Exposure Draft USPAP 2018-19 - Appraisal Foundation

[George Hatch]

We still have draft proponents who will vehemently disavow that an assignment result can occur prior to the conclusion of an assignment, so in my view that pretty much guts any pretense that there will be a firewall that prevents or inhibits legitimatizing the abuse of what these definitions will enable.

As far as I'm concerned, if an appraiser lives in a state where the laws define reports more broadly and they're doing drafts in violation, safe in the recognition that their state board will never call them on it then I see no reason for them to need the entire appraisal profession to make these changes on their behalf.

In other news, there is STILL no element in USPAP 2015 that prevents or inhibits an appraiser from conveying a "draft" to a client in compliance with SR2, nor any element in USPAP 2015 that requires an appraiser to refer to any or all of the entire front half of an appraisal report (which lacks any analyses, opinions or conclusions resulting from the development of an approach to value) as an appraisal report or for that communication to comply with SR2.

 

[DWiley]

My biggest objection to the proposed changed to the definition of REPORT is simple - it ignores reality. Once you have communicated, you have "reported" - at least you have if you are using any regular definition of "report"

They are trying to address a perceived problem by addressing symptoms rather than causes. The cause of their dilemma is not the definition of "report" it is the content requirements. Until they fix this fundamental error, by focusing on the correct component, I don't think they can get to a "clean" solution.

The logic trap created by the proposed definition is simply an enforcement nightmare. It creates traps for good appraisers and big loopholes for bad ones, and that is a terrible combination.

 

[George Hatch]

eggzactly

I would go so far as to suggest that they're using semantics to address those symptoms.

If the issue really is a problem then I don't think that taking the most superficial approach to it (It's not an appraisal report until I call it an appraisal report) is a solution at all, let alone an effective solution that would be consistent with logic and reason.

The kid who said the Emperor has no clothes was not an idiot.

 

[George Hatch]

I'm curious what the 2016 ASB thinks will be the difference in reactions from the state boards and the ASC this time vs the last time the 2014 ASB tried to make this boat float.


Speaking of enforcement, once we walk directly away from all pretense of trying to consistently applying these requirements on the basis of principles and concepts rather than relying solely on the nomenclature that opens the door wide for the litigation attorneys to play havoc with the meaning of "is" in other applications that are not directly addressed by these changes.

After all, that's part of the job description of the lawyers.

 

[hastalavista]

We still have draft proponents who will vehemently disavow that an assignment result can occur prior to the conclusion of an assignment, so in my view that pretty much guts any pretense that there will be a firewall that prevents or inhibits legitimatizing the abuse of what these definitions will enable.

George:
Maybe I'm misreading the ASB's draft proposal, but what the draft proponents want to occur (there isn't any assignment results prior to the conclusion of the assignment) isn't part of the proposed draft.
I read it to be a pretty strong statement to the contrary: You can only communicate assignment results two ways: (a) in a report or (b) in a draft document that is prominently labeled as such. But regardless how you report them, they are "assignment results" and those "assignment results", other than the communication labeling, must adhere to all other obligations that exist when reporting "assignment results" now. So, you cannot disavow anything. You must take full responsibility for those results. The communication medium is the difference here, not the process, the credibility of the results, or the responsibility in ensuring that the results are not misleading or fraudulent.

I don't know. Maybe this danger

...It creates traps for good appraisers and big loopholes for bad ones...

is bigger than I see it (because I honestly don't see good appraisers being harmed and I don't see a change in bad appraiser behavior at all due to the ASB's proposal). If one is not going to follow the rules that exist now, one is just as likely not going to follow the rules with the change. Which begs the question: why worry about the rule change at all (whether one thinks it is a good change or not... other than the practical aspects of the conflict with state laws)?

I'm not trying to change your mind (I know I wont ), I'm just making an observation.

 

[George Hatch]

I understood all this reasoning the first time it was put forth several years ago. And while I appreciate the point - based on the history that has occurred as a direct result of the existing wording - that you don't think there's much potential for abuse on a practical basis, that's not the benchmark that I think is appropriate for a *minimum standard*. By my read a minimum standard is aimed by definition at inhibiting the actions of our lowest common denominator. I don't think it's wise to give these donkeys an inch because - having personally seen the antics of the wholly unregulated mob prior to licensing - I've seen the mile that they're both willing and capable of reaching for with that extra inch.

Those folks who came in after licensing started don't really have any way of appreciating how profound the before/after differences were between conduct of the 1980s vs conduct of the early 1990s.

If there's a legitimate benefit - and that's not a point I'm at all convinced we should even concede - then I think it should be weighed carefully with the known and foreseeable costs. IMO if we can inhibit the misdeeds of our donkeys then maybe foregoing the "legitimate benefits" of these changes can be fairly chalked up as collateral damage. Regrettable (perhaps) but definitely worth it to keep the barbarian hordes from breaching the gate.


An appraisal is an appraisal and a report is a report. I don't see those concepts or their applications to be all that complicated, nor are they at all difficult to comply with.

 

[hastalavista]

Those folks who came in after licensing started don't really have any way of appreciating how profound the before/after differences were between conduct of the 1980s vs conduct of the early 1990s.

(my bold)
Well, that would be me, and I acknowledge that a shorter-time participant might fail to recognize a pitfall that a longer time-in-service paticipant has seen before.

 

[George Hatch]

I realize that comment comes off poorly but I don't think I'm exaggerating when I say that prior to USPAP "what the client wants" really was the priority for most appraisers. Not so much the client advocacy thing but just in doing things that appraisers wouldn't normally choose to do if they thought about it, like appraising the house-n-5 acres, or appraising the SFR/office as an SFR even though the property is worth more as an office.

In particular, appraisal issues were *often* settled based on the status of the individuals involved. Reviewers were usually deemed right solely by virtue of their job titles and not the content of their reasoning. Designated appraisers pulled rank on the masses on a regular basis - again solely on the basis of status. If you think appraisers are paranoid about the impossibility of returning an acceptable appraisal in 2016 there's no comparison to the level of paranoia that existed in 1986. If nothing else, USPAP put appraisers and their users on the more level playing field WRT appraisal applications.

Right now, one of the primary functions of a written standard is to provide cover to the appraiser for declining to do something they think it wrong without getting tagged as being uncooperative. "Gee, I'd like to advocate for your desired result but it would put my license in jeopardy if I got caught". Backing those minimums down enables the donkeys to inject more gray into these situations and somewhat strips from everyone else the plausible deniability that they're *unable* to commit a certain act rather than simply *choosing* not to commit that act.

Let us not lose sight of the fact that the reports are all the state boards have to act with when there's a complaint. If I fail to include a 3yr sales history in an appraisal report, the only act the state can prove is the SR2 violation of the omission in the report; they can't prove that I didn't perform the analysis itself (SR1) nor can they prove why (Ethics Rule or Competency Rule) I omitted that info from the report.

That's one reason why I think messing around with the minimum requirements for Appraisal Reports goes beyond the SR2 issues.

 

[Mr Rex]

The Appraisal Foundation publishes its drafts and asks for comments. Perhaps that's what they think appraisers should do. Issue drafts, wait for comments and change the draft. Oh yeah, and update the appraisal every 2 years whether it needs it or not or whether the intended user asks for it to be updated and charge for it.

 

[hastalavista]

I have no other first-hand appraisal experience than the appraisal-universe USPAP has established. That, by definition, limits my perspective; so I appreciate the insights that come from a longer walk around the block.