AI Connect

[Terrel L. Shields]

Holy Cannoli I won the bid to appraise the local hotel that rents rooms by the week, where do I start?

An open bid system invites appraisers to bid on things they know nothing about. And I see it certainly in the RIMS customers I fired who were sending me offers to bid that were 50 miles away and might be from a strip mall to an undeveloped lakeside subdivision - two properties that I explicitly said I did not do in my RIMS profile. Further, I was limited to a single county apparently and RIMS offers and "upgrade" so you can buy into multiple counties.

If your business is not diverse in property types, zoning types, ownership interests and other issues, you should not be taking on trainees.

The inverse could and should be equally true. If I am training someone to be a mineral appraiser, I should concentrate upon teaching them about minerals. We need more specialists. That C Store appraiser may need a trainee too. But the trainee needs to understand that they are working directly for a CG license and that they are going to be a niche player. If they want to expand into residential work, then they need to mentor those experiences under someone else.

All 4 of the mentors that I had were CG. My first inspection was a chicken farm, and I tagged along on 3 of them in the first six weeks, I also did 4 plexes, SFR, and executive homes under the direction of those mentors. I had an excellent relationship with 3 of those mentors and I survived the other. I would think the well rounded trainee would not want all their eggs in one basket. They should train under multiple experts and get different perspectives about the way appraisers work.

 

[Big4Jim]

If a CPA firm can provide the value of all machinery and equipment and the residual is the value of the RE (according to our own theory) why pay for an appraisal. The state enforcement boards can try to go after the CPA firms but now you are talk big money and powerful lobbying groups. Again, if I have said anything please let me make this part clearest. This is not a problem of to many appraisers. It is a problem of other industries coming in to our industry and doing the work faster and cheaper because they are not accountable to USPAP.

Stephen - I hate to inform you that many of the "CPA firms" (if not all) are staffed by state licensed appraisers who hold designations from the AI, RICS, ASA and other real property appraisal organizations. The appraisers/accountants working for these "CPA firms" are following the same rules and regulations that the everyday appraisers adhere to. Further, the same "CPA firms" that you are referring to have specialized M&E appraisers who carry their own designations and professional qualifications. Most of the work that the "CPA firms" are doing is USPAP complaint.

No matter how appraisal work is distributed, will not change things (the fundamentals are the problem). You have large CPA firms providing corporate America with one number values for their real estate and charging 5 time more in fees (than appraisers). These numbers are of course rolled into financial reports that are eternal corporate documents that no one sees. You can not turn them in. They are taking giant chunks out of our markets. It is illegal for them to do this in almost every state in the US but has never been tested because the problem is out of sight and out of mind. On the other end you have BPO's, AVM's and others taking work under $250,000 (residential) and $1,000,000 (commercial). They have no problems providing it cheaper or faster. Their hands are not tied by USPAP like ours. You can not compete. It is not a level playing field. In IMHO they should have kept USPAP restricted to FRT. After that free game.

Some states dump their money taken in by licensing back into enforcement some do not. The ones doing the latter are loosing more and more ground due to fewer and fewer appraisers. TAF could give a zzz about the problems they have created at ground level. The only way that things will change is if appraisers start lobbying Congress making them aware of what has been created. TAF got pissed at AI for this. Which is bull because every American citizen has the right to lobby Congress especially it groups appointed by them are not listing and seeing facts. If we all got up and wrote to our Congressman/woman on the matter this would change and change quickly or they would throw TAF out on their ear. Report it, watch what is done about it, if nothing, than do not vote your congress person in again and tell them that.

Again, I think you are mislead and/or misinformed about financial reporting reports and appraisals. You want to believe that these is no oversight to the financial reporting valuations, but that couldn't be further from the truth. Every time I prepare and sign one of these appraisals, I am putting my multiple CG state licenses and MAI on the line - just like you. I am bound to USPAP and the state boards where I am licensed (as well as AICPA, PCAOB, SEC, and other professional and regulatory boards) - just like you. Further, all of the corporate America entities have auditors, who have their own real estate specialists review the valuations prior to their acceptance as audit evidence.

Corporate America doesn't just pay five times greater (five times is actually very light) for an appraisal performed by a "CPA firm" because they like the format. Often times, corporate America needs a valuation technically far beyond a standard market value appraisal performed for financing purposes. By the way, a few of the large appraisal shops, namely C&W and CBRE, have recently started to develop their own financial reporting specialties to compete with the "CPA firms".

 

[PL1957]

Again, I think you are mislead and/or misinformed about financial reporting reports and appraisals. You want to believe that these is no oversight to the financial reporting valuations, but that couldn't be further from the truth. Every time I prepare and sign one of these appraisals, I am putting my multiple CG state licenses and MAI on the line - just like you. I am bound to USPAP and the state boards where I am licensed (as well as AICPA, PCAOB, SEC, and other professional and regulatory boards) - just like you. Further, all of the corporate America entities have auditors, who have their own real estate specialists review the valuations prior to their acceptance as audit evidence.

IIRC, the PCAOB requirements are pretty onerous regarding support of assumptions, among other things. "It's my professional opinion" doesn't seem to work very well.

 

[Red Flint]

Stephen - I hate to inform you that many of the "CPA firms" (if not all) are staffed by state licensed appraisers who hold designations from the AI, RICS, ASA and other real property appraisal organizations. The appraisers/accountants working for these "CPA firms" are following the same rules and regulations that the everyday appraisers adhere to. Further, the same "CPA firms" that you are referring to have specialized M&E appraisers who carry their own designations and professional qualifications. Most of the work that the "CPA firms" are doing is USPAP complaint.

I fail to see a direct link between regulation loosening and appraiser business profit increase. If you look up USPAP on Wikipedia, you see it is cataloged as ‘Quality Control.’ How is taking away quality requirements going to improve the appraiser business capture?


If CPAs are really taking appraisal work, then why don’t you run into a CPA valuation more often, like when you are handed a prior valuation by another appraiser?


Be aware that a major interest of the Appraisal Institute is to maintain or increase member fees. If you take away requirements for appraisers to master, the entry bar is lowered, hence more appraisers to populate vacancies of existing fee payers. Is this in the long term interest for appraisers who have mastered these existing, and changing, requirements?

 

[Non Sequitur]

This amazing. Let me summarizes this. Every group has a complaint with current regulations. The appraisal organizations, state regulatory bodies and appraisers are seeing real problems. Some of the last three groups have, but not all, similar arguments. The one thing they do have in common is the vast majority are unsatisfied with (and they do not believe) AF and the boards it creates are helping matters. Further, they do not believe they are installing public trust. In fact most believe quite the opposite.

I've spoken to several people who were around in the early 90s and participated in the formation of the current regulatory system. Everyone, privately, acknowledges a monster was created. A few want to change, a few don't want to go through the process again. I'm happy that at least a debate is starting.

On the other end you have BPO's, AVM's and others taking work under $250,000 (residential) and $1,000,000 (commercial). They have no problems providing it cheaper or faster. Their hands are not tied by USPAP like ours. You can not compete. It is not a level playing field. In IMHO they should have kept USPAP restricted to FRT. After that free game.

Bolding mine. I've been preaching this for some time. The ASC was formed by FIRREA in 1989 to “provide that Federal financial and public policy interests in real estate transactions will be protected by requiring that real estate appraisals utilized in connection with federally related transactions are performed in writing, in accordance with uniform standards, by individuals whose competency has been demonstrated and whose professional conduct will be subject to effective supervision.” But this has morphed into covering just about every aspect of the profession through licensing and the never ending tweaking of qualifications and standards.

If I were King for a day I would order the ASC to form its own panel, similar to the VA or the old FHA to cover ONLY the transactions outlined in FIRREA. States would be allowed to revert back or keep what they have, either way they are free to do whatever they feel is the best way to regulate or not regulate appraisal activity without interference from the feds. The ASC would be free to set its own qualifications and standards, set a fee for registration to raise revenue, and administer the panel in whatever manner they feel fulfills the congressional intent of FIRREA. If an appraiser wants to accept assignments for federally related transactions there would be one national source for registration, qualifications and standards; no more drama.

Some states dump their money taken in by licensing back into enforcement some do not. The ones doing the latter are loosing more and more ground due to fewer and fewer appraisers. TAF could give a zzz about the problems they have created at ground level. The only way that things will change is if appraisers start lobbying Congress making them aware of what has been created. TAF got pissed at AI for this. Which is bull because every American citizen has the right to lobby Congress especially it groups appointed by them are not listing and seeing facts. If we all got up and wrote to our Congressman/woman on the matter this would change and change quickly or they would throw TAF out on their ear. Report it, watch what is done about it, if nothing, than do not vote your congress person in again and tell them that.

This is why I support the AI's current efforts in CA (and TX) and hope it spreads to other states. It's the beginning of taking back this profession.

Bottom line is TAF are very unresponsive to appraisers, Appraisal Organizations and Appraisal Enforcement. There were a number of people on these panels from each group. Tons of letters were written opposing changes to the 2015 changes, while there were minor concessions made they did not listen to what the majority of the industry was saying.

At this point they really don't have to listen, they hold all of the cards.

 

[Terrel L. Shields]

This amazing. Let me summarizes this. Every group has a complaint with current regulations. The appraisal organizations, state regulatory bodies and appraisers are seeing real problems. Some of the last three groups have, but not all, similar arguments. The one thing they do have in common is the vast majority are unsatisfied with (and they do not believe) AF and the boards it creates are helping matters. Further, they do not believe they are installing public trust. In fact most believe quite the opposite.Bottom line is TAF are very unresponsive to appraisers, Appraisal Organizations and Appraisal Enforcement. There were a number of people on these panels from each group. Tons of letters were written opposing changes to the 2015 changes, while there were minor concessions made they did not listen to what the majority of the industry was saying.

On the old NAIFA site, I challenged one of those people who helped formulate it to tell me why the rules were not only convoluted but were self-contradictive. He absolutely went ballistic and said he would turn me into the state. I told him to go ahead and he even left a slobbering hate filled message on my message machine. I think I still have a copy of it as those were the days when those machines had tape. His name was Jim T**** up in Washington state. I wonder what Jimbo thinks now.

 

[Eli]

Please understand that the main players, which are regulators, appraisers, AMC's, lenders, and appraisal organizations, and specific individuals within each category, have different self interests. Trust me that not all of them have the PUBLIC'S best interest at heart. That my friends is the main reason for more regulation. Ya'll can cry me a river, but more is coming for the very main reason I stated.

 

[Meandering]

Follow the money.

 

[Non Sequitur]

On the old NAIFA site, I challenged one of those people who helped formulate it to tell me why the rules were not only convoluted but were self-contradictive. He absolutely went ballistic and said he would turn me into the state. I told him to go ahead and he even left a slobbering hate filled message on my message machine. I think I still have a copy of it as those were the days when those machines had tape. His name was Jim T**** up in Washington state. I wonder what Jimbo thinks now.

Not sure what Jimbo thinks, but a few people I know acknowledge what we have now is a mess, that was never their intention. A lot of good people worked on licensing, I hope some of those same good people step up and help the profession reverse course.

 

[Terrel L. Shields]

A lot of good people worked on licensing, I hope some of those same good people step up and help the profession reverse course.

I would prefer some better informed folks step instead, as the original drafters of USPAP language made some serious errors based, almost certainly, upon their own perception that licensing would create that nebulous "public trust"; improve the profession; and, put us on a monetary glide path to riches....That last sentiment was frequently touted based upon us having not only a more important role in finance, but upon the premise that by weeding out the weak sisters among us, we would create a sort of artificial shortage. That did not work out did it? And egos being egos, I cannot imagine those old heads wanting to make major modification because it implies they screwed up to begin with.