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How Little Product Can we Provide and still be Professionals

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Terrel L. Shields

Thread Starter
Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
In Valuation Insights & Perspectives magazine, John Ross Viewpoint article argues that
licensing and certification “undermined the professionalism of the appraisal profession.”
Then, curiously in my mind he endorses the additional hours & degree requirements the
AQB is considering on the one hand but argues appraisers should be willing to do “appraiser
price opinions” on the other.

He says there is no place for “Broker Price Opinions” but expects appraisers to be able
duplicate that service. I am assuming he wishes us to duplicate if for the same money - i.e.-
$35 to $100 a pop. Thank you Mr. Ross, but no thanks. Every effort so far that I see to create
some shortcut appraisal has ended with the appraiser doing more for less with an enormous
increase in liability.

One only has to peruse the legal rulings to see that courts generally side with appraisals they
see that not only complies with USPAP but almost invariably want the 3 approaches to value
in a complete document. They will side with an interior inspection over a drive-by and are
far more likely to decree a drive by as non conforming and inadequate.

The 2055 led to 2055 with interior inspection, cost approach, income approach, rent
schedules, etc.

What this profession needs is clear. First, a statue of limitations. No one should be able to
challenge an appraiser for work over 2 years old, certainly not past our record keeping
requirement.

Secondly, no one should be allowed to submit a complaint to the State Board except the
client or the intended user, except the board itself initiate the action. Again, the boards
should be forbid to investigate anything beyond the record keeping requirement. If they
cannot do it in 5 years, then they don’t need to be considering it.

But most importantly, each state needs to put Statement 9 into law. Namely, the borrower
or home owner is explicitly denied the right to sue an appraiser whose client has named
neither the home owner or the borrower as an intended user. ONLY the client or the
intended users should be allowed to dispute an appraisal in court.

That will help more than all the Micky Mouse Appraiser Price Opinion forms you can
invent. IF Mr. Ross wants the profession to be considered “professional” then we need to be
submitting better appraisal products not cheap imitations of appraisal products. I would
rather argue that these bottom feeders pressuring us for near free services should not be
required to get an appraisal, but instead become bonded or insured, so if they make a
decision that results in a loss in the event of foreclosure, let the insurance company pay up
the difference. It won’t take the insurance business long to be appraising these properties
themselves, I’ll Bet!!
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
8)
Terrell:

I find myself agreeing with you, as I do more often than not. I also read the article and my jaw nearly hit the table it fell so far. Heare is a person in authority in the Appraisal institute advocating for an "Appraiser Price Opinion" ? And he wnat's us to be more professional?

Terrell, what I really heard was bitching, moaning, and a longing for the "good old days" when the forerunners of the Appraisal institute virtually controlled who could be an appraiser in this country. Certainly in metropolitan areas they did. I am sure they would not have cared about the rural markets, not enough money to be made there. Well I for one do not care to return to a time when folks like myself were discouraged from even attempting to become an appraiser. Where educational requirements for their members were raised only to keep out the "riff raff", and only after the good old boys had got their designations. I once had a disgruntled MAI tell me that most MAI's that received their designation more than 10 years ago(this was around 1993), could not meet the requirements for it now, and would not be able to pass the test. The writer of this article bemoans what licensing & certification have done, and wants a return to just designations. Ain't gonna happen.

If I understand the article right we should have higher educational requirements, more pre-license course hours, more experience, and all so we can do things like "Appraiser Price Opinions" for less money. Now that takes the cake :!:

I do believe we need higher educational requirements, and in time, either an Associates or 4 year degree. Certainly a 4 year degree for Certified general, and perhaps an Associates Degree for residential, Licensed or Certified. Actually, I suggest we do away with the Licensed residential, boost every one from licensed to Certified if they have more than 5 years experience. I would also require a minimum of 3 years experience and eventually 5 years experience to become Certified in any category. But.............not to do minimal work, but to do comprehensive work based on a market standard, not a clients whims.

Don
 

John SRA

Junior Member
Joined
Jan 19, 2002
Terrell,

I find it interesting that so many appraisers think offering products based on a very limited scope of work is somehow unprofessional or less professional. Appraisers seem to want to fight the needs of their clients rather than meet them.

Take the following example: A doctor is asked to perform a physical. If the patient is a high school student who simply needs clearance to play sports, then the scope of work is very limited, and the fee is very small. If the patient is a 55 year old man who has been experiencing chest pains, then the scope of work is very extensive and the fee is much higher.

In each case the doctor’s scope of work is suited for the intended use. Is the doctor who performed the high school sports physical less professional because he did not do as much as the other doctor?

The person who can analyze a problem and identify the work that it is appropriate to meet the need is the true professional. The person who takes a “one size fits all” approach and tries to force clients into buying more service than they really need is the one who is not acting professionally. Furthermore, the ability to make that appropriate judgment does take more training and education than simply providing the same solution in all cases.

Best Wishes

JC
 

Terrel L. Shields

Thread Starter
Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
>>the doctor’s scope of work is suited for the intended use<< And if the High School jock collapses on the field in mid-August guess who gets sued for doing an inadequate job? But he still gets to practise as a doctor and his E & O pays out the hush money. The courts so far are holding an appraiser to one standard, complete appraisal with 3 approaches to value. Anything less and the COURTS (and lawyers) play GOTCHA!

I have no problem with a reduced product as long as 7 years down the road I am not being sued and blamed for events having nothing to do with my report (like I am being done now) for a borrower who bought the property a year after I appraise it for someone else.

One mark of a professional is a professional income. If you are crunching out 3 mickey mouse 2055s a day at $125 a pop, I guess you can call $90K gross a year a decent enough measure of that. But I see it as little more than a non-automated Valuation Model. You produce a compliance document for the lenders files, not an appraisal. So if you do what they say, they won't turn you in.....until the eventual crunch in which they will express their shock and dismay that you, the appraiser, has provided them with such horrible service!! Why, they have been a victim too, so they sue your butt as well. What I am seeing is appraisers who are lucky to turn out 1 report a day and paying taxes on $12-15K a year. How professional can you afford to be???

How stupid are we to expect the next generation of REQUIRED college grads with $10,000 worth of testing, education and expense to get that license or certification to accept an apprenticeship of 3 - 5 years for $10-15K MAX before earning a marginally decent living with the full expectation that they will have to carry increasingly expensive E & O for the numerous times they will be sued over a 40 year career? It is an oxymoron for someone with a college degree to be so stupid that they would work for peanuts for the best 5-10 years of their lives before making a modest living as an appraiser.

If you do more than 10% commercial work, E & O runs thousands of dollars per year alone. So now commercial appraisers are not ony supposed to provide cut rates for commercial buildings like "drive by" for 200 unit apartments or 40,000 SF industrials. We are to ignore the income approach or Cost Approach at our own peril so we can sell our service for $300??? And now the AI wants not only to mine our comps for residential properties, but for commercial ones as well. Well Kiss my kester. I spent HOURS researching some of those commercial comps and may be only able to use that comp more than once or twice in a year. I have no intention of giving it away to AI or anyone else.

As for the public. I paid $900 for a survey last year and I wrote the legal description for the surveyor. I paid $450 for title insurance. Who the hell gripes about those fees? After all, they aren't for the benefit of the consumer. They are to protect the BANK. I recently saw a $105,000 home whose closing costs were $4,500. Say what!! 300 smacks for the appraisal and somehow that is the problem, we ain't working cheap enough??? Gimme a break as Stossel would say.
 

Verne Hebert

Senior Member
Joined
Feb 25, 2002
Professional Status
Certified General Appraiser
State
Montana
Great response JC................................in theory. The physican however is not "guided" by USPAP", one of the most continually poorly written documents in the american business community. Few understand this document other than some of those who drafted it, and the small percentage of seasoned appraisers. Those ordering the appraisals certainly do not.

I an aware of companies that continually and routinely order these more limited products when they are not remotely appropriate for the assignment. And I know that when the appraiser upgrades the assignment to the appropriate level the company attempts to "find someone to do it". And they do, the green appraiser with the new office.

Good effort JC. I do not concur. When USPAP is written in english, and the mandated requirement for those involved in the transaction to have enjoyed their ongoing 16 hours of USPAP and blessed with "certification of education"-having been deemed educated and responsible then your argument may have some merit.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
8)

Terrell:

I have asked several people to read the article written by John Ross in "Valuation". I understand that the AI has sent this to all appraisers as a recruiting tool 8O :lol:

Talk about shooting themselves in the foot :!: Every appraiser I have talked to that have read the article are insulted by what Mr. Ross has said. They consider the article to be elitist, arrogant, biased, insulting, and completely out of touch with the time. No wonder they are losing members like crazy, and have been for years. :twisted:

Mr. Ross would have us believe that we should all have a college degree to do "Appraiser price Opinions", give all our data to the AI so they can mine it to make themselves more money, and not have to comply with USPAP. After all, he believes that only their members are competent, educated professionals, and the rest of us are Riff raff.

What I hear is fear in his words. He hears footsteps. No one needs him and his elitist group anymore. Shame, shame.

Sure Mr. ross, let's throw out USPAP (only for members of the AI of course), do away with licensing, and go back to designations only so you can control the appraisal business once again. Then you will be able to build up your coffers once again.

Excuse me, but I believe that it was the forerunners of the AI that advocated for state licensing and certification. What;s the matter :?: Did you maybe misjudge what the results would be :?:

Well Sir, we don't need you.

Don
 

USPAP Compliant

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Verne,

Very good respose. I agree 100%. Lenders are trying to order more and more "drive-bys" and such to save time and money, with no consideration to scope, purpose or complexity.

I got an order today, 2055. It was for a home built in 1890 with 8 acres of land. No way am I going to guess at the interior and how many out buildings are on site at this place. I turned it down, told them why and got an order for a URAR within the hour.

Many appraisers don't realize that it is the responsibility of the APPRAISER to decide if a Limited Appriasal is prudent, proper and won't be misleading.
The Lender can request anything he wants, but the AXE falls on us if we produce a report that is unclear, misleading or inappropriate for the property. Just remember, that lender will not be there to defend you if a problem arises.

Sure, there are cases where a limited appraisal is fine. However, it calls for some judgement and discretion to make that decision. Time (as in quicker) and money (as in cheaper) should not be the basis for such a decision.



Bob
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
8) Actually, I suggest we do away with the Licensed residential, boost every one from licensed to Certified if they have more than 5 years experience. I would also require a minimum of 3 years experience and eventually 5 years experience to become Certified in any category. But.............not to do minimal work, but to do comprehensive work based on a market standard, not a clients whims.
Don
Hear hear... Don I had I heard rumors that such was going to be implemented... seen no action as yet.

Speaking as someone who applied for a residential thing in my state, back when there were two catagories: Residential and certified, only to find out that I used an 'old form' rather than a new form and wound up with a 'license' when I was more than qualified for the 'certification'.... and tokk the test for same!!! Made me so mad I never got 'certified'. 99% of clients don't care!

I quite agree that a degree requirement would do much for this profession, but would also like to see greater availability for intensive education classes rather than the medicore spread of continueing ed currently available for folks outside major urban areas.

Actually I am FOR a return to deignations as a meaningful representation of qualification, however I am not at all sure that the Institute flaoundering as it is should be the premier organization, niether am I overly impressed with any of the other residential appraisal organizations out there. So what where to turn? I have questions not answers.

Did I see a need or benefit I would have earned that SRA, but frankly though it is something to be proud of I see too many poor quality reports being turned out by folks with the letters after their names...

I quite agree that the licensing implementation did not do the industry a good turn.
 

Terrel L. Shields

Thread Starter
Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
My quarrel with certification is the same as teacher testing. Many teachers are better test takers than they are teachers. Secondly, I cannot for the life of me see the pov of the AI who argues for extremely high standards for MAIs but many apparently are now against state certification. And right-o they were in the forefront of those wanting certification 14 years ago.

And someone said it well that USPAP is poorly written. Further, the courts are dominating the direction this document must take. Until the appraiser is given some protection from lawsuits by statues of limitations, limits upon who can use and sue over an appraisal, the profession is very unappealing to the next generation of appraisal "professionals."
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
8)

Lee Ann,

Actually, until a few months ago I would have agreed with you about professional organizations. However, I am (at 66 years old), a recent convert. I have been posting comments on the NAIFA Chat Rooms at www.naifa.com/chat for over 3 years. have come to know, respect, and like a great many in the organization. So, in March of this year I submitted my application for membership, my 5 demos, and joined the organization I have come to like and respect. They seem best suited for what i was looking for. A few days ago I was informed that my demos were accepted. Then I filled out an experience and educational certification for that took me several hours as I have courses going back to 1977, and a transcript of my AA in Real Estate to locate and copy, and copies of my experience logs for last several years. I had it signed by local Chapter officials, and it will be in St. Louis today and my IFA Designation should be awarded soon.

Of course each person must make a choice of what is right for them. To become an MAI, which most MAI's today could not get, you would need about 15 years of taking the AI courses in other states, at an expense of at least $10,000. Hell.........I might not live that long. Not only that but for reasons already stated, they would not be an organization I would choose to be a member of.

As to Certified. My son has been licensed over 8 years. He has attempted to get appraisal courses that would qualify him to sit for the certified exam. He still needs 1 more course which he may be able to get this fall, out of town, and expensive. If it is that hard to get enough prelicense courses to be certified then how in the devil is it going to be possible to get a 4 year degree in appraisal related subjects? I do believe we should move in that direction...........but in a 5 to 10 year period and after some work to have colleges and universities offer degrees in Appraisal Theory and Practice.

Don
 
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