REVIEWS

[Chris Harrison]

OH NO!! I maybe a USPAP violator and appraisal peeper 8O
Yesterday one of my best clients, a credit union, faxed me a copy of an appraisal that they were given to used as the value estimate of a property. The member applying for a home equity line furnished a copy of their most recent first mortgage loan appraisal done in November. While processing the loan application the loan officer noticed that the property was purchased in April, refinanced in November (appraisal date) and that it is reported as being a 1 year old attached townhouse PUD.
The appraisal (2055 interior inspection) fails to mention the April sold price of $135,000. Reports only 5 comparable sales and 4 active listings in the market area and yet indicates in the PUD section that there are a total of 120 units in this new development with 45 units for sale. According to this appraisal the property is now appraised at $155,000 :?:
This clients request is weather the property could have inflated by $20,000 in 10 months base on the information in this report. This is a limited review with a verbal opinion that I have done at no charge for a good client. I have completed my assignment and will now forward a written summary with the documentation to the State! According to some of the posts in this thread I am in violation of USPAP and may be endanger of being sued by the original appraiser. All I can say is BRING IT ON SCUM BAG :evil:
Chris Harrison

 

[Tom Hildebrandt]

Chris

My read on your comments is that the client asked you do do an appraisal review of a portion of another appraiser's work product. If you properly defined the scope of work in the review sufficient for you to meet the clients needs and that which would be typically expected by your peers, and have done the work essential to meet the development requirements in Standard 3-1 (and Std 1 if you expressed a value opinion) you are ok on the development side of your review assignment.

I take it that the client asked for an oral report. Perfectly ok. You need to make sure that your workfile accurately depicts your analysis, that you have a written summary of what you told your client and that the workfile contains a signed certification that you acted professionally.

In short, if you did the above, you met the minimum requirements of USPAP. If you have not done any one of the specific issues listed above, you did not do the work in accordance with USPAP.

Whether you chose to do the work for free is a business decision and has nothing whatsoever to do with USPAP. Having said that, what many appraisers feel and what many posters have said on postings on similar concerns about other appraisers who do such oral reports "for free," is that these appraisers often fail to recognize their obligations under USPAP to comply with Std 3. Such an individual is therefore likely not do the necessary scope of work to actually support their differences of opinion adequately. They may also fail to create appropriate workfiles and sign certifications.

The issue of whether you turn the other appraiser into a state board is a matter for you and you alone to decide. USPAP does not preclude such an action nor does USPAP require such an action. State law or policy may require it, or your membership in a professional organization may require it, but not USPAP.

Finally, regarding the matter of being sued, you can be sued regardless of whether you broke the law or not, or whether you complied with USPAP or not. You can not control the actions of others. However, if you complied with the law and USPAP, your chances of being "successful" in the suit are better than if you were not in compliance with the law or USPAP.

Hopes this helps sheds some light on the discussions presented in this thread.

Regards

Tom Hildebrandt GAA

 

[George Hatch]

As appraisers, we are constantly in search of new data about a subject property and the local market so that we can do the best job we can. I see absolutely nothing wrong with looking over another appraiser's report to see if they caught something that I might have missed. It's no different than accepting a brokers stack of "comparables" when appraising one of their properties. I may not like their comps, but just knowing where they are coming from can make my job of documenting my analysis easier. Face it, sometimes we have to sell our opinions a little and overcome objections.

If there's another appraisal out there that has a significantly different result, I must accept the possibility that the other appraiser spotted something that I didn't. It's either that or add the title "Appraisal God" to my business cards (yeah, right). And yes, I have learned a thing or two over the years from reading other peoples' reports. Show me someone who never does this and I'll show you an appraiser whose reports are straight from the 1980's.

Having and looking over another appraiser's report in no way influences my analysis unless its somehow instructive. Trying the stretch that one into a preconceived opinion of value is like trying to say that I have a preconcieved opinion when I start pulling comps. As for expressing my opinion of the other appraiser's work, I would only do that under very limited conditions. Examples of this might include a situation where the client is forcing the issue that one of us is wrong and I have to change; or the original report is downright incompetent or fraudulent; or the client has specifically asked for my opinion. None of those circumstances could be construed as a casual situation.

I would never make a complaint to the state unless the situation was desperate, and the other appraiser's work was clearly representing a hazard to the public. Adverse reviews and complaints are not cost effective, there's no money to be made, and the only way they are justified as a business practice is if they are fulfilling a specific legitimate purpose. As an aside, those rare occasions when I have made a complaint (2 in the last 11 years), those complaints were made in the form of a review, complete with the extra comparables and analyses, as well as the certification. Needless to say, the state did not come after me, nor have I ever seen anything in USPAP or the state law to suggest that my action was a violation. We are not required to bury our heads in the sand to avoid 'squealing'. Not anywhere.

An appraiser who wants to avoid making complaints or 'causing trouble' for others should certainly follow their hearts. But they shouldn't in any way delude themselves into thinking they are helping their clients, their peers, the appraisal industry or the public when they look the other way as the law is being broken.

We can't complain that there are idiots out there gobbling up the work when we allow them to conduct business as usual. Personal and professional responsibility do exist, not only in the abstract but also in real life.


Let's talk about the 'assignment' issue. I think we can all agree that when a client asks for an opinion on someone else's work that we are required to render that opinion in the form of a review, or else decline. That is hardly volunteering or initiating a review. How about when we come across a bad report that we want to send in? Can we do that if the report was handed to us by a client? The state boards say we should, and remember, confidentiality in USPAP does not extend between appraisers, only to appraiser-client relationships. If an appraiser is afraid that their work might come under scrutiny from some third party (including their state boards) at some time in the future, then maybe they should examine what is going out the door. Either that or consider the possibility that they are in the wrong line of work. Likewise, an appraiser who writes or communicates a review of someone else's work had best be prepared to stand by that review or face the consequences.

 

[Tom Hildebrandt]

George

Nice comments

Best Regards

Tom Hildebrandt GAA