Question about appraisers responsibility to include comments on conditions they observe

[teakay77]

You might have a case. Appraisers are supposed to be impartial with divorce or other work , and not under value nor over value to help a "side" out. Idk if the 386 one is too low or the 525 one is too high, but something is wrong to be so far apart

The junk and scrap metal can be removed and normally are not a valuation issue, however pits and ponds dug on the land and or neglect/repair issues do affect value.

I realize the junk and scrap metal can be removed. I worked all last winter on removing it. I'm sure there are still some things in the ground (nuts, screws, etc.), but it has been returned to horse pasture like it was when we purchased it. I hand pulled all the weeds growing around all of the junk and burned them and the pallets in one of the pits that I still have not had time to fill in all the way.

My point is that it was appraised as if everything was in pristine condition and the property could go up for sale at the appraisal value. It was in horrible condition and that is what I got....a property in horrible condition that needed tons of work. Typically when someone purchases something that needs alot of work, they pay less for it. My husband, who caused all of the negative issues, got paid for half of the equity based on the value of $525,000. He devastated this place and then walked away with a huge paycheck leaving me to deal with all the issues.

I think the 3rd appraiser was told by my husband's attorney what the value needed to be. The three comps used were all superior homes. (I have DIY concrete countertops with flaws and kitchen cabinets that I painted myself. Comp 1 has marble countertops and custom, old-world style cabinets). And yet in the end she adjusted up $25,000. I know there were other details, but she adjusted up in every case to homes that were obviously nicer. If you took a potential buyer to my house and to any of the comps, they would be confused as to why they were being shown this "fixer-upper" that would never compare with the other homes.

 

[teakay77]

If your attorney was actually working for your husband and you have evidence of this, the attorney should be disbarred. My Mom and I went through a similar issue (in Mississippi) between her attorney and the other attorney being "friendly" with opposing side. This involved Probate, a life estate, and a Medicaid dispute. The opposing party had an offer to buy the property from the neighbor all along and we were stumbling around from another state, while trying to work. We had to pay for timber cruises, multiple appraisals, etc. just because the attorneys were making back alley deals. We paid for an appraisal. The other party paid nothing. I lost all the money I paid for appraisals when it could have been settled quickly if we had been informed of the offer. Small town issues. That attorney would mail checks to the wrong person, etc. I have never seen the appraisal I paid for to this day and it has been 10 years. There was only 1 other CG appraiser in this county, the Attorney's Mother, if you can believe it. Greed knows no bounds, especially where most attorneys are concerned. There must be some honest ones, just haven't experienced one in person, myself.

I do not know if anything will happen to the attorney. After I got divorce, my divorce file was returned to me. I went through it and found so many things that had been withheld from me. It took me almost a year to learn about what should have happened, gather evidence and then file complaint against attorney. I had to do it for me if nothing else.

 

[teakay77]

Ummmm what? Can a client not request a report subject to certain conditions? I need further clarification here. I am interested in learning more

My husband's attorney may have told the 1st and 3rd appraisers that the property would be cleaned up. I do not know. She may have told them anything. I do not know the magic words to say to make things happen like I want them to, but this woman did know how things worked.

But it seems to me an honest appraiser would have to include what they saw in their inspection, no matter what they were told, and indicate the value is based on certain conditions being met.

 

[teakay77]

I preach the use of narratives and when I see the obvious poor form filling skills of the current crop of appraisers, it's no wonder the banks want shed of us. We talk about a good game of "public trust" but looks to me like all 3 appraisals should go to the state...ALL OF THEM. If you are using an explicit lender form for a divorce assignment you need your *** handed to you by the state board.

I knew an appraiser who did this kind of work and got away with it over 20 years. She was hired by the husband. The wife hired an older appraiser who even taught classes at one time. He took an assistant. Afterwards the wife filed against all 3. The one I knew well had to surrender her license and owes the state $2200 still. The older guy had the temerity to die before his hearing and his assistant got reprimanded and fined...as well as sent back for more education.

The fine points of USPAP compliance is blown out of the water by grossly abusing the forms and certainly there are far better forms to use than the lender forms that secondary market and only secondary market requires. My BANK clients do not use those forms as a matter of course because they are not selling the paper into secondary market. They prefer something they can read and that isn't UAD codes and abbreviations. Appraisers, learn to write for God's sake.

What is an appraisal for a divorce supposed to look like?

 

[Terrel L. Shields]

What is an appraisal for a divorce supposed to look like?

It needs to follow USPAP and what is formally known as "The Appraisal Process"

1) State the problem (The 'problem' is NOT a lender problem)
2) Identify the data needed and the sources (The scope of work)
3) Gather, record and verify the necessary data (the data you deem relevant)

a) General data​

i) Nation​

ii) Region​

iii) City​

iv) Neighborhood​

b) Specific data​

i) Subject site​

ii) Improvements​

c) Data for each approach​

i) Sales data (appropriate sales - preferably that bracket the subject in size, age, and perhaps something like bedroom count)​

ii) Cost data (if applied. And in a divorce I personally would always included it but not required.)​

iii) Income and expense data (Income approach is generally only used for income property like rentals or commercial)​

4) Determine the highest and best use - HBU (what is its current best use like single family, commercial, etc.)
5) Estimate the land value (as if vacant and available for its highest and best use)
6) Estimate value by each of the three approaches (you used)
7) Reconcile the estimated values for the final value estimate
8) Report the final value estimate

USPAP demands impartiality. It demands accuracy both in the data and your observations of the property. It does not demand perfection and appraisers can and do differ at times. The less common a property is, the more common for the opinions of appraisers to diverge. The more data the more consistent the analysis. If you have chosen the best comps and do a credible job of analysis, then the report writing is the next step. That is called Standard 2 of USPAP. The report must be understandable by the client. The report should be clear and make a compelling case why and how they reached their conclusions. Unfortunately the reconciliation section is often boiler-plate piffle. A well written report be it narrative or an APPROPRIATE form designed for general use, will include text that explains why the appraiser arrived at the value that they did.

 

[Tiffany Gibbons]

I realize the junk and scrap metal can be removed. I worked all last winter on removing it. I'm sure there are still some things in the ground (nuts, screws, etc.), but it has been returned to horse pasture like it was when we purchased it. I hand pulled all the weeds growing around all of the junk and burned them and the pallets in one of the pits that I still have not had time to fill in all the way.

My point is that it was appraised as if everything was in pristine condition and the property could go up for sale at the appraisal value. It was in horrible condition and that is what I got....a property in horrible condition that needed tons of work. Typically when someone purchases something that needs alot of work, they pay less for it. My husband, who caused all of the negative issues, got paid for half of the equity based on the value of $525,000. He devastated this place and then walked away with a huge paycheck leaving me to deal with all the issues.

I think the 3rd appraiser was told by my husband's attorney what the value needed to be. The three comps used were all superior homes. (I have DIY concrete countertops with flaws and kitchen cabinets that I painted myself. Comp 1 has marble countertops and custom, old-world style cabinets). And yet in the end she adjusted up $25,000. I know there were other details, but she adjusted up in every case to homes that were obviously nicer. If you took a potential buyer to my house and to any of the comps, they would be confused as to why they were being shown this "fixer-upper" that would never compare with the other homes.

I still think the 20 acres probably has more to do with upward adjustments. Did any of the appraisers use comparable sales with acreage? I would want to do a narrative for a divorce appraisal and it would be priced accordingly. I hope attorneys are not going for cheaper and faster reports like lenders.

 

[teakay77]

I still think the 20 acres probably has more to do with upward adjustments. Did any of the appraisers use comparable sales with acreage? I would want to do a narrative for a divorce appraisal and it would be priced accordingly. I hope attorneys are not going for cheaper and faster reports like lenders.

I had 6 horses when we bought the place. It has a horse barn. The acreage is horse pasture and it is all needed to sustain the horses. This is in a rural area. There are subdivisions in the area, but most of the places here are farms of various size and types.

The 1st appraiser used 11.6, 7.5, 21 and 30 acre comps. The 2nd appraiser used 10, 23 and 19 acre comps. The 3rd appraiser used 21, 7.5 and 11 acre comps. The 3rd appraiser said she added value for vacant land. I don't think we had any vacant land. It was all used for the horses, until my husband started a junk yard and I temporarily fenced them out of that to prevent injuries.

 

[teakay77]

It needs to follow USPAP and what is formally known as "The Appraisal Process"

1) State the problem (The 'problem' is NOT a lender problem)
2) Identify the data needed and the sources (The scope of work)
3) Gather, record and verify the necessary data (the data you deem relevant)

a) General data​

i) Nation​

ii) Region​

iii) City​

iv) Neighborhood​

b) Specific data​

i) Subject site​

ii) Improvements​

c) Data for each approach​

i) Sales data (appropriate sales - preferably that bracket the subject in size, age, and perhaps something like bedroom count)​

ii) Cost data (if applied. And in a divorce I personally would always included it but not required.)​

iii) Income and expense data (Income approach is generally only used for income property like rentals or commercial)​

4) Determine the highest and best use - HBU (what is its current best use like single family, commercial, etc.)
5) Estimate the land value (as if vacant and available for its highest and best use)
6) Estimate value by each of the three approaches (you used)
7) Reconcile the estimated values for the final value estimate
8) Report the final value estimate

USPAP demands impartiality. It demands accuracy both in the data and your observations of the property. It does not demand perfection and appraisers can and do differ at times. The less common a property is, the more common for the opinions of appraisers to diverge. The more data the more consistent the analysis. If you have chosen the best comps and do a credible job of analysis, then the report writing is the next step. That is called Standard 2 of USPAP. The report must be understandable by the client. The report should be clear and make a compelling case why and how they reached their conclusions. Unfortunately the reconciliation section is often boiler-plate piffle. A well written report be it narrative or an APPROPRIATE form designed for general use, will include text that explains why the appraiser arrived at the value that they did.

Thank you for explaining. I appreciate your help. From my research I found that Standards Rule 1-1b states: “In developing a real property appraisal, an appraiser must not commit a substantial error of omission or commission that significantly affects an appraisal.” I think the 3rd (and the 1st) appraiser did not adhere to this rule. Neither noted the condition of the property.

Also from what I can understand, if an “as if” or “assumptive” appraisal is prepared, the appraiser must disclose that the appraisal is hypothetical and not an indication of the market value of the property in its “as is” condition. It is a hypothetical appraisal because it assumes conditions not in existence at the time the appraisal is prepared. It assumes the future events vital to the value estimate have already taken place. I realize many times this is referring to new construction being completed, but I would think it also has to apply to renovations/repairs and deferred maintenance.

 

[Tom D]

i have changed my mind from 'subject to' to 'as is' minus costs to cure certain problems, and/or the $ affect on the marketability of the subject. are we now talking about a home that most buyers would not buy, then maybe only the sharks coming out. in a divorce the judge is only looking for the 'as is' value to determine equity. 'subject to' is getting to complicated for this situation where that isn't going to happen by either party.

 

[teakay77]

i have changed my mind from 'subject to' to 'as is' minus costs to cure certain problems, and/or the $ affect on the marketability of the subject. are we now talking about a home that most buyers would not buy, then maybe only the sharks coming out. in a divorce the judge is only looking for the 'as is' value to determine equity. 'subject to' is getting to complicated for this situation where that isn't going to happen by either party.

I think you are correct about the buyers. No one would buy unless it was very cheap because they can just buy another property that does not need all the work done. My first instinct was to let it actually go up for sale and wait for price to drop and buy it myself, but I could not do that because my husband's family is very wealthy and his mother would have purchased it at full price for him. Then my mother and brother would be stuck with my husband's eye sore property in between them for the rest of their lives.