NC Appraisal Board Appraiser Report Feb 2024

[Terrel L. Shields]

Just because an appraiser didn't perform competently in a particular assignment doesn't mean they were incapable of performing competently or had never been instructed. Or were somehow unfamiliar with the requirements in USPAP.

There is an issue about administrative law. When a local appraiser had a complaint filed - probably because his rival was now on the state board - they revoked his license though he had been duly licensed for 20 years nearly, without a single complaint. In appealing to a real court, the board was overturned and the judge said that since the board had never revoked a license upon the first offense, it wasn't appropriate to revoke his license. The appraiser has to be given a chance to improve if all other appraisers were given the same opportunity. But the judge went on to say the claims made were minor and he vacated the entire sanction.

Also, I have a question. Does USPAP even require an adjustment be made to a comparable? Does USPAP require 3 comps or more? Couldn't you simply rank sales and then assess which sale is the most similar? Isn't that a traditional appraisal method?

As usual, I see an awful amount of weakness in appraisers - particularly, CRs, in being able to develop the value of land, the cost approach, and the income approach. Virtually all the sanctions in the states I monitor has some issue with site value, cost approach or as in the report above, the income approach. Seriously, there isn't any excuse for this except FNMA and FHA have basically pooh-poohed the CA and IA to the point most appraisers are being either ignorant of it or dismissive of it and simply throw in some numbers and back into something similar to their SA.

 

[George Hatch]

As usual, I see an awful amount of weakness in appraisers - particularly, CRs, in being able to develop the value of land, the cost approach, and the income approach. Virtually all the sanctions in the states I monitor has some issue with site value, cost approach or as in the report above, the income approach. Seriously, there isn't any excuse for this except FNMA and FHA have basically pooh-poohed the CA and IA to the point most appraisers are being either ignorant of it or dismissive of it and simply throw in some numbers and back into something similar to their SA.

As I see it, appraisers are capable of adjusting to the IRL expectations of their users, which IRL is often less-than the expectations those users say they require. If more users kicked more reports back over "land-value-by-I-backed-into-it" or the weak 20-second CA then most of those appraisers would quickly adapt to the changing expectation and meet them. After all, their choice is to either level up or starve, the latter being a very powerful motivator.

Matter of fact, the revision of the GSE appraisal report is directly addressing site valuation issues by use of an adjustment grid. Inasmuch as a lot of the appraisers work to the form rather than using the form to work for them, I think the revision actually will change how many appraisers perform that analysis.

I am not worried about appraisers somehow being incapable of learning how to appraise. If someone can pass the course and pass the state test then that demonstrates that they are capable of learning the material. IMO our profession doesn't have a problem with QE content or minimum requirements; we have a problem with supervisor conduct. Our trainees aren't getting (Subject SC - Subj Depreciated Value = Subj Land Value) from any QE or CE course instruction. That instruction is conveyed entirely by the supervisors who are not working to specs. Which to date has been probably the majority of them. Same with the mindless 20-sec CA, same with backing into GRMs off the subject's SC conclusion instead of extracting them from the sales data and so on.

Not to mention the point that the IRL expectations at the user level are driven by the users, so that much is on them.

 

[CGinMN]

You can not teach someone to be honest, credible, knowledgeable, impartial, careful, well read, up to date, competent and a dozen other things unless they really want to learn and be a good appraiser.

Sure you can. Carrot and stick. But the incentives are all wrong. The carrot goes to the corner cutter; the stick goes to a competent appraiser who sets their fees based on the required scope of work. In the secondary market world, there is no incentive to be competent and provide a well-supported appraisal; in fact, it is clearly disincentivized. These are market forces at play.

 

[Terrel L. Shields]

here is no incentive to be competent and provide a well-supported appraisal

With sanctions being meted out by serendipity (someone has to complain) most appraisers can go years without being confronted with their weaknesses.

 

[George Hatch]

What you are complaining about is the conduct of individuals in govt. There is no mode of enforcement that isn't subject to human frailties. Reviewers aren't perfect, underwriters aren't perfect, state and federal regulators aren't perfect and even God's clergypersons on earth aren't perfect. So there will be mistakes, there will be some bias of personality clashes or business-related conflict of interest - to one degree or another - in any administrative or enforcement program imaginable.

"Compared to perfect" isn't among the alternatives. There is only better vs worse.

 

[Mejappz]

There is an issue about administrative law. When a local appraiser had a complaint filed - probably because his rival was now on the state board - they revoked his license though he had been duly licensed for 20 years nearly, without a single complaint. In appealing to a real court, the board was overturned and the judge said that since the board had never revoked a license upon the first offense, it wasn't appropriate to revoke his license. The appraiser has to be given a chance to improve if all other appraisers were given the same opportunity. But the judge went on to say the claims made were minor and he vacated the entire sanction.

Also, I have a question. Does USPAP even require an adjustment be made to a comparable? Does USPAP require 3 comps or more? Couldn't you simply rank sales and then assess which sale is the most similar? Isn't that a traditional appraisal method?

As usual, I see an awful amount of weakness in appraisers - particularly, CRs, in being able to develop the value of land, the cost approach, and the income approach. Virtually all the sanctions in the states I monitor has some issue with site value, cost approach or as in the report above, the income approach. Seriously, there isn't any excuse for this except FNMA and FHA have basically pooh-poohed the CA and IA to the point most appraisers are being either ignorant of it or dismissive of it and simply throw in some numbers and back into something similar to their SA.

Appraisers, like many professionals, are often products of the American educational system, which relies heavily on standardized testing. This approach dates back to the post-World War II era when returning GIs needed guidance on suitable careers, such as electrician or plumber. A simple bubble test was deemed sufficient to assess their potential.

These tests proliferated across the country, becoming the norm. Prior to this, a student aspiring to attend Harvard would undergo a rigorous interview process with professors, often writing essays or completing other in-depth assessments.

Similarly, in the appraisal industry, individuals complete primarily theoretical courses and take exams, after which they are deemed competent. This is further complicated by the awful continuing education classes every two years, with USPAP being the worst.

The result is a workforce of compliant professionals who can check boxes but struggle to think critically or creatively. They tend to follow directives without question, much like captives adhering to the demands of their captors. While there are always exceptions—those who dare to think independently—these individuals often face resistance and are marginalized, as their ideas threaten the established system. This phenomenon extends beyond the appraisal industry and is prevalent in many fields, especially among those in positions of power. If you need proof of this just check the appraisal leadership. Docile brain-dead zombies.

 

[Mejappz]

probably because his rival was now on the state board

Absolutely many on the board use their position to eliminate their competition. Moreover, no one has mentioned that those on the boards are often more incompetent or corrupt than those they are disciplining.

 

[Terrel L. Shields]

Absolutely many on the board use their position to eliminate their competition. Moreover, no one has mentioned that those on the boards are often more incompetent or corrupt than those they are disciplining.

Yes, this was a personal matter between the board member and the party with the complaint. The board member should have recused themselves. We've had former board members who surrendered their license while on the board. We've had past board chairs who were sanctioned and again there seemed to be an element of personal animosity between him and another sitting board member. They did compete in the same market so I cannot confirm that there was any personal angst but the sanctioned party did feel like it played a role.

 

[Terrel L. Shields]

What you are complaining about is the conduct of individuals in govt.

Nevertheless there should be an automatic sanction against those voting for a sanction against someone and only to have them appeal to a court and get it overturned. At a minimum, they should be required to take an ethics course and be removed from that board. There should be responsibility imposed upon someone who serves. That's why the board should not even be allowed to vote on someone's license directly. An administrative judge with appraisal experience should be the person making the judgment based upon the recommendation of the investigators. AND, if an investigator decides there is nothing, let it end there. But if the certified appraiser investigator decides there is a serious foul, then the report should be reviewed by 2 other certified appraisers of the same license level. Only with a majority vote of the 3 should it proceed to the administrative level.

 

[George Hatch]

All of those remedies could be legislated into existence at the state level.