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Practical multiple hats problem on my desk

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JSmith43

Thread Starter
Elite Member
Joined
May 5, 2003
Professional Status
Certified General Appraiser
State
California
My three hats are CG, RE Broker and LO. Currently, in my 8th year as a LO,
and working for a large national bank, I have on my desk, an appraisal that I must refute for my LO duties, but I don't really want to do a Std 3 review.
I would like to take the room temperature to see if the learned USPAP junkies that hang out here think I am in a USPAP Std 3 box.

Background: Appraisal comes in somewhat low, but, I can live with it, because I realistically set the expectations of the borrowers and prepared them for a lender paid mortgage insurance option, etc.

Appraisal comes in at, say, 350K instead of 360K. No big deal. Appraiser marks URAR market time 3-6 Mo. OK, the 4 gridded comps used averaged 4 mo. on market. Makes sense.

However, in a short narrative blurb, appraiser mentions that only 5 two story homes comparable to the subject closed in the past year. He notes there are no pending sales and there are 5 listings that are comparable to the subject. Conclusion: Based upon the 5/5 ratio, appraiser concludes that the absorption rate is one year for the subject:unsure:.

I could smile at the sample size and look the other way, but this so intimidated (or otherwise influenced) the UW, that he whacks 5% off the maximum loan terms offered.

This happens to be in my back yard, and I too was shocked at the market implications when reading the report. Trouble is, when I fired up MLS and did a rough filter of the area, I came up with 45 sales of 2 story homes in the 300-400K range. I went 5 years either side of the subject's 7 year age (subject condition way above average-low EA), 200 main level SF above and below. The area is wonderfully defined and homogeneous.

The report is fairly reasonable, but, like the [SIZE=-1]Sorcerer's Apprentice in Fantasia might respond to a Statistics for Dummies course, the guy painted a vivid picture in the UW's mind that will affect my customer, which in itself, is OK with me. But, I don't think the appraiser really meant to give such weight to such a highly refined and narrowed sample size.

Question: I have no intention or reason to critique the appraiser's estimate of value, only the lack of clarification as to the significance of the artificially limited sample size used to create the scary impression that the home would take a year to sell (via his absorption conclusion) in spite of market evidence that DOM average was 4 months for the comps used and the front of the form checks 3-6 months for marketing time. He did check the "over supply" box.

Can I make the argument I just made and hide under my LO hat if they don't know I am a licensed appraiser? Assume my state is OK with the hat stuff.
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USPAP Compliant

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
IN NC if you have the appraiser license or certifiction then you must abide by the Appraisers Act Chapter 93E . If a fellow working beside you, for a bank, DID NOT have a license/certification you have, he/she could do the appraisals and reviews (for his employer) and never give a second thoght to Standard 1, 2 or 3 (much less 4-10).

(f) A trainee registration, license, or certificate is not required under this Chapter for:
(1) Any person, partnership, association, or corporation that performs appraisals of property owned by that person, partnership, association, or corporation for the sole use of that person, partnership, association, or corporation;
(2) Any court-appointed commissioner who conducts an appraisal pursuant to a judicially ordered evaluation of property;
(3) Any person to qualify as an expert witness for court or administrative agency testimony, if otherwise qualified;
(4) A person who appraises standing timber so long as the appraisal does not include a determination of value of any land;
(5) Any person employed by a lender in the performance of appraisals with respect to which federal regulations do not require a licensed or certified appraiser; and
(6) A person who performs ad valorem tax appraisals and is certified by the Department of Revenue under G.S. 105-294 or G.S. 105-296;
however, any person who is registered, licensed, or certified under this Chapter and who performs any of the activities set forth in subdivisions (1) through (5) of this subsection must comply with all of the provisions of this Chapter.
 

JSmith43

Thread Starter
Elite Member
Joined
May 5, 2003
Professional Status
Certified General Appraiser
State
California
Thanks, Mr Compliant. I may have to educate my manager and have him do it:)
 

USPAP Compliant

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
MN Appraiser Law



Who Needs an Appraiser License


Printable Content
If you have questions about whether a license is required, please contact the Commerce Department at 651-296-2488 to discuss your activities and what type of license may be required. Unlicensed activity may result in administrative action.

82B.03 Prohibitions.

Subdivision 1. License required.
(a) It is unlawful for a person to act as a real estate appraiser in this state unless licensed under this chapter.
(b) Only persons licensed under this chapter may advertise or represent themselves to be real estate appraisers.
(c) No person, other than a licensed real estate appraiser, may assume or use that title or a title, designation, or abbreviation likely to create the impression of licensure as a real estate appraiser by this state.

Subd. 2. License not required.
(a) An officer or employee of a corporation, partnership, or other business entity may act as a real estate appraiser without obtaining a license under this chapter if the corporation, partnership, or other business entity in which the person is employed or is an officer has an interest in the real estate that is the subject of the appraisal as owners, lenders, investors, or insurers.

(b) Notwithstanding licensure under this chapter, any appraisal conducted by a person exempt under this subdivision is only subject to the guidelines for real estate appraisal policies and review procedures of the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the Federal Reserve Board, the Farm Credit Administration, the National Credit Union Administration, or the comptroller of the currency, if the appraisal was conducted only within the scope and purpose of this subdivision.

(c) If a real estate appraisal is made by a person who is exempt from licensing under this subdivision, the person for whom the appraisal is conducted must be given written notice that the appraisal was not conducted by a licensed appraiser, and the appraisal report must clearly state that it was conducted by an interested party and not by a licensed real estate appraiser.

82B.035 Exemption.

Subdivision 1. Market analysis. This chapter does not apply to a licensed real estate salesperson or broker who, in the ordinary course of the licensee's business, gives a market analysis of the price of real estate, if the market analysis is not referred to or construed as an appraisal.

Subd. 2. Assessors. Nothing in this chapter shall be construed as requiring the licensing of persons employed and acting in their capacity as assessors for political subdivisions of the state.

Subd. 3. Geologists or engineers. This chapter does not apply to an appraisal, analysis, opinion, or conclusion as to the value of oil, gas, coal, and other mineral resources performed by an engineer registered as provided in sections 326.01 to 326.15 or by a certified professional geologist, unless the appraisal, analysis, opinion, or conclusion of value is performed in connection with a federally related transaction subject to the requirements of United States Code, title 12, section 3331, et seq., the federal Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

Subd. 4. Department of revenue. This chapter does not require persons employed by, or under contract to, the department of revenue to be licensed in order to perform, conduct, or assist in, an appraisal done within the scope of their employment or contract duties.
 
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George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
This is a classic "when does USPAP apply?" question. Regardless of the coincidence that you happen to be a trained appraiser, your role with this property is not that of an appraiser but of a loan originator. In that role you are not expected to be unbiased nor are you expected to pursue a particularly high level of diligence with respect to developing your opinions.

There is no review assignment, there is no intended user and this situtation wasn't given to you because somebody else knows you're an appraiser and is now asking for your professional opinion.

In short, you are a user of this appraisal and the decisions you have to make is about the property itself, not the appraisal.

The fact that you have the expertise to see the error in fact upon which the exposure time estimate was built doesn't, by itself, trigger the requirements in USPAP. At any rate, you can't really represent yourself as being the D3P anyway because you do in fact have an interest in the property and the transaction. You really can't wear both hats at the same time, and the choice of which hat to wear was made before the report landed on your desk.

In your place I would do what I've seen a hundred (non-appraiser) loan underwriters do over the years - express your disbelief of the characterizations in that appraisal report and ask the appraiser to reconsider.

If you're at all nervous about it, you could simply resort to the use of the pointed question. Instead of expressing an opinion of your own, you could question that conclusion, ask the appraiser to address the multitude of sales data that you found and comment on average exposure times among those sales data. Then politely request that they reconsider their opinion of exposure time and market stability based on this additional information.

Believe it or not, USPAP and its predecessors were never intended to make your life miserable or place undue burdens on your business. IMO.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
I'm not sure what the conflict is?
What I'm getting is all you want to do is have some clarification on the absorption rate and for the appraiser to consider additional information?

You can do that research and provide it (formally, if you'd like) in a written request for the appraiser to consider.
You are not being engaged as an appraiser by a client; therefore, you are not acting as an appraiser (IMNSHO); you are acting as a loan officer.:new_smile-l:

Unless you want to act as an appraiser and sign a certification and review the original report, I don't see the issue? :shrug:

(edit to add: George posted while I was writing; his post makes mine redundant! :) )
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
This is a classic "when does USPAP apply?" question. Regardless of the coincidence that you happen to be a trained appraiser, your role with this property is not that of an appraiser but of a loan originator. In that role you are not expected to be unbiased nor are you expected to pursue a particularly high level of diligence with respect to developing your opinions.

There is no review assignment, there is no intended user and this situtation wasn't given to you because somebody else knows you're an appraiser and is now asking for your professional opinion.

In short, you are a user of this appraisal and the decisions you have to make is about the property itself, not the appraisal.

The fact that you have the expertise to see the error in fact upon which the exposure time estimate was built doesn't, by itself, trigger the requirements in USPAP. At any rate, you can't really represent yourself as being the D3P anyway because you do in fact have an interest in the property and the transaction. You really can't wear both hats at the same time, and the choice of which hat to wear was made before the report landed on your desk.

In your place I would do what I've seen a hundred (non-appraiser) loan underwriters do over the years - express your disbelief of the characterizations in that appraisal report and ask the appraiser to reconsider.

If you're at all nervous about it, you could simply resort to the use of the pointed question. Instead of expressing an opinion of your own, you could question that conclusion, ask the appraiser to address the multitude of sales data that you found and comment on average exposure times among those sales data. Then politely request that they reconsider their opinion of exposure time and market stability based on this additional information.

Believe it or not, USPAP and its predecessors were never intended to make your life miserable or place undue burdens on your business. IMO.

I agree 100%.
This is the perfect example of when many years experience in other sides of real estate will make you more professional in your job. Your borrower could have ended up with an LO who will do nothing but rant, rave, tick off everyone involved, and end up costing them more points, interest, and PMI. My 3 hats off to you for building such a distinguished career. :)
 

JSmith43

Thread Starter
Elite Member
Joined
May 5, 2003
Professional Status
Certified General Appraiser
State
California
Thanks, ML. I like to try.

George, I especially liked this part:
If you're at all nervous about it, you could simply resort to the use of the pointed question. Instead of expressing an opinion of your own, you could question that conclusion, ask the appraiser to address the multitude of sales data that you found and comment on average exposure times among those sales data. Then politely request that they reconsider their opinion of exposure time and market stability based on this additional information.

It takes care of my minor nervousness that I might get carried away and impute an opinion of value or an opinion of an appraiser's opinion of some aspect of value. But, mostly, I think it is an appealing style and strategy to use in arguing my point.

Ditto Dennis.
Thank You Mr Compliant....Is that you, Bob?:beer:
 

Fred

Elite Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Virgin Islands
Who Needs an Appraiser License
Whomever FIRREA says needs one.


Roger
Question: I have no intention or reason to critique the appraiser's estimate of value
You already did.


There is no review assignment, there is no intended user and this situtation wasn't given to you because somebody else knows you're an appraiser and is now asking for your professional opinion.
If you guys keep trying to create more and more loopholes, to be accurate, you are going to have to change the name to Uniform Standards of SOME SMALL PORTION of Appraisal Practice.


BTW George, if I were called upon to express an opinion of what Roger did, there is nothing stopping me finding that your assessment is factually wrong, that Roger’s if professional status as an appraiser was on his resume or job application when he was hired. Further, because of their knowledge of his professional status, his employer expected him to review appraisals that crossed his desk in a manner befitting a professional appraiser operating under generally accepted standards of practice.

As you probably would anticipate, in the responses I am crafting to the ASB’s current questionnaire – where it asks if USPAP is achieving its goal of promoting and maintaining a high level of trust – my answer is no. I start by mentioning that trustworthiness in anything is not achieved with “minimum” standards. I go on to point out that beginning in 2000, the ASB set aside certain parts of appraisal practice so that these practices are not covered by the Standards. This has been followed by the more recent attempts to create the I-didn’t-really-have-a-client loophole. I am thinking of calling that the ha-ha, fooled-ya, you-thought-I-was-an-appraiser defense.
 
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