Divorce Appraisal tesimony

[Delta85]

This post makes me laugh ....

Apparently Delta doesnt understand that the STATE FORCES THE JUDGE TO TAKE CE, THE JUDGE PAID FOR, TOOK, AND PASSED A BAR EXAM, TRAINED WELL IN EXCESS OF YOUR PIDDLY 4 YEARS ....

And you dont do the same thing as the judge ... please ... you flatter yourself way too much.

I'm hoping most posters can keep up and understand I am playing devils advocate.

I'm also hoping most posters are capable of understanding that I do realise judges are well educated and authorized to make these kinds of calls in situations like these.

I'm amazed I am getting this much pushback on an appraiser forum. I understand a judge has undergone years of education and passed a bar exam and I am not comparing a judge to an appraiser. But at what point has the judge passed an appraisal certification exam and undergone the years of training under an appraisal supervisor and taken appraisal related coursework in order to render an opinion of value? Choosing one of two appraisal reports is one thing, coming up with a seperate number is another IMO. If I pass the bar exam can I begin doing appraisal work as well according to the state?

Apparently being an appraiser really means nothing when you come down to it according to many here.

 

[Peter LeQuire]

I'm hoping most posters can keep up and understand I am playing devils advocate.

I'm also hoping most posters are capable of understanding that I do realise judges are well educated and authorized to make these kinds of calls in situations like these.

I'm amazed I am getting this much pushback on an appraiser forum. I understand a judge has undergone years of education and passed a bar exam and I am not comparing a judge to an appraiser. But at what point has the judge passed an appraisal certification exam and undergone the years of training under an appraisal supervisor and taken appraisal related coursework in order to render an opinion of value? Choosing one of two appraisal reports is one thing, coming up with a seperate number is another IMO. If I pass the bar exam can I begin doing appraisal work as well according to the state?

Apparently being an appraiser really means nothing when you come down to it according to many here.

I believe your point is well understood, but the discussion has two tracks. Yours seems to be that the judge isn't an appraiser and ought not opine about value. I agree with you that the judge "should" decide which appraisal was the more credible, but if he decides that the appraisals are equally credible, he still has to make a decision about the value of the property for the purpose of the case before him. Since the case is a divorce, and the appraisals equally credible, I would guess that the judge considered the mid point of the range between the appraisals to be equitable to both parties and settled the issue that way.

He also would have had the latitude to order another appraisal; to hear additional expert witnesses; to find neigther appraisal credible and set a value; to order the property auctioned; etc. But at some point, the case has to be resolved and the expense to the parties brought to an end. I would guess that the additional legal and appraisal fees to drag the proceedings out while another appraisal was done or more expert witnesses brought in would exceed whatever "inequity" either of the parties suffered because he named a number that is simply the middle of the range before him.

Lenders routinely decide which appraisal from among two or more is the more credible. Relo companies do the same.

That said, you could file a complaint your state's appraiser commission that the judge is performing appraisals without an appraisal license: that'll show him.

 

[Delta85]

I believe your point is well understood, but the discussion has two tracks. Yours seems to be that the judge isn't an appraiser and ought not opine about value. I agree with you that the judge "should" decide which appraisal was the more credible, but if he decides that the appraisals are equally credible, he still has to make a decision about the value of the property for the purpose of the case before him. Since the case is a divorce, and the appraisals equally credible, I would guess that the judge considered the mid point of the range between the appraisals to be equitable to both parties and settled the issue that way.

He also would have had the latitude to order another appraisal; to hear additional expert witnesses; to find neigther appraisal credible and set a value; to order the property auctioned; etc. But at some point, the case has to be resolved and the expense to the parties brought to an end. I would guess that the additional legal and appraisal fees to drag the proceedings out while another appraisal was done or more expert witnesses brought in would exceed whatever "inequity" either of the parties suffered because he named a number that is simply the middle of the range before him.

Lenders routinely decide which appraisal from among two or more is the more credible. Relo companies do the same.

That said, you could file a complaint your state's appraiser commission that the judge is performing appraisals without an appraisal license: that'll show him.

I agree with your post. I understand. I guess it just irks me that we as appraisers are held to such a high standard in terms of having to have a license to offer an opinion of value and having to have a workfile showing the due dilligence that got us to that opinion while others kinda get to wing it, including lenders, judges, etc.

I guess I feel, in the case of judges and the power they hold over peoples lives, that they should be held to a higher standard in what they can and can not do. Can they decide between two appraisals which is more reliable? Yes. Can they order an additional report as a tie breaker or call an additional qualified independent appraiser to offer advice? Sure. But to pull a new number out of his hat, even if agreed to by both parties, IMO is a bit much. And yes I understand it happens all the time. I can't get away with telling a client "I see comps between $300,000 and $400,000 so lets go with $350,000" and I have a license to appraise residential properties.

Look at lenders. An appraiser can spend hours studying and analyzing a subject and comparables and extracting adjustments and market conditions (including being required to inspect the comps personally, measure the subject, etc.) until he feels he has enough data in front of him to render an opinion. Then he sends this report to a lender who, in a blink of an eye, lops off $10,000 in value. Based on what?

To me that's like seeing your doctor and being diagnosed with cancer and then on the ride home on the bus the bus driver says "Nah, not cancer, just a bellyache."

 

[Calvin the Airedale]

I agree with your post. I understand. I guess it just irks me that we as appraisers are held to such a high standard in terms of having to have a license to offer an opinion of value and having to have a workfile showing the due diligence that got us to that opinion while others kinda get to wing it, including lenders, judges, etc.

I guess I feel, in the case of judges and the power they hold over peoples lives, that they should be held to a higher standard in what they can and can not do. Can they decide between two appraisals which is more reliable? Yes. Can they order an additional report as a tie breaker or call an additional qualified independent appraiser to offer advice? Sure. But to pull a new number out of his hat, even if agreed to by both parties, IMO is a bit much. And yes I understand it happens all the time. I can't get away with telling a client "I see comps between $300,000 and $400,000 so lets go with $350,000" and I have a license to appraise residential properties.

Look at lenders. An appraiser can spend hours studying and analyzing a subject and comparables and extracting adjustments and market conditions (including being required to inspect the comps personally, measure the subject, etc.) until he feels he has enough data in front of him to render an opinion. Then he sends this report to a lender who, in a blink of an eye, lops off $10,000 in value. Based on what?

To me that's like seeing your doctor and being diagnosed with cancer and then on the ride home on the bus the bus driver says "Nah, not cancer, just a bellyache."

This has been an amusing discussion. If I may paraphrase, your basic question goes like this: "What gives this guy (substitute: judge, lender, client) the right to determine a value estimate, short of the same standards to which I'm held?" (1)

Everybody has a right to their opinion, no? And bear in mind, that what appraisers do to estimate values are simply more highly refined methods of observation, analysis and presentation than what every other human does to answer the same questions.

In the case of the users of our services, their opinions are formed based on the credibility of the evidence presented to them. Those appraisers that perform their analyses to high standards and are able to communicate both those standards and a sound rationale for their conclusions will likely be found more credible than those who cannot. It's as simple as that.

Therefore, if you're not happy with the outcome of your valuation and testimony, don't blame the audience, the attorneys, or the judge. Blame yourself.

Footnote:
(1) This is a slightly refined version of the popular question, "Who do they think they are?" which itself is the latest iteration of an age old question, "Why am I not god?"

 

[The Warrior Monk]

I totally understand though a judges right to do this. I just disagree with it.

Feel free to work on changing the law. In the meantime, judges aren't bound by USPAP.

FWIW, the issue at hand, IMO, is not the situation to make a point. A decision of $125,000 is within 5% of both value conclusions, which is a very reasonable conclusion. To prove either value is a pinpoint conclusion would require a fairly large sample of data.

 

[Hiker]

This is included in every one of my reports:

If the appraiser is to appear in court, at a deposition, or any type of legal proceeding ( initiated by either parties attorney, or through a subpoena ), a retainer will be required in advance (minimum of $1500.00 ) and a flat hourly fee of $150.00 per hour from door (office) to door (office).

 

[The Warrior Monk]

This has been an amusing discussion. If I may paraphrase, your basic question goes like this: "What gives this guy (substitute: judge, lender, client) the right to determine a value estimate, short of the same standards to which I'm held?" (1)"

FWIW, if the judge was held to the standards of that all of experts were held to, then the court system in this country would come to a screaming halt.

Fact is, in a great many cases, it is not difficult to render a decision. Basically, in my experience, value decisions are decided two ways.

1. If all reports are equally credible, then the value of the asset is concluded to be in the middle.
2. If one report is credible and the other is not, then the value concluded in the credible report is used.

Simple.

 

[444nutman]

He had a range of $120,000-$130,000 supplied by two different appraisers who had used all their skills and experience and came up with two seperate numbers. Instead of choosing one report that appeared more reliable or ordering a tie breaking third appraisal he offered his own value opinion of $125,000.

I know it's not a big deal and by saying $125,000 he was splitting the difference and allowing the parties to agree and settle without further action, cost, or hassle to either party. It just jives wrong with me.

Could it be possible both appraisals were right? IT was an 8% difference between the 2. The possible 3rd appraisal could have been out of line of the first two. If both appraisers presented valid arguments in defending their work, then splitting them, seems like a logical decision.

 

[Michigan CG]

Delta,

If a judge has two reports (assuming they are both credible) and remembering that appraising is not a science but an educated opinion, then the $120,000-$130,000 appraisals are both reasonable.

What most appraisers do not do correctly is advise their clients on the options of your services. When I get a call for a divorce the normal question is "do you do divorce appraisals and how much do you charge?"

I stop the folks right there and ask them if they are sure they need an appraisal. The silence is deafening. Not all folks involved in litigation, in this thread it is divorce, need an appraisal.

Sometimes they need consulting services (see USPAP Standards 4 and 5). I ask the caller if the other side has an appraisal. I ask if the value of that appraisal has been shared with them, and most of the time it has been shared with them in some sort of angry outburst.

An appraiser can offer many services in litigation (divorce). I tell my clients that they may not want an appraisal but rather an opinion of value offered by the other side. If a BPO says the property is worth $200,000 and my consulting assignment says this opinion is most likely at the high end then maybe the client really doesn't want me to do an appraisal.

Does an attorney or person involved in a divorce want me to produce an appraisal with a value of $180,000 when the opposition has a value of $200,000 which will benefit my client? As an appraiser you can perform consulting work where you say to the client "accept their value opinion".

It is too long to explain here, but an appraiser can provide many services. Supplying an appraisal is not always in the best interest of the client and consulting if done ethically is a great income stream.

---------------------------

Should we change the $120,000-$130,000 scenario to say, $250,000-$350,000 and the judge settles in the middle at $300,000 then most likely the appraiser has not serviced their client and should get out of litigation work. Typically when there is a large difference in value opinion one appraiser should be able to discredit the other appraiser in pretrial conferences to the point that the opposing appraiser will not stand behind their report; getting on the stand would not be in their best interest.

I can tell you that it is very common for some idiot appraiser to perform an "appraisal" for litigation who is subsequently handed a long review of their BS appraisal and then decides he/she doesn't want to stand behind what they submitted.

I can tell you that if you want to get involved in litigation you need to make sure who you might be up against in litigation. You need to make sure that you can support every single adjustment and that there is no advocating for the client.

In the last two years I have had three such litigation assignments. One was a BPO, sorry you lose. The other two were residential properties. One was a 1,400 SF home on a 0.10-acre lot where the total appraisal fees were over $3,500. The opposing appraiser was given a 70 page narrative review of their work. Case closed.

The other assignment turned out similarly with a 70 page review submitted to them on a small multi-family property. My client will get back the $2,500 fee I charged to him, and most likely it will be from the appraiser's E and O insurance, emphasis on the E.

Litigation work can be very good but if an appraiser is going to get into this then they cannot write some typical AMC, boilerplate, no narrative appraisal. The appraiser will get discredited beyond embarrassment eventually.

 

[PropertyEconomics]

Should we change the $120,000-$130,000 scenario to say, $250,000-$350,000 and the judge settles in the middle at $300,000 then most likely the appraiser has not serviced their client and should get out of litigation work. Typically when there is a large difference in value opinion one appraiser should be able to discredit the other appraiser in pretrial conferences to the point that the opposing appraiser will not stand behind their report; getting on the stand would not be in their best interest.

Michigan .. I disagree with the above statement as a blanket. I was involved in an inverse condemnation case where one appraiser showed zero damages, one appraiser showed $60,000 damages (on a property that only had a before value of $30,000) and all told the Judge awarded $60,000 in a taking (that did not occur), gave them the remainder ($30,000) an untouched and buildable site with NO taking, and awarded attorney fees in the amount of $60,000 ... thats right a $150,000 verdict on a $30,000 property that was not touched nor were there a taking .....

Now should the appraiser who had great data and showed Zero damages for all of the above reasons stop litiation work?

The case was sent to the appeals court who overturned the verdict and said only one appraisal was prepared appropriately and the judge erred in 1) Allowing submission of the $60,000 damage report as it was not done in a before and after format; 2) There was not a taking of the property therefore under state law there could not be damages (proximity is not compensible here); 3) Awarding attorney fees on a case that was not correctly decided was improper; and 4) not placing primary emphasis on the appraisal report which was properly prepared and thoroughly documented that showed the property suffered no damages.

So not all appraisers that do their job win in court .... unless of course they have a great client that is willing to spend the additional money to file an appeal and they prevail there.

Judges are interesting people ... its their court and they do as they feel that particular day .. most times quite right and properly ... but not always. A good attorney will tell you when you place your fate in the hands of a judge or a jury any decision is possible and until the verdict is rendered ... you simply will not know if you have won the case or not .... nothing in court is guaranteed for either the good or the bad guy as it were.


To the other posts ... judges do not determine value ... they are a referee if you will .. they have two reports, they make a decision on which they believe is credible, they listen to testimony, and they render a verdict based on their belief of that which is credible, true, and reflective of equity under law. A judge does not render an opinion of value .. they simply use the opinions they have been provided to render a verdict .......