CGA vs CRA who should have done the report?

[Robert Dunkle]

I was engaged to appraise a 171 acre tract of land that had a 1,600 sf house one it. The tract is zoned AG Agricultural and is located just outside a small rural town. Approximately half of the property is in a FEMA "Special Flood Hazard Area", about 15 acres of, mostly, flood land is, currently. "land-locked" by a railroad track, and there are two high pressure gas lines running across the entire tract.

The tract is in an estate and one of the heirs engaged me, a CGA, to appraise it. One of the other heirs engaged a CRA who completed a 1004 form and two of their "comps' were houses on 20 acres with a $302,000 adjustment for site size with no explanation or comparables to show how they got to that adjustment figure. He even shows the tract to be in FLood Zone X (high and dry), no mention of the gas lines or the "landlocked" portion. Actually, no analysis or description of the property, except as required to fill out the 1004. Don't jump on this, I know it should have been a GP.

My report was a narrative that discussed the positives and the negatives and how one might get the "land-locked" tract, "unlocked". I analyzed three sales of similar sized houses to arrive at a contributory value for the improvements, then analyzed a number of large vacant and a one large "improved" property. The CRA charged $450 and I charged a "few" dollars more than that.

Anyway, the heir that engaged the CRA has, also, engaged an attorney and is threatening to go to court. Oh, by the way, his valuation was $110,000 above mine.

To all you USPAP gurus, my belief is that a tract of agricultural land that large and that complex, over $250,000 in value would require a CGA. Am I wrong?

I know that a $302,000 adjustment with no supporting evidence is wrong. I know that it is not zone X (not all of it). I, also, know that there is no "public sanitary sewer" as he checked on the form.

My main question is CRA OK, or CGA required?

 

[Tom Woolford]

As a Cert Res, there is no way I would get near that one. I hope you got a huge fee....

 

[Randolph Kinney]

If the HBU is agricultural and not residential, plus the complexity, then it should be appraised by certified general.

 

[Noreen]

This is a very timely post. If the other appraiser was not "competent" to appraise that property, they had no business accepting and doing the assignment. Case in point, there is a guy up here that just lost his license for appraising a residential property ( in a residential area) that had an active, income generating kennel on site. He did the appraisal with no reference or valuation for the "value in use" of the kennel or the income generation from it. The state found that he accepted an assignment that was beyond his level of licensure due to the "value in use" of the kennel. It looks like ( your "other guy) ""technically" he had the license but based on the errors you sited, I think my question would be, was this person "competent" to value a parcel with that complexity? You should know, I am never afraid to tell people it is in their best interest to get a CG to do an appraisal when there is a "mixed use" or other qualifying factor to bring it beyond what is reasonable for a CR to do thoroughly and competently.

 

[Michigan CG]

The CRA is an idiot to do that report but he most likely did not know about someone else hiring you. Sounds like the CRA does not know what he does not know.

The heir that engaged the CRA should be informed that the appraiser they hired is working outside of their license level and most likely will not go to court against a CG. I doubt the CR put much time into the analysis and would have a hard time sitting on the stand answering questions as to how he arrived at those "adjustments".

License level can be an intimidation factor. He would be smart to walk away.

 

[J Grant]

A question, are the license levels mandatory when it comes to completing private work ? Or just lender FIRREA work?

Sounds to me that this property was beyond the CRA expertise, based on the results of report and comps, but since it was a private party engagement, was he prohibited from doing it?

 

[CANative]

I've comfortably appraised residential property at that size and much larger. One was 180 acres and had 3 houses, 3 different sources of alternative power and was designated as a timber preserve.

two of their "comps' were houses on 20 acres

What were the other comps?

If the tract can't be subdivided into more than 4 lots then it's still in CR territory. It's complex but CRs can do complex.

 

[form1025]

Invoke the Peter Principal
Everyone rises to their own level of incompetence

 

[CANative]

It's really annoying that some people equate complexity with licensing level. Everytime someone describes a complex property the mantra "get a CG" sounds.

 

[The Warrior Monk]

A question, are the license levels mandatory when it comes to completing private work ? Or just lender FIRREA work?

Sounds to me that this property was beyond the CRA expertise, based on the results of report and comps, but since it was a private party engagement, was he prohibited from doing it?

I depends on state license law. For example, in NY an unlicensed appraiser could appraise the property. Once the appraiser holds a license, the appraiser is subject to license law, and must work within the scope of their license (or their supervisors license). CRs have disciplined in NY for doing appraisal work falling under the scope of practice of a CG.

Other states take the minimalist approach and allow licensed appraiser to do this type of work for non-FRTs. In any situation involving litigation, the CR is going to have an uphill battle trying to prove credibility. I speak from experience, since I have testified in commercial cases with only a CR credential (even though I was supervised by a CG).