Appraisal Consulting, Discouraged By USPAP?

[Ramon Tate]

I'm enjoying the debate here because it is highlighting WHY the instructor told me "more trouble than it's worth". Since my work of the past two decades has been in appraisal and appraisal review, not consulting, I made a fundamental mistake of interchanging words without taking into account the finely-honed distinctions applied to those words by the ASB in USPAP.

RECOMMENDATION (and all its variants) vs. ADVOCACY (and all its forms). The dictionary definition of the root word "recommend" includes "to advise, as an action, practice, measure, or remedy, to set forward as advisable." The dictionary definition of "Advocacy" includes "The act of advocating, a pleading for, espousal,..". When I used the word "ADVOCACY", as it pertained to consulting, I carelessly thought of it along the same line as "recommending" or as in "advocating a course of action or remedy". Obviously, as it pertains to consulting, there is little or no interchangability of those terms in USPAP. Sorry, My mistake.

George,
Your points on the text from the ethics rule are well taken. But, I now see quite a conundrum. Your quotation from the ETHICS section

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

that part about "or issue" really leaves my head spinning on the whole consulting thing. I understand its meaning in the context of appraisal and appraisal review, but in consulting? Isn't the recommendation that is produced through a consulting assignment an act of "ADVOCATING" something, be it action or inaction, in regards to a specific "issue(s)"?

IMHO, the variety of comments in this thread indicate the true problem with consulting. USPAP's language on consulting can be and is interpeted in a variety of ways and it can be supremely frustrating trying to determine what razor thin distinctions have to be made in performing a consulting assignment. To produce a report product, each and every phrase of that document would have to undergo a grammatical analysis of surgical precision. And yet, it could all be for naught if those sitting on your State Appraisal Board have a different interpretation for even one part of your work or the wording in your report. Based on what I've gathered so far, every consulting assignment is at risk to the whims of interpretation of whoever is sitting in the USPAP enforcement chair. When the laws (and USPAP is law in my State) get to the point that honorable people aren't sure how to comply with it, then that law needs to be scrapped (at least the consulting portion anyway). In the public interest, clients need plain speaking that makes sense, not the indecipherable.

 

[Ramon Tate]

Originally posted by George Hatch@Apr 11 2005, 12:38 PM
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......

The client needs consultation because they don't know anything about the eminent domain process, how it works, what they're legally entitled to be paid for, whether or not the offer they receive is typical horse-trading or based on something more, whether or not permitted pertinent issues are taken into account, and conversely what issues are not permitted to be considered, etc. That requires placing ALL the elements of that situation into the same basket. There's no practical way to render service to the client, answer his questions, and make recommendations to him without having everything on the table. Consulting for an unknowedgeable landowner is necessarily a dynamic process in which an appropriate recommendation on one issue is inextricably tied to what exists for one or many other issues. The owner simply wants to know if he's being treated fairly or equitably given his specific situation.

George, how would you handle this?

 

[JSmith43]

You need to disentangle. Standard are standards. The major standards officially became part of practice in 1929 when Henry Babcock wrote them down for the Realtors, before they were called Realtors, and before the appraisers formed their own “institute” within the Realtors. And more, he copied from the RICS code of 1834. So, you don’t like system. Fine.

Ok, I used the term "USPAP System", and you top it with a metaphor of Moses coming down from the mountain. I guess standards are standards. That darned Koran

I never thought an IFAS would kiss up to "the" institute on a public forum Besides I thought them that have the gold makes the rules? Alternately, "them" boards and courts backed by the force of current interpretation of current law on the books seems to work as well.

When the laws (and USPAP is law in my State) get to the point that honorable people aren't sure how to comply with it, then that law needs to be scrapped. In the public interest, clients need plain speaking that makes sense, not the indecipherable.

Demonstrated beyond a doubt daily on this forum

 

[George Hatch]

Steven could probably answer your question better than I can. I'm simply not familiar enough with the eminent domain process to give advice on how to draw the line between consulting and review.

However, it does seem to me that merely providing a recommendation to a condemnee to seek further clarification on an issue or to identify additional elements that are applicable to the situation such as the effects of laws or public policy on the matter is not the same thing as rendering an opinion on the quality of an appraisal. As long as you are limiting your recommendations to the property and not the original appraisal you are not engaged in review as such.

It seems to me that a problem that many people would point to, and which I cannot say is unfounded, is that the appraisal board that regulates your license is part of the same state government whose interests you're 'working against'. The potential for a conflict of interest is there; the actual risk depends on what steps, if any, are taken by your board to ensure their neutrality. Regardless of what may technically be reasonable, in the end the enforcement policies of the state board who has jurisdiction is the effective standard you need to be concerned with.

In fact, in the case of Hildebrandt vs. the NCAB, that all came about as a result because Tom prevailed in an eminent domain case over appraisers who were politically connected to the NCAB, and his case was investigated by people whose prior experience was with the state (DOT, if I remember correctly), the same department as the complainant. So it can effectively happen on this state level, regardless of what is "right" in the abstract on a national level.

It seems to me that you should be able to build a scope of work that includes the appraisal consulting component in addition to a review component that has some limitations with respect to commenting only on portions of the original process. One that does not involve expressing your own opinion of value - which would be prohibited in a consulting assignment in any case. In other words, rather than reviewing everything (as in, one-size-fits-all), you're only reviewing those areas where you have recommendations. That would be a USPAP solution, although it doesn't look like that is going to mesh well with what you're trying to do.

From your description I get the impression that what you really want to do is to be allowed to provide your own opinions of value as well as a review of portions of the original appraisal as well as your recommendations in a consulting capacity, and to do so at an economical and expedient manner without having to worry about the state coming after you for it. All things considered and from a USPAP perspective, I would agree with your instructor that this is not feasible. You probably would have an easier time of it by eschewing the state's appraisal license and marketing yourself as something other than an appraiser. You can still be ethical and competent and yet not claim USPAP compliance or appraiser status as that standard.

I wouldn't do it, but then again I don't do eminent domain.

 

[Ramon Tate]

Originally posted by George Hatch@Apr 12 2005, 12:09 PM
From your description I get the impression that what you really want to do is to be allowed to provide your own opinions of value as well as a review of portions of the original appraisal as well as your recommendations in a consulting capacity, and to do so at an economical and expedient manner without having to worry about the state coming after you for it. I wouldn't do it, but then again I don't do eminent domain.....

No George, your impression is WRONG. If I thought another opinion of value was needed, I'd advise my client accordingly, i.e. hire an appraiser. I'm not sure where or how you read that into my comments, that I want to "be allowed to provide my own opinions of value" unless you considered my comment on noticing that there was no "cost-to-cure damages for fencing" to be rendering a value opinion. If that's a value opinion, we're all in big trouble. Appraisals for the State are like any other. Mistakes can be made, paperwork troubles, etc. Saying that a "component" of legally permitted compensation was not included IS NOT the same as rendering my own appraisal valuation. The fact that there were no "cost-to-cure damages for fencing" does not mean the landowner was guaranteed to get it, or if he did how much it would be. The REAL PROBLEM here is how reporting the possible omission to a client might be open to being construed to be a value opinion even though I stated no figure and my reporting a possible omission of compensation might be construed to constitute a REVIEW even though the appraiser may have had a reason that there was no "cost-to-cure damages for fencing" that I'm not aware of or privy to. It seems like there's more of a desire to find hooks to hange people from than provide practical solutions to very real needs for consulting services.

No, this is not about wrapping my own appraised market value opinions in the service I'm talking about. That would be unquestionably unethical. But if something is not included, and all I do is notice that a required consideration is not mentioned, is THAT a market value appraisal or market value appraisal review? I think it's patently absurd to say that it is. But, if the current USPAP can be construed to say that very thing, then God help us all. I'm just saying that a layman client should be able to get plain-spoken information before deciding whether or not they need to spend many thousands of dollars on attorneys, appraisers, and other experts. If the layman client can bring these issues up with the condemning authority because I made him aware of them, am I performing a market value appraisal? a market value appraisal review? NO and NO!!!

Now if I were to talk about their per-acre values being too low or that the fence should be compensated at $4.00 per foot....Then yes, THAT would be appraising. Right now the USPAP net is either not sufficiently defined or inadequately addressed to certain types of consulting, to promote rendering such ethical services without fear.

 

[George Hatch]

My apologies - I'm probably reading too much into your descriptions.

Seeing as how the state appraisal board is going to have the final say, why not solicit their input before you get involved with it. That way if they have some funky point of view you can work on them until they can refine it down to a sustainable policy. Once you figure out where lie your effective boundaries, it'll be a lot easier to build a plan that will keep you in them.

Especially if you can get them to commit to a policy - any policy - in writing. Heck, that will be helpful for everyone on both sides of these cases.