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Sticky Situation

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AppraisalTwin32

Thread Starter
Sophomore Member
Joined
Aug 19, 2007
Professional Status
Certified Residential Appraiser
State
Indiana
Hello All,

I have a situation I was just part of that gave rise to a few questions I was hoping many of our more astute appraisers could answer. I recently was inspecting a property with my supervisor. The owner (borrower), a realtor, had a package of information she provided to us during the inspection. In this package included her prior appraisal.
The prior appraisal was an exterior appraisal of the home. The subject is an 1,850 square foot ranch, 3 bedroom 1.5 bathroom vinyl/brick ranch built in the late 1990's. The prior appraiser used a 2,500 square foot two-story, 2,600 two-story, and 2,700 two-story home(s) as comparables. All of the comparables had 4 bedrooms and 2.5 baths. He left the GLA line of the subject, as well as the room count sections blank. He stated that due to the fact that the subject was unassessed at the time of his appraisal he could not derive such information. He also indicated that two of the comparables were "inferior" to the subject, although they were built within one year of eachother using the same materials. In exteriors I have completed in the past, I would NEVER turn in an appraisal without GLA or roomcount information. It is as simple as calling the borrower and measuring the home. So my questions are as follows:

1. While its no doubt unethical, is it even legal (USPAP compliant) to leave such information out given that the product is an exterior-only product?

2. As I am not an intended user of the original report, do I even have the right to read the prior appraisal at all?

3. If I am allowed to read the appraisal, how should I handle the situation. The appraisal was completed 6 years ago, so there is little I can do in terms of turning him in, nor do I feel it is my place as a trainee (I have had discussions with my supervisor, who does not want to gain a poor reputation with his "peers").

4. The original appraisal was inflated by approximately 10-15%, which means that my current appraisal is going to come in well lower than his. The realtor will no doubt complain to the lender and explain that there is no way her home "depreciated" over a 6 year period. Am I allowed to suggest that the prior appraisal was inflated, or should I just tell them that I will examine and address any contradictory evidence that they can provide?

Some of these may be "rookie" questions, and I realize that my supervisor should be answering many of these quesitons. He has provided little help in this situation, which is why I came to the board. I appreciate any feedback. Just want to make sure I handle this situation in the most ethical and honest way without overstepping my "trainee bounds". Thank you in advance for any insight you can provide.

-AppraisalTwin
 

Chris Colston

Elite Member
Joined
Jul 24, 2003
Professional Status
Certified Residential Appraiser
State
Florida
You can look at the old appraisal, you can read the old appraisal. Beyond that, if it were me, I'd say "thank you very much" and continue to do the job I was hired to do.

Who is your client? If the Realtor/owner is not your client than your only obligation is be polite and do your job. It doesn't matter what the communication is with that person if THEY ARE NOT YOUR CLIENT.

Besides as a trainee, your supervisor should be the one taking care of any "after the appraisal" communications.

I'm going to say it again, do what you were hired to do, which is appraise the real estate as of a certain date. Make sure you go over it with your supervisor who is equally responsible for the final value conclusion.

A 6 year old appraisal is useless to you, as should be a 6 minute or 6 hour or 6 day old appraisal if you didn't do it.
 

Scott Lanz

Member
Joined
Dec 13, 2002
Professional Status
Certified General Appraiser
State
Minnesota
In answering your questions:

1. You need to make the USPAP your nightly reading. I suggest reading and seeing if you can find the answer to your question. You would need a version from that time period.

2. Yes, you can read the report not being the intended user.

3. How you handle the situation is going to be left to you and your supervisor. I am not sure what "situation" you are referring to. I am assuming your job includes providing your opinion of market value, not a Standard 3 review and retrospective value opinion (appraisal).

4. First, making a comment about the value being inflated six years ago is an appraisal, and a retrospective one at that. Second, you have technically completed a review of the appraisal by commenting on the quality of the appraisal on this board (some may disagree with that).

Here are my suggestions since you asked for them.

Quit worrying about fighting an old appraisal and concentrate on doing your appraisal.

In the future, if you are going to take another appraisal, I would state you are using the report in the assistance of completing your due diligence and you will not be commenting on the reports quality or opinion of value in any way, unless the scope of work includes this service.

I would be very careful on answering questions about your appraisal with any person/organization outside of your client. This could extend your intended users list to these individuals.

Don't get sidetracked by these distractions.

Hope this helps and good luck,

Scott J. Lanz
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
I'm going to say it again, do what you were hired to do, which is appraise the real estate as of a certain date. Make sure you go over it with your supervisor who is equally responsible for the final value conclusion.

A 6 year old appraisal is useless to you, as should be a 6 minute or 6 hour or 6 day old appraisal if you didn't do it.


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should be a STICKY and a mandatory read before someone is allowed to post in this category.:clapping: :icon_idea:
 

Greg Bell

Senior Member
Joined
Jul 7, 2006
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Louisiana
Ignore the previous appraisal , obviously it's work of fiction....
 

AppraisalTwin32

Thread Starter
Sophomore Member
Joined
Aug 19, 2007
Professional Status
Certified Residential Appraiser
State
Indiana
Thank you very much for your quick and insightful responses! Chris, your answer was concise and correct. Thanks Scott for breaking down each point, and for adding extra clarification and insight beyond the original question. I can see now why my supervisor was so tight-lipped about the situation (I use the word "situation" for lack of a better one). Feel free to make this STICKY under a more appropriate (or explanatory) title. I don't mind looking like an idiot for life if it helps future newbies with the same question!
 

Chris Colston

Elite Member
Joined
Jul 24, 2003
Professional Status
Certified Residential Appraiser
State
Florida
should be a STICKY and a mandatory read before someone is allowed to post in this category.:clapping: :icon_idea:

Thanks Mike, I'm glad you liked it, but it's not in green so I wasn't sure if you really liked it or were just having fun with me. :flowers:
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
1. While its no doubt unethical, is it even legal (USPAP compliant) to leave such information out given that the product is an exterior-only product?

Just to provide some context, 6 years ago the Departure Rule in USPAP was in effect and very few appraisers had an inkling of how central the Scope of Work requirements would become for us.

Nevertheless, there were still requirements in USPAP to refrain from limiting the appraisal process so much that the results are no longer credible.

The Fannie form that was probably used made some very specific assertions. Crossing any of those assertions would be a violation of USPAP all by itself.

The appraisal report probably cited its data sources. If so, whatever information was on those data sources would have been considered, even if the reliability was suspect. Using the "I didn't personally survey each structure so I don't know if I can trust the data" argument is obviously fallacious. If the data was so bad that you had to measure then that's what you have to do. If it is good enough to use without further checking then its good enough to use.

To say that the average buyer/seller saw those properties as being equal is also demonstrably false if you can show an obvious trend where people using the available information and without any extraordinary verification measures paid different prices for different reported GLAs.

So yeah, telling lies in an appraisal report is a violation of USPAP no matter what sophistry is used to rationalize it.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
should be a STICKY and a mandatory read before someone is allowed to post in this category. :clapping: :beer: :D


thar ya go Chris.
 
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