Paul:
This thread makes the points I am trying to make. Some of the USPAP gurus on this and other forums are constantly arguing that the appraiser must explain the meaning of the cap rates so the client can understand them and not be mislead. You stated in your last thread that you saw abuses in your reviews. How many times do you think appraisers know Ye, or Re, or the stability of the income, or can support a future change in price. Y=R and Y cannot =R depending on equity build up, unstable income streams from various patterns, change in future prices, etc. How many appraisers much less clients do you think know or understand the subtle differences in R’s? The answer is none, zero, nada. How can you know Ye and not know the cap rate? Probably when most people do appraisals and use the band of investment method they have already extracted the range of cap rates from the market from experience, but rather than spend hours and pages explaining and supporting the rate just use a band of investment to support what they already know so they will be in compliance with USPAP or in general to CYA. Appraisal is a circular reference with many shortcomings. That is bad enough, but you have people, like you, reviewing the work of others and being paid to find something wrong to justify their fee, and the system is subject to serious abuse.
That is why I made the statement you labeled political. State boards are taking away peoples right to make a living for doing less than what you did in your B o I example. That is not a criticism of you. I don’t disagree with anything you have said. The point is that the nature of this business is such that when you throw in USPAP and state appraisal boards like the notorious NCAB for example; it is a recipe for gross abuse. Do you think these people know the subtle nuances and different shades of overall rates and what they encompass? Talk about arbitrary and capricious? In your example of B o I, why didn’t you explain the nuances of unstable cash flows etc.? You could have confused a lot of people and caused them to mislead others. I write this stuff and point all of this so called “political stuff” in hopes that somebody in authority with half a brain will wake up and correct this fiasco before any more damage is done. Hell, I have gotten to the place that I won’t do a commercial appraisal for people I don’t know. It ain’t worth the risk. We only have about 10 local appraisers (two qualified to do commercial) here and three of the most experienced will be retired in five years. None of them including me are willing to take the risk of taking on a trainee because of the risk. It ain’t worth it. Out of the remaining 7 appraisers, one is pretty good. The other six couldn’t even find their way to this forum much less read and understand what we are talking about. I ask, is the system as it exist protecting the public now or in the future? The answer is no. It is just another can of worms.