Confidentiality

[Terrel L. Shields]

What able using a previous report as a rent comp?

Unless the owner explicitly asks you not to use this information AND it is not otherwise available elsewhere, you don't disclose, but otherwise are not in violation of Gramm, Leach, Bliley Privacy Act. GLB applies to us as we are considered to be "fiduciary" agents. But say an MLS listing exists for the property. That listing is also posted in Realtor.com, Zillow, etc. and thus is "publicly" available. Prior comps you use, properties you appraiser are all fair game to disclose unless the owner explicitly asks you to exclude it. OTOH, disclosing expensive art, personal financial information, etc. might argue for the use of discretion. I have noted things like a lis pendens in the public file (which is a notice filed in court that some action is pending like a foreclosure) but I see no reason to include although public - it is not germane to the appraisal.

 

[shrubberyvaluation]

Denis sent me a sample report back in the day and it was like "in the course of this assignment I spoke with A, B, C, D, E". I was like oh nice, I'm going to start naming people and what they said. And then one day I called an agent for information and she was like you mother ****er I don't want to be quoted in your report you understand me? LOL She was a real ***** but I get it. Agents on social media, their pitch is integrity, discreet, confidential, etc., and I am probably ****ing up their ****. I don't do that anymore.

I only name people if I'm calling up zoning or some other government agency and want to relay who gave me the information. Especially since I have called 3 people before and got 3 different answers for the same question.

 

[Long Walk]

I do residential but I was told by a contact at my main client that the fact that I am appraising a property is not confidential.

In the commercial world, sometimes you need to be very circumspect or you could hurt someone financially by accident. Sometimes I have to inspect after hours. Once the property contact took the photos of the interior to avoid making his workforce jumpy.

I am very careful with interviews. Names are in the workfile, but not in the report; the exception is government employees and they get named. That's because I need their interview authority as the best available data.

I never talk about properties that our office has appraised unless there is a solid business reason to do so and I can be sure nobody's business interest would be hurt by the disclosure. In my part of the world, a call to a planner is a signal of likely impending change in the market and I can't control how far or wide that conversation might go. So, I am very closed mouth.

 

[HowAboutNo]

In the commercial world, sometimes you need to be very circumspect or you could hurt someone financially by accident. Sometimes I have to inspect after hours. Once the property contact took the photos of the interior to avoid making his workforce jumpy.

I am very careful with interviews. Names are in the workfile, but not in the report; the exception is government employees and they get named. That's because I need their interview authority as the best available data.

I never talk about properties that our office has appraised unless there is a solid business reason to do so and I can be sure nobody's business interest would be hurt by the disclosure. In my part of the world, a call to a planner is a signal of likely impending change in the market and I can't control how far or wide that conversation might go. So, I am very closed mouth.

Would you consider using the RR from a prior report as a rent comp in a later report to be a violation of confidentiality? If both reports were for the same lender, and they cared to look, it would be clear that you used data you previously agreed to keep confidential. Where would you draw the ethical line?

 

[Ricky LaFleur]

it would be clear that you used data you previously agreed to keep confidential.

If you specifically agreed to keep the information confidential, then I would suggest emailing the client for permission to use the info and keep the email in your work file.

 

[Long Walk]

Would you consider using the RR from a prior report as a rent comp in a later report to be a violation of confidentiality? If both reports were for the same lender, and they cared to look, it would be clear that you used data you previously agreed to keep confidential. Where would you draw the ethical line?

WRT client requirements, I have called four different lenders to discuss their SoW requirements in their bid offerings. Three times, the lender had no good working understanding of what was actually in their SoW. The exception was calling BoA and they could answer my non-confidentiality questions. So, I don't have strong confidence that I can look to the lender for an interpretation of GBL or the MA data security law.

Suppose that a lender could offer an opinion on how to interpret those laws WRT re-use of data obtained in the course of an assignment. Experience tells me that I can find another lender with a different interpretation which would not agree with the first. So, looking to the lender doesn't work.

The Appraisal Institute would be the next source of authority. Lately, we submitted a question for an interpretation. The manuals all said one thing on the question and the AI contact said a different thing at first and then declined to provide any further guidance. Like the lenders, the AI is not helpful for an interpretation, IMO.

The E&O carrier would be another place to ask for guidance. But, nobody wants to be on the hook for a legal opinion.

So, getting a legal opinion would be the next option. Cost is prohibitive and lawyers can arrive at very different conclusions, just as appraisers can. I worked in a law firm for two years doing property tax and found this to be the case regularly.

Another place you could check would be the state licensing board for discipline actions. Maybe appraisers are being disciplined for mis-use of confidential information? I checked MA, RI, ME, NH, and VT recently on another question. Top reason for discipline was failure to comply with CE requirements. I found no instance of discipline for mis-use of confidential information.

That leaves client instructions to keep information confidential and your office's policy. That is why I posted earlier that appraisers need to know that policy. Our office policy on data security fairly meets the requirements of GBL and the MA data law. Generally, these requirements appear to be more concerned with the physical security or re-sale of the data than the re-use of it, IMO. We don't re-sell data. And a strong argument can be made that any data received from a client that is non-confidential becomes company property for the use of the company in its business. Anticipating objections, an argument made for the opposing position would be sophistry.

Unless the client has explicitly stated that the data is to be confidential, then we use it. Experience has shown that the data usually already lives on CoStar, local MLS, Compstak, or some other platform. Our approach meets my personal test of fairness as integral to ethics.

 

[KHS445]

In the commercial world, sometimes you need to be very circumspect or you could hurt someone financially by accident. Sometimes I have to inspect after hours. Once the property contact took the photos of the interior to avoid making his workforce jumpy.

Being in a rather rural area many times an employee or two will know me and know what I do, even in a different County. I will always work with the borrower with regards to the timing of my inspection even if it means early morning, nights or weekends. I will also tell them to tell the employees that need to know I am coming thru is that they are updating their insurance coverage and the insurance company is requiring an updated evaluation.

 

[Long Walk]

I will also tell them to tell the employees that need to know I am coming thru is that they are updating their insurance coverage and the insurance company is requiring an updated evaluation.

Your post was spot on.

I have had property contacts tell me this when we are first meeting at the property. That is when I tell them that they need to let me know where I can take photos so as to avoid issues with proprietary systems, documents left out in offices, and the presence on-site of a hostile tenant. Independent, objective, and unbiased does not give me a license to be a jerk on-site.

 

[KHS445]

Your post was spot on.

I have had property contacts tell me this when we are first meeting at the property. That is when I tell them that they need to let me know where I can take photos so as to avoid issues with proprietary systems, documents left out in offices, and the presence on-site of a hostile tenant. Independent, objective, and unbiased does not give me a license to be a jerk on-site.

I always keep in mind that I am a representative of my client. I am fortunate to know close to 70% of the property owners/tenants I meet with.

 

[Fernando]

I always keep in mind that I am a representative of my client. I am fortunate to know close to 70% of the property owners/tenants I meet with.

If you know the owners/tenants, do you disclose this relationship in your reports?