Out Of State Review

[Dale Smalley]

Are you not competent to read a report and say what you like and dont like about it? That is what a review is. Just tell them the facts that you are not local and the review is based on info provided in the report. USPAP does not prevent you from providing this type of service. What could be better than reviewing a 2075 and in the end you could recommend they get a real appraisal if you are not satified.

 

[Oregon Doug]

Dale - after more than three decades as an appraiser, including a career as a national commercial appraiser and having taught appraisal BL (before licensing), I have to say that I do not believe that I am really competent to accurately review a URAR residential form appraisal of a home in suburban Yourstate. That dosen't mean that I can't read the appraisal report to verify that all the little boxes are checked and that the written responses and comments are all appropriately filled in so that the report appears to lead to a logical conclusion - I can do that.

In Standard 3 (USPAP '03), line 1123 it says "The COMPETENCY RULE applies to the reviewer..." It states in the COMPETENCY RULE, line 386 to 395 that "In an assignment where geographic competency is necessary...." [I hate their wording here because it implys that there are some instances where it is appropriate to be incompetent.]

I take this to mean that if during the course of your review, you agree with the appraisal, concur with its value conclusion or don't and change it, you have in fact completed an appraisal and you must therefore be bound by at least the same level of competence as the appraiser who's work you are reviewing - and that includes the necessary geographic competency. By signing the review, you enter into a co-liability with the appraiser.

Getting back to my review of a residential appraisal Yourstate, I lack the geographical competency to tell if the appraiser's selection of comparable sales is appropriate or not. If I appraise a home on Assumption Street in Eugene, OR and use comparable sales less than a quarter mile away on St. Helena Street - can you tell me if they are appropriate or not? I doubt it - nor could I tell if a comparable sale on Maple Street in Yourtown is suitable for an appraisal of a home on 7th Avenue. Could I write an appraisal that would fool you? Sure I could and you could easily fool me, too. Therein lies the rub.

What is the purpose of an appraisal review? It seems to me that the underlying reason that a review is requested is founded on the client's uncertainity of the appraisal. The reviewer is bound to adhere to SR 3-2 (d & e) in the review reporting process. If I, as a reviewer, can not be certain that the information included in the appraisal being reviewed is accurate or appropriate to the appraisal analysis, because of my lack of geographical competence, then I would be in noncompliance with SR 3-1 (d-g) and SR 3-2 (d & e) at a minimum.

Then we go on to regulitory and jursictional issues....

Dale, I ain't review'n your appraisals.

Oregon Doug

 

[Dale Smalley]

Doug
You are just the type of person who should be doing reivews. The good folks at the bank can't read a report and know what is good or bad or if a drive by needs to be upgraded.

I am clueless to USPAP so dont bother to quote some part here and there.

If USPAP is going to prevent you from making an honest living to use your extensive knowlege of appraising then it need to revoked. Reviewing is not that hard to do and needs to be done to weed out the BS going around.

 

[Bill_FL]

I want to know how, a reviewer from out of the area can comply with SR 3-1(e)?

 

[Dale Smalley]

Bill
All reviews have to have some assumptions otherwise you would have to do a whole new appraisal and then you are back where you started. But now there are two appraisal to review. Again USPAP has proven to be a disservice to both the appraiser and the lender. All they want in the review to ensure that the appraisal is valid and reasonable. You do the best with what is provided and expain it in simple terms that they can understand. No you can't prevent all outright fraud but you can prevent much of the overvaluation abuses. I can tell you firsthand there some just bad appraisals out there looking for a funding source.

 

[Oregon Doug]

Dale - you told Bill that " All they want in the review to ensure that the appraisal is valid and reasonable. "

That is my point, exactly! How are you, over there in Yourstate, going to review my appraisal in Mystate and satisfy your client that my appraisal is valid and reasonable (or not) without sufficient knowledge and understanding of the market in Mystate. I don't believe that you can - period!

You & I are just simply gonna have to disagree on this one.

Bill - Your question " I want to know how, a reviewer from out of the area can comply with SR 3-1(e)? " is valid. I would add that if a violation of SR 3-1(e) is involved, then a violation of SR 3-2(e) is also included (SR 3-1 has to do with developing, SR 3-2 has to do with reporting) along with the potential for a Competency (geographic) issue.

As part of the review process, the reviewer is typically requested to agree with the appraisal value conclusion, or if the reviewer does not agree, to change the value conclusion. The net result is that the reviewer has provided an appraisal - no matter which. If you - over there in Yourstate - review my appraisal over here in Mystate; I find out about it and determine that you are not licensed/certified in manditory Mystate - I'm going after you for unlicensed appraisal activity in Mystate at a minimum. I may be able to file a complaint against you in Yourstate for violations of SR 3 - 1 & 2 (Yourstate may not accept complaints from non-residents) based on geographic competency.

If Yourstate is not manditory and/or you are a non licensed employee doing "collateral assessment & compliance" reviews for some lender - then there's not much that can be done.

USPAP places a yoke on us appraisers that does not apply to anyone else. Yourstate may have regulations that control non-licensed/certified appraisal activity (usually with loop holes) or it may not but the net result is that we have a hodge-podge of rules and regulations in 55 individual jurisdictions that impact us all differently. That makes it difficult to conduct appraisal or appraisal review activity on an inter-state basis.

This is murky water that places reviewers at greater risk that many of them think..........Oregon Doug

 

[Bill_FL]

Doug,

We are on the same page.

Basically, to answer the question "Am I qualified to do this review?" you have to be able to answer the question "Am I qualified to do this appraisal?"

In the situation that was originally asked in this post, my answer would be no. I am not qualified to do a review or an appraisal in Doug's market. Just as he is not qualified to do one in mine.

You really do not even need to go across the country for this to apply.

Pam is from Jacksonville. Pam, unless she has a weekend home there, is not qualified to go appraise in Orlando. She does not know the market. She could associate herself with someone who is, or spend sufficient time in the market to make herself familiar with it.

 

[Charlotte Dixon]

Originally posted by Oregon Doug@Apr 7 2003, 10:31 PM
The questions then are: Is Delaware a manditory state - is the appraiser/reviewer required to be licensed in Delaware? If the answer is yes, then obviously Delaware needs to initiate the complaint and investigation regarding the reviewer's license status and geographical competance regarding the Delaware market.

It is the responsibility of the Oregon Board (ACLB) to monitor appraisal/review activities of those licensed/certified appraisers in the state of Oregon (a manditory state). The Oregon Board will investigate complaints filed against Oregon Appraisers for USPAP violations and non licensed/certified Oregon residents performing appraisals of properties in Oregon. I assume that Delaware is similar.

I don't see how an Oregon Investigator would be able to adequately investigate a complaint involving a property in Delaware - the investigator would lack the requisite geographical competance. Without that local knowledge, it would be difficult to perform an investigation regarding alledged developmental matters (SR 1) or reporting violations (SR 2).

You're right - it is a loop hole, no matter what. I don't know what the answer is (national license?) but I'll keep asking questions.

Oregon Doug

Doug, here we go 'round again. I'm on the Delaware Council on Real Estate Appraisers, now, and intend to do some work on this. The existing members are steadfast; I've been told that Delaware does not monitor out-of-state review appraisers, and the Council is of the opinion that each state is responsible for it's own licensee. Yes, we are a mandatory state. I believe this will require quite a bit of discussion and nashing of teeth over a period of time until we are all on the same page. It may even be tied to practice permits. In any event, it's a can of worms. And the can of worms is very busy doing reviews here, there and everywhere all over the states.

 

[Dale Smalley]

You guys are on the wrong page. We are not doing field reviews these are desk reviews. Akin to checking homework. You read it and mark the problems to be fixed. Here we order REO appraisals and expect the local appraiser to explain those local market conditions and what effects value. I am assuming that that information is correct. But if I use a second source of data that is different then we have to review and make our own value judgments. I don’t know how in the world you read that USPAP prevents you for doing this type of work. Are you suggesting that persons with no appraisal experience review appraisals because they are not bound by USPAP? Just do the research to gain competency and be compliant.

Of course nobody gives you any cookie cutter stuff to review only the really weird ones. And good luck finding a good reviewer in every market.

 

[Carnivore]

Dale,

I think what is in a lot of minds is the liability inherent with this kind of work for the measely bucks. Frankly, you have not made a very good case for your cause. At least you have not convinced me and it appears a few others are either. So where does this leave the situation. Well me and many others dont want to do it. So there ya go, your stuck. Seems like an education is in order for in-house people. Now if you think it wont work for you because the cost is prohibitive to acccess lots of data bases around the country then all I have to say is sorry, thats life. I pay for it, so I use it in the way I choose, for the money I want.