Appraisal Consulting, Discouraged By USPAP?

[Walter Kirk]

I think that you are over complicating the problem. If your consulting assignment is basic such as " what is your opinion of the other side's appraisal report" or " find something wrong with this report" you should have no USPAP problems. If you are going to get deeper than that into a case you will want to perform an appraisal of your own anyway.

Remember that in any court procedure the judge and the rules of evidence are far more important than USPAP. This is not to say that USPAP isn't important in court cases. Most of the problems that I discover with appraisal reports used in court cases are USPAP related and some judges are very interested when one side provides evidence (an appraisal report) which does not meet mandated standards.

 

[Ramon Tate]

Originally posted by John Papa@Apr 10 2005, 06:22 PM
Please let me know if I'm wrong, but couldn't you just let your Appraiser license expire before becoming a consultant. At that point, would you or would you not be bound by USPAP? If not, then you're good to go.

Yes, in fact I had already thought of that. But, that would mean committing professional suicide and limiting my options on the type services that I could provide for other areas.

 

[JSmith43]

Yes, in fact I had already thought of that. But, that would mean committing professional suicide and limiting my options on the type services that I could provide for other areas.

There might be some "once an appraiser always an appraiser" case law to consider. Don't really know, just a guess. So that plan might not have a full set of wings.

But if it did have wings, teaming up with a CG for the other stuff might work. In WI licensing isn't required by the state & transactions with a less than $250,000 value are done every day by non-licensed appraisers, typically signed off by certified appraisers so that they can be OK with Fannie & Freddie.

As Terrel mendioned, AK has an option Know anything about poultry farms?

My brother in law has access to this site, but my sister had to sign him up (at my request) since he apparently has little tolerance for computers and the internet. The two of you should swap contact information. I'll chat with him first. He's darned interesting, but has a bit of a hard time hearing. I think the two of you would get along well & benefit from war story exchange in general

 

[Fred]

how muddy USPAP is on consulting

Muddy or silent?
I see six redundant development standards and six redundant reporting standards (that all say the same thing) and none of the address “consulting.” I think it likely that what anyone calls “consulting” is more correctly called something else, and if you use an arguably wrong label, then that is what you may well end up arguing.

I always enjoy catching my opponent playing cute word games. Like the one mentioned where the client gives you their report, you read it and communicate that something is missing while trying not to state it directly as a conclusion to avoid calling a a review a review

 

[JSmith43]

Muddy or silent?

I always enjoy catching my opponent playing cute word games. Like the one mentioned where the client gives you their report, you read it and communicate that something is missing while trying not to state it directly as a conclusion to avoid calling a a review a review

A shark is silent.

It looks like unlicensed experts will be filling the niche where a blend of appraisal skills and advocacy skills are most useful.

 

[Steve Owen]

Excuse me if this seems a little slow, Ramon. I tend to agree with the previous posters, but...

Wouldn't it be easier if you just did a review and then added fee for that to your fee as a consultant?

Am I missing something here? I understand that the question involved wanting to do a consulting assignment without a review, but wouldn't it be simpler to just do a review?

I don't know a lot about eminent domain work, so maybe I didn't really get it.

It is an interesting question, but it seems to me like the best solution is to wrap a review into the assignment.

 

[Ramon Tate]

Originally posted by Steve Owen@Apr 11 2005, 07:48 AM
....Wouldn't it be easier if you just did a review and then added fee for that to your fee as a consultant?

Am I missing something here? I understand that the question involved wanting to do a consulting assignment without a review, but wouldn't it be simpler to just do a review?....

It is an interesting question, but it seems to me like the best solution is to wrap a review into the assignment.

There are multiple problems with what you propose. First, is the issue of the client's needs.

-Why should a client have to pay for full blown SR3 review, (and all that entails) when all he wants to know is whether or not all legally compensable issues were addressed?

-At the purely consulting stage of this assignment, do I even need to have an opinion on the quality of the appraiser's data, conclusions, support for comps., etc.? Answer: NO! Those judgements might be a consideration AFTER assessing whether or not all legally compensable issues were addressed.

-If the appraiser's before and after valuation process ADDS damages to the final computed figure, (a specifically prohibited action here), I don't need to know what the damage figure is, how he calculated it, or whether or not his opinion is well-based. The structure of how he placed that figure in the appraisal is the problem, not the opinion that there is or isn't damage.

-Eminent Domain issues are governed by the same set of requirements within a State's boundaries. There is case and statute law regarding the framework of how an appraisal for just compensation must be addressed that does not touch on the appraiser's individual value opinions. There are also Federal requirements via the Uniform Act and the UASFLA regarding the structure of the process in reaching "just compensation" that have little or nothing to do with market value appraisal. Why should I have to address support for a value opinion via an SR3 review if my focus is the required structure of the valuation or just compensation offer? I can asssess whether or not a required issue is addressed/considered without rendering any opinion on whether or not the appraiser's opinion is good/bad quality, right/wrong. In other words, if there's a requirement to address a specific issue, (like project influence), and that issue IS NOT addressed then I don't need to have an appraisal opinion. If it's not there IT"S NOT THERE!

-ADVOCACY!!!! As a consultant, I can be an advocate for my client. As a reviewer, I can't. USPAP specifically bars advocacy in the review function. Please let me know how I can act as a ADVOCATE for my client after performing a REVIEW without tripping over the conflict of interest issues and landing in boiling caldren of USPAP.

 

[Fred]

Ramon,
That got complicated.

Why should a client have to pay for full blown SR3 review, (and all that entails) when all he wants to know is whether or not all legally compensable issues were addressed?

I thnk SR-3 includes full-blown and slightly-blown reviews and everything in between. As the following portions of your post point out, checking the conpensation issues "entails" a lot more than what USPAP says about review..

Maybe USPAP has a funny way of saying that line between types of work is not always clear ("not mutually exclusive") and that one assignment can include more than one type of work. And maybe it is a little tough to grasp the idea that the value of the before is an appraisal, the value of the after is an appraisal, BUT those few lines of the report where you subtract one from the other to arrive at a recommendation of compensation - that becomes a recommendation "where an opinion of value is a component." (and that is the defintion of appraisal-consulting). So. you end up with four lines of consulting ina 40-page appraisal report.

The standards say to develop what is necessary - so if it's necessary for the client to know something for a legitimate busines decision - you're on the right track.

This is what you need to avoid

I can asssess whether or not a required issue is addressed/considered without rendering any opinion on whether or not the appraiser's opinion is good/bad quality, right/wrong. In other words, if there's a requirement to address a specific issue, (like project influence), and that issue IS NOT addressed then I don't need to have an appraisal opinion.

If you tell me the appraiser failed to consider project influence, then of course that's "bad" regardless of who gains by the mistake.

I think the problem is USPAP updates are geared toward residential mortgage appraising: Lender A and Lender B. (Where's the snooze button?) It's like lititation support, emnent domain and complex assignments don't exist.

 

[Elliott]

Is consultation worth it?

I don't think it is. What people want is a value,
and a value needs an appraisal.

AI has pushed restricted reporting for years (probably
they were getting old, and they wanted to give
opinions off the top of their head).

If you want to do what you know how to do, and
want to minimize your liability, prepare a standard,
supportable report. IMHO.

elliott

 

[George Hatch]

Okay, you were previously talking only about providing recommendations with respect to the property; now you're talking about making comments on the original appraisal - that's going to lead you straight back to Appraisal and Appraisal Review. I feel it necessary to point one more difficulty in your argument:

-ADVOCACY!!!! As a consultant, I can be an advocate for my client. As a reviewer, I can't.

That's partially incorrect. USPAP prohibits advocacy in appraisals, appraisal reviews, and appraisal consulting:

Conduct (ETHICS RULE)
An appraiser must perform assignments ethically and competently, in accordance with USPAP and any supplemental standards agreed to by the appraiser in accepting the assignment. An appraiser must not engage in criminal conduct. An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests.

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

Comment: An appraiser may be an advocate only in support of his or her assignment results. Advocacy in any other form in appraisal practice is a violation of the ETHICS RULE.

Appraisal Consulting falls under the definition of appraisal practice. Just to show this is not some kind of typo, SR4 starts out with a similar comment:

STANDARD 4: REAL PROPERTY APPRAISAL CONSULTING, DEVELOPMENT

In developing a real property appraisal consulting assignment, an appraiser must identify the problem to be solved and the scope of work necessary to solve the problem, and correctly complete the research and analysis necessary to produce credible results.


Comment: Real property appraisal consulting assignments encompass a wide variety of problems to be solved. However, the purpose of an assignment under this STANDARD is always to develop, without advocacy, an analysis, recommendation, or opinion where at least one opinion of value is a component of the analysis leading to the assignment results.

In some assignments, the opinion of value may originate from a source other than the consulting appraiser. In other assignments, the consulting appraiser may have to develop the opinion of value as a step in the analyses leading to the assignment results.

An opinion of value or an opinion as to the quality of another appraiser’s work cannot be the purpose of an appraisal consulting assignment. Developing an assignment for those purposes is an appraisal or an appraisal review assignment, respectively. Misrepresenting the purpose of an assignment performed under this STANDARD is a violation of the ETHICS RULE .

The ETHICS and COMPETENCY RULES apply to the appraiser performing an appraisal consulting assignment. Appraisers practicing under this STANDARD must perform the assignment with impartiality, objectivity, independence, and without accommodation of personal interests.

I would say one alternative for your situation may be to set yourself up as an eminent domain expert dealing with the subject in its entirety rather than as a narrowly focused appraiser commenting on other people's appraisal reports. It looks like it would be difficult to do it that way, and I probably wouldn't attempt it, but there may be something in there for your situation. The one thing that's certain is that client advocacy and appraisal practice don't mix.