Illinois Board Issues Warning On Hybrid Appraisals

[George Hatch]

Inspector performing the HBU? How did you get that? They're literally just taking inventory of the subject's physical on-site attributes. How can anyone analyze HBU who isn't pulling the zoning (not the inspector), analyzing the composition of the neighborhood (not the inspector), analyzing the market conditions (not the inspector) and having at least some idea of the underlying land value for the purposes of comparison with the values of the improved properties (also not the inspector).


Tell me how it would even be possible for you to use a 3rd party inspection report without developing your own opinion of the subject improvements quality and condition and marketability? How screwed up would your process have to be to act so negligently with the available data to not even analyze it on your own as a precursor for comparing the attributes of the comparables to your subject?

 

[The Bob]

Inspector performing the HBU? How did you get that? They're literally just taking inventory of the subject's physical on-site attributes. How can anyone analyze HBU who isn't pulling the zoning (not the inspector), analyzing the composition of the neighborhood (not the inspector), analyzing the market conditions (not the inspector) and having at least some idea of the underlying land value for the purposes of comparison with the values of the improved properties (also not the inspector).


Tell me how it would even be possible for you to use a 3rd party inspection report without developing your own opinion of the subject improvements quality and condition and marketability? How screwed up would your process have to be to act so negligently with the available data to not even analyze it on your own as a precursor for comparing the attributes of the comparables to your subject?

This is the PCR someone posted in the Stewart thread.

 

[George Hatch]

It sounds to me like some state boards are trying to plug the GIANT HOLE in USPAP, that of identifying an inspection done for appraisal purposes as part of appraisal practice and named as providing significant assistance. In a USPAP FAQ, an inspection is identified as significant assistance, when performed by an appraiser. Go figure. USPAP protects non appraisers who engage in what anyone with common sense can understand as appraisal practice and keeps their contribution anonymous ( by the stakeholder solution of re naming an inspection "data collection" .

USPAP has become a tool of the stakeholders in large part over the years.

You may be familiar with the term "that's not a bug, it's a feature".

You still haven't responded to my question: How would you reword the term "appraisal practice" to include activities that can and are performed by non-appraisers outside of appraisal practice on a regular basis?

I don't think you can do it.

I've been saying this for many years: It's the actions being performed and the expectation of the users that trigger the applicability of these definitions, not the licensing status of the individual. If a broker is performing a valuation for non-brokerag purposes with the expectation by the user that they're acting impartially and without bias then that's an appraisal and they are acting as an appraiser regardless of the word games.

If an appraiser is engaged to inspect a property just to inspect a property then that activity does not fall under the definition of appraisal practice even though they hold the license. There is no such thing as a USPAP compliant inspection and it's actually unethical to invoke USPAP outside of appraisal practice. And that's not me making things up, either

 

[The Bob]

Are these statements of fact or are they opinions?

 

[George Hatch]

This is the PCR someone posted in the Stewart thread.

View attachment 40342

Well, I do have to admit that I wasn't aware of how incompetent this form designer was, but what's new about that?

Regardless, the type of appraiser that would actually use that conclusion in their report in lieu of performing their own HBU analysis is the same type of appraiser who never does HBU analysis anyway; so what difference does it make to the appraiser's process if they rely solely on an HBU conclusion prepared by someone else who doesn't know what they're doing or they rely on their own assumption that the existing use is always the HBU without bothering to analyze? Either way they didn't perform their own analysis or include that consideration in their process.


I've been watching SFR appraisers for many years and I have to say it's a little late for you guys to be getting sanctimonious about HBU analyses because the overwhelming majority of you are incapable of doing it as a result of never doing it.

 

[George Hatch]

Are these statements of fact or are they opinions?

View attachment 40344

Those are opinions, but so what? Would you rely *solely* on the opinions of a homeowner or broker or 3rd party inspector without forming your own opinions or not?

If you would then at that point that homeowner's opinion, that broker's opinion, that inspector's opinion, your client's opinion - any of those could be attributed as the source of those opinions. In that event you should make such disclosures and attributions.

 

[J Grant]

"George Hatch, post:

You still haven't responded to my question: How would you reword the term "appraisal practice" to include activities that can and are performed by non-appraisers outside of appraisal practice on a regular basis?

You have it backwards. We can't reword the term ""appraisal practice" to include activities that can and are performed by non-appraisers outside of appraisal practice on a regular basis.

But when those non appraisers perform activities on a property FOR APPRAISAL PURPOSE , USPAP should make clear that in those cases, a person is acting as an appraiser /engaged in appraisal practice..

Example: RE agent inspects a house for their own listing, they are not inspecting it for appraisal purpose, thus they are not acting as an appraiser ...even if later an appraiser might use the listing as a source. urce.
But when a RE agent is hired to inspect a house for appraisal use, purpose, THEN they are engaged in appraisal practice.

Do you understand the difference?

It would make appraisals that use non appraiser parties for activities as engaged in appraisal practice or acting as appraisers, thus making those reports non USPAP compliant.

 

[J Grant]

Well, I do have to admit that I wasn't aware of how incompetent this form designer was, but what's new about that?

Regardless, the type of appraiser that would actually use that conclusion in their report in lieu of performing their own HBU analysis is the same type of appraiser who never does HBU analysis anyway; so what difference does it make to the appraiser's process if they rely solely on an HBU conclusion prepared by someone else who doesn't know what they're doing or they rely on their own assumption that the existing use is always the HBU without bothering to analyze? Either way they didn't perform their own analysis or include that consideration in their process.


I've been watching SFR appraisers for many years and I have to say it's a little late for you guys to be getting sanctimonious about HBU analyses because the overwhelming majority of you are incapable of doing it as a result of never doing it.

I agree on this one. There are plenty of reasons why a third party inspection by non appraiser is a stinky idea, but saying they are developing HBU analysis is not one of them.

 

[Deleted member 128537]

Personally I see no reason why a 3rd party can't do the inspection of a property and that we use that data. How can that be a violation of USPAP? We do it all the time when we use comparable sales. I use all kinds of non-appraiser 3rd party data. But ultimately we make the final determination of quality and condition based upon the given data. In the case of a 3rd party inspection the inspector may say it is a C3, but I may look at the data and say it is a C4. In other words the 3rd party data is not written in stone. I'll do that with appraiser data as well. For example I might get data from an appraiser for a FSBO. When he/she gives me their data, I might say it sounds more like a Q4 than a Q3 or vice versa. I was asked to do a hybrid about a month ago. I didn't because I'm too busy. But nowhere in the hybrid appraisal process is the appraiser directed to use the data of the 3rd party inspector as the final word. Personally I think the Illinois statement regarding 3rd party data makes no sense whatsoever. Show me in USPAP where the appraiser is required to make a physical inspection of the subject. Nowhere to be found. The only criteria is that the data used can't be misleading. Or the SOW must be expanded so that the report isn't misleading. So I've done 2055's where I can't see the property form the road. I call up the lender and tell them I need to do an interior. The same could be true for a desktop. If we believe the data given by a 3rd party is not sufficient or is somehow not credible we can either turn down the assignment or ask for an increased scope of work.

As to HBU nowhere would a 3rd party non appraiser inspector be required to do a HBU analysis. And this gets to the point of asking for an increased SOW. If from public records, personal knowledge of the neighborhood, etc we find that a personal inspection of the property is necessary for HBU analysis then again we can ask for an increased SOW.

 

[DWiley]

Are these statements of fact or are they opinions?

View attachment 40344

What difference does it make? Have you ever read an MLS description? Ever seen an "opinion" in the MLS about the condition of that comp? Does an appraiser HAVE to use the condition reported in the MLS? Of course not. The same would be true of subject property data - it is true of all the data one uses.

And, I have certainly seen MLS listing that opine on the HBU (e.g. "home listed for lot value only")

So, we have been using data sources that express opinions of condition/HBU for a very long time, and now it is suddenly unacceptable?