? In the states I work it has been several, but is usually a pyrrhic victory because the appraiser is out a lot of money....and not so much an "oopsie" on the part of the board, who often grouch that the judge "got it wrong."

Fighting a complaint can kill your career and put you on the state radar for years. Surrendering to a minor complaint sounds like the easy way out but it stays with you the rest of your career. It impacts your E & O. We had a forumite from this state who was licensed but attending law school in Little Rock, working for his appraiser brother. Complaint dealt with the adjustment for a basement where no similar comp has a basement. Basements are uncommon there. To protect his ability to sit for the bar exam, he surrendered his license. The investigator was extremely aggressive and did not last long much to the relief of the board itself apparently. I ran into this ex appraiser when he worked as an intern in a large LR firm I worked for. He is happy to be out of appraising.

Complaints are serious, literally career killers as people can often simply not afford to fight the board. Lack of reasonable compensation only exacerbates the issue. But the irony is the number of board members who publicly stated how they changed the way they prepared reports after sitting a few hearings...boy, so the people sanctioning others have admitted they violated USPAP all those years before being on the board. Go figure.

 

[George Hatch]

It's not the additional requirement any particular board may have for its licensees that concern me. i don't care *what* their expectations are so long as they're known/knowable. It's the passive/aggressive "if you really loved me you'd know what I want without making me say it" approach that I think is unfair. It's unfair when a client or user does that, it's unfair when a reviewer does that, and its unfair when a state board does it. If your state board wants MLS numbers then they need to clearly convey that - in advance - to their licensees.

An expectation not expressed is only a wish.

 

[Digger88]

Denis, the opinion of a peer,

"An appraiser’s value opinion can be in the form of a range, a single number, or even as seemingly innocuous as providing some home sales that we think are “comparable.” The Uniform Standards of Professional Appraisal Practice (USPAP) says that appraiser work files must contain information about the client and users, copies of the appraisal reports, summaries of oral reports, signed certifications, and, “…all other data, information, and documentation necessary to support the appraiser’s opinions.” Here is a list of some items that are important for an appraiser to have in their work file:

1. A copy of the signed engagement letter.

2. Appraisal inspection notes and photos.

3. Documentation of correspondence with the client.

4. Support for highest and best use.

5. Comparable search results, including land sales.

6. Documentation of data verification or other correspondence.

7. Support for or lack of adjustments, including market conditions.

8. Cost estimate data.

9. Copies of public and other data accessed online.

10. A copy of the completed written appraisal report or summary of oral report and certifications.

An appraiser’s work file (electronic or paper) should have sufficient documents that a peer could review the appraisal report and work file, follow the appraiser’s steps, and reasonably come to the same value conclusions. Having a sound work file keeps appraisers out of trouble with regulators, helps to defend appraisers in court, and encourages a high level of public trust as a profession. Without a detailed professional work file, appraisers would merely be fortunetellers.

Above is exactly what the 2014 thru 2015 USPAP Ethics says about the appraiser’s work file in the Record Keeping Rule."

http://www.aqualityappraisal.com/Ten+Things+a+Real+Estate+Appraiser+Should+Have+in+Their+Work+File

ha lol. no ones work file contains all that and CERTAINLY not mine.

 

[Mr Rex]

If opinions of value could and were consistent to such a degree based on the available market data, there would be no need for human interaction, reasoning, and consideration. The OP is suggesting mechanical/mathematical use of the data without normal human consideration and opinion. Epic fail at the most rudimentary level.

 

[Elliott]

What level of support do you all think is appropriate for the Percent of Land Use, Price and Age fields on Page 1 of the 1004.

 

[Mr Rex]

At least 2 pages of narrative in the report per comp utilized and 10-20 pages of workfile pages per comp used. Each MLS page of all comps considered in the broad search ( before narrowing) should include MLS basic pages, all MLS photos, and every available internet response to an address query of the comparable's address including Zillow, Trulia, Red Fin, Realtor.com etc. There should be a full blown expansive search criteria exhibited to the wildest dream of potential comparable properties as that is obviously how the overall market searches for potential homes. I figger at least 1000 pages should cover all bases.

 

[jay trotta]

At least 2 pages of narrative in the report per comp utilized and 10-20 pages of workfile pages per comp used. Each MLS page of all comps considered in the broad search ( before narrowing) should include MLS basic pages, all MLS photos, and every available internet response to an address query of the comparable's address including Zillow, Trulia, Red Fin, Realtor.com etc. There should be a full blown expansive search criteria exhibited to the wildest dream of potential comparable properties as that is obviously how the overall market searches for potential homes. I figger at least 1000 pages should cover all bases.

Sometimes, just sometimes, the Bell Ringing that comes from your noodle is so loud I can't sleep at night...…..