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More lessons from field reviews-verification sources

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Tim Hicks (Texas)

Thread Starter
Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
I can't believe I haven't covered this in previous posts. I see a recurring theme in field reviews that are questionable. Appraisers will give very limited verification sources and many times only one. For instance, if you obtain closing information from a Title Company (which is against the law in Texas), you usually can only verify the closing date, legal description, type of financing, sales concessions and buyer and seller. Rarely will the Title Company provide you with physical characteristics of the home (age, size, style, construction quality, improvements, lot size, amenties and improvements). So, how can you have only one verification source in this instance? If you do use a Title Company as a verification source, shouldn't you obtain a copy of the closing statement and put it in your report so it can not be questioned? Don't fall into the trap of a developer, builder or sales person giving you information across their desk without printed verification of their data. It will quite often be discredited under review because you did not verify the data. A reviewer will find out that the home is not the same size, or on larger acreage, or closed three months away from your reported date. Do you think the person who provided you this information will come to your aid when you are proven wrong? Then, keep in mind that FNMA states that all sales must be "exposed to the open market" in order to be utilized as a proper comparable sale. Also, we are supposed to be the "unbiased third party" in the transaction and it is easy to spot an appraisal that has forgotten this rule. Any appraiser that uses three sales from 10+ miles away with questionable verification sources can not hide the obvious when there are 30-40 MLS sales that discredit his data from within 5 miles and 5-10 MLS sales within a mile.

Sorry, just did another $50,000 high review for FNMA. It really seem worse when it is $50,000 on a property is really worth $70,000. Especially, since it just sold as an REO property for $49,000 this year. You would think if an appraiser was going to be fraudlent and risk his license they would be more clever and cover their tracks better.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Excellent post Tim! I agree. I can't believe what I see sometimes. The Florida appraiser that recently lost his license and was/is still running an appraisal sweat shop tells his people that they don't need to verify any further that what someone tells them or what is in MLS. The couple of trainees I had that worked in his shop prior to coming to me told me this and thought I was crazy for verifying the data. When I would find descrepancies, they were told to ignore anything that might not make the value wanted and just use what would make that value.

It really boils down to: You never know where that report is going to end up or be reviewed. If you do all as 'ready for a full field review', you will have yourself covered.
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
I agree with Tim and Pamela. Research and write every report, regardless of form, as if you were defending yourself before your state board. Have everything researched, verified and double checked that could cover and be also found by any reviewer. It is better to be safe than sorry!
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Verifying data in non-disclosure states must be lots of fun. 8O I use MLS for my initial search to read about the properties, and see the photos. But I use a private data service, specifically for appraisers, for the true info based on public records. I also subcribe to a service where I can look up recorded deeds in any Georgia county. Cost me a bit of $$$, but I can look up the sales, verify the data, and get the sales history all on line. With all of this data available, it burns me when I see reports that look like a cut and past of MLS. :evil:
 

Stephen J. Vertin MAI

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Illinois
There is no definition of protocol for verification , within any creditable source, that I know of. This has been discussed on this form a number of time over the years. I would say the type and extend of verification depends on the intent and purpose of the report. This should always be discussed with your client. I personally put how data is verified within the report. If you use MLS, state it. If you talked to someone state it. I also put in a caveat that I believe the information true and correct but was not part of the actual transaction and can not warrant it as fact. However, there are some on this forum who will tell you if you sign the report you are responsible for content. It is truly debatable how legal this is and it has never, at least to my knowledge, been challenged in court. But none the less there are those who interpret USPAP in this manner. So be forewarned.

I personally believe the people advocating this stand have not fully considered the repercussion of its indications. But their dogma is somewhat supportable. However, it is not as strongly supported as much as it was when the original STD 2.5 was in place.

Steve Vertin
 

Tony in Ohio

Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Ohio
I have always believed in verifying with MLS and some form of courthouse data (pace, Win2data, Haines, etc). If those are sufficient to give me a clear picture I will stop there. If I have an oddball, conflicting information, or even just a gut feel, I then move on to calling the realtor, checking the auditors website (or calling, or even going to the office).

I always remember the time I called a realtor about a comps condition and he said “Err, do you know that this was Jeffry Dahmers childhood home?”. I said “no, but that explains the remodeled kitchen.” He did not think it was funny. :twisted:

It did not appear to sell at a discount, but I would have hated to have found out about that in court. I cant spend that type of time on all of them, but if in doubt, the more you know, the better.
 

Paulette in Texas

Sophomore Member
Joined
Jan 24, 2002
Sorry, just didn't follow Tim's post to his conclusion. I am guessing it must have been builder sale. Okay, Mr. Builder, I write down the info and ALSO get copy of his floor plan for that plan or what info HE is stating it is, as to room count, baths, lot size, fp, etc. I will also look on the tax rolls, but here in Houston, with so much building, it may not be on the tax rolls as to the home itself. We will ask for and receive HUDS for the closing, information from the sales office and IF available the tax card. ENOUGH ALREADY. Where does it say, we've taken this puppy to raise for the rest of our life? 1/2 sales from this subdivison and then we are out of here for MLS data confirmable plus tax cards of 2/3 other sales. If somebody wants to produce crap they will, but they can do that based on ALL MLS sales. It really is based on the work ethic and product of the person doing it. Sorry, Tim, but I think some people produce crap and then some people actually get to the end with good results. The sad fact is crap reports may or may not also have had the right conclusion for value. NOT every bad report was based on BAD data. More often than not the same appraiser doing crap work, has crap data and on it goes... Paulette in Tx
Rotts rule and Shih tzus fine too.
Go w...
 

Tim Hicks (Texas)

Thread Starter
Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
Paulette, it sounds like you are way past a need for a vacation. Every post is not a accusation hurled at you. The post post simply states that if you are going to use flimsy data, that you should verify it properly and don't let some outside party sell you down the river. Nobody says you have to "raise that puppy", just state reliable verification source in case your data turns out to be bad. I perform many field reviews. I see many reports that state their verification source as only a title company. How is this possible? The title company has no idea about the size of the home, the condition or age of the home or what type of improvements it has. If you obtained that information from the builder, don't you think you should state where you obtained that information? I make these posts about appraisals I review on an FYI basis. Hopefully, some new appraiser or some stubborn older appraiser will "see the light" and learn something. I try to give the reviewer's perspective so that maybe, just maybe that the good, honest appraiser can protect themselves from unnecessary questions by just changing their perspective a little bit. There is another recurring theme among older experienced appraisers I review. The "I have been appraising for 1,000 years, I have a masters in real estate, a zzz designation and how dare you question my unsupported adjustments, USPAP violations, and bad data" excuse just doesn't float when the evidence proves you are just plain wrong and got caught. Here's a novel idea, how about defending your report which is being reviewed instead of making statements that have nothing to do with the subject. I don't even worry about USPAP violations on these reports because I have so much ammo with the report itself that I don't want an appraiser focusing their whole rebuttal on their inability to discuss "exposure time" or actually put limiting conditions in their report. You would think every appraiser would want information on how to protect their reports so they can not be questioned under review. However, there are too many appraisers out there that appear to believe that if they put it in their report it must be gospel and too bad if verification sources prove it to be wrong. The basis of our reports is factual data, so don't you think that the data ought to be correct?
 

Stephen J. Vertin MAI

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Illinois
Tim:

You say "The basis of our reports is factual data, so don't you think that the data ought to be correct?" I do not think anyone would argue the point. However, there are market realities and limitation to what you are saying. I for one, think some reviewers forget this. Many times they sit back and Monday morning quarter back and forget the realities of the game. It is really weird, I am sure there is not one person on this forum who does not know what I am referring to. We have all run into "Joe Cool" reviewer who knows everything about appraising while the rest of us are just dolts. Usually, these are the most insecure people in their own ability. Since they do not believe, deep inside, they know what they are doing, they also think no one else knows what they are doing.

Real estate is not a prefect market. If you remember Economics 101 a prefect market has perfect information. Real estate information sources are far from prefect. The fact is appraisers are restricted by the same laws as the general public. Much of the information we receive is through secondary sources. We do not go on private property measuring comparables or looking into their interior. This is trespassing. Additionally, we are not party to the actual sales or rental transaction.

Information concerning description and economics is provided by brokers listings, deed transfers, county records and or parties involved with the transaction, to name a few. Many times this information is contradictory., i.e., county records say a building is one size, MLS says it is another. We try our best to reconcile these difference; however, no warranty can be given as to accuracy of information provided by others. If appraiser are warrantying this information they need their heads examined. Additionally, no warranty should be given that all possible information sources were examined unless your client wants to pay you for a title search or 100 to 200 hours of additional research time, i.e., Cook County records literally has hundreds of records on one property. Especially if the building is 80 to 100 years old. Most appraisers examine physical attributes with 1 to 3 sources which are considered reliable. Most acknowledge some sources may be contradictory. Most acknowledge all sources may not be totally accurate.

With that said, I would agree that information should be as accurate as possible. Appraisers who ignore information readily available or quote a source that they actually did not check or do not look into situations that blatantly call for further research are lazy and taking advantage of their client and the public as a whole. But we do have limitations.

Steve Vertin
 

David C. Johnson

Senior Member
Joined
Jan 15, 2002
Steve,

Very well said in my opinion.

About a decade ago I heard Marvin Maes, MAI, SRA, of Harper-Maes & Associates in Nashville, TN, (author, intellectual, and, along with Harper, one of the town's widely acknowledged appraisal powerhouses) speak about Verification. He started out by saying that for his demonstration report (as well as for other more significant works during the time period), he would actually sneak onto comparable properties after hours or over the weekends to measure them for himself. (Something several of us have probably done a time or two for litigation purposes when testimony was a near future certainty.) He made fun of himself for that and then discussed some of the points you raised in your post. His speech and your post help to define Due Diligence for appraisers in a rational, practical way.

Regards,

David C. Johnson
 
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