The Georgia Trying to Eliminate Appraisal Subcommittee

[David C. Johnson]

<span style='color:darkblue'>Steven:

Mandatory competency testing for board member service on state boards would cure the second "issue" you identify.

As for the first issue, without knowing the circumstances (which would require a large investment of one's time to absorb even if all "the facts" were available / published) there is little basis for meaningful comment from anyone. Are you familiar with the full circumstances here? What is your take on this? (Or in Tom's terminology, "what is your cut on it?")

If you would, remind me which state you are from (and I assume this is from your state)? Generally, do you view this write-up as reasonable, absurd or N/A or what? There is at least one obvious "typo" in it. Is it yours or the board's?

Thanks.

dcj</span>

 

[Fred]

David,
It is from IL, not my state, posted on another chat room, so I think it is a recent ruling, and I don't know anything except what it says in the statement. This is not a trick question!

 

[Tom Hildebrandt]

Steve

My cut is that I have essentially the same opinion as yours. This board has confused the report (Std 2) with the appraisal (St1). The NCAB does the same thing. The core problem is that this type of board believes that if they do not understand the report, the appraisal is wrong. This is old school appraising, that any appraisal report must have sufficient information for any and all readers of the report to not have any questions when they have finished reading the report.

In that light, I see some confusion in the description of performance standards and the related analysis. The statements that he failed to note the Enterprise zone, note ingress/egress and age in the report does not mean that the appraiser may have failed to "analyze" these property characteristics. Ditto for the Highest and best use, the discussion of the "uniqueness" of the property and the sales history analysis.

From my read on this, I suspect that the appraiser did a poor job of reporting what he did, but probably there are only two legitimate and provable reporting errors, the failure to disclose Departure (although from the summary it is not clear what the departure should have been) and a failure to summarize the sales history.

Just as you note, Steve, the rest of the issues all appear to be development issues, and as DAvid notes, without a review of the workfile and discussion with the appraiser, one can not legitimately make an informed decision regarding whether the respondent developed the work product properly.

Based on the reading of the summary, I have no clue as to the merit off the case.

I give the board a D- on their summary reporting of this case as one could certainly make the case that this "summary case report" is misleading. I give the board an F on USPAP knowledge. Just as a side note, this summary is perhaps better than the NCAB summaries, the NCAB seldom references USPAP.

Regards

Tom Hildebrandt GAA

 

[George Hatch]

Please tell me that summary was not written by a licensed appraiser. I would bet that most of the participants on this forum could have written that better.

Here's my cut on this.

Assuming that all is as reported and we aren't missing something of significance, I would agree that the board confused reporting requirements with development requirements in USPAP. This detracts from the credibility of the board, and detracts from the confidence of appraisers in that state toward their board. By extension, it also detracts from the public trust in both the appraisal profession and the licensing system.

Not knowing the facts of the case, it is difficult to determine from these allegations if there was an impact on the valuation itself, or if the complaint is centered around the lack of disclosure of key elements of the assignment. Lack of disclosure in a report is not exactly the same thing as lack of development.

Assuming there were no significant errors in the valuation portion and that the highest and best use was as reported (although allegedly not developed), the low degree of sanction is probably warranted. Give the appraiser a public reprimand, some education and a fine, and move on to the next case. This does not appear to rise to the level of enforcement that should require a license suspension or revocation. The fact that the board messed up in their analysis and summary should not allow the appraiser to get off the hook for their inadequacies. Although the board messed up some, this appraiser should not be appealing the discipline itself. Neither side appears to be innocent in this case.

Looking backwards in hindsight (always the superior vantage point), the board could have better presented their case by "understanding and correctly employing those recognized methods and techniques that are necessary to produce a credible investigation of the appraiser." If we were to hold the board to the same standards by which they are holding the appraiser, this board would apparently be up for some discipline in their violations of (at least understanding and enforcing) USPAP, and by extension, their own state laws and regulations. Such disclipline should include mandatory education and submission of some of their work for review (by the ASC), and maybe even a fine and public reproval. The result would be a better prepared board, and improved enforcement results. This case, if appealed, would only cost more to pursue and the appraiser might get off on a technicality. It would have been cheaper to do this right.

Alas, the way it should be is, by definition, the way it isn't.

George Hatch

 

[Anonymous]

Amen to Georgia. The feds need a wake up call if nothing else. They have imposed regulations that are meaningless, redundant, and nonsensical. On the one hand they argue that local custom (typical practice) is a valid reason to do one thing or another and then argue in the same breath against the states individualizing appraising. Today the national registry has names of people who did nothing wrong who are on the bad boy list. If you reciprocate into Okla. like I do, from Arkansas, and 2 years from now you decide not to do any more work in Okla. and do not send in your fee for the third year of their 3 year license, your name goes on the registry as having a "revoked" license in OK. You pay annually, but the license is 3 yr. If there was no national registry there would be no such problem.
So the ASC cannot argue that their stewardship has created uniform regulation across the states. Some of the above argue that why we need even more regulation. We do not need more regulation, more USPAP, more education. We need some common sense regulation that changes only as desperately needed, and is UNIFORMLY applied within each jurisdiction (i.e.-state.) Today punishment is punitive. The judges are not competent to be judging. They are not jurists, & they are not merely our peers, either. They are our COMPETITION and therefore, by definition cannot adjudicate without bias.
No one can say with all the bum appraisals, people appraising property that is completely out of their league, inflated appraisals, lending pressure, etc. that the current system is either fair, uniform, or working well. It is none of those. Ethics, as in any business, remains a very personal cross to bear. This generation (our avg. age is 50+ yr.) and the one we sired, have a unique way of rationalizing almost any action to be ethical so long as we can get away with it, a la Enron, Whitewater, S & L's, and the ilk.
USPAP tries to regulate the minuate of appraising that has resulted in conflicts within the document which cannot be resolved. USPAP has changed economic law! Sample? Mineral rights are part of the bundle of rights and distinct but equal to surface rights (what we normally deal with) or air rights. Nevertheless in the definitions, USPAP treats mineral rights as if they were a business interest, i.e.- patents, franchises, goodwill, and other intangible assets. Mineral rights have never been treated as intangibles in any text that I have ever examined, nor are they treated as such in courts across the nation.
If the ASB passes regulations that require a degree and testing of cont. ed as proposed, and someone loses a license because of failing a cont. ed class, and they are not degreed (but grandfathered), are they no longer qualified to appraise? What other profession has this requirement. NONE. What other profession was regulated and mandated in such a manner that there was no grandfathering as was done in 1992? NONE. We are the first and only profession to be treated like that.
Does everyone suppose that prior to 1992 there were no good appraisals? I argue many were superior to that today, because they were not forced into the USPAP box. USPAP implies that a limited appraisal MUST be something less reliable than a complete one. Nothing could be further from the truth. Without the understanding of the nature of that limitation (which could be a nothing event, or a major eviceration of the work performed) you cannot make a blanket judgment regarding that. Take simply the lack of plans and specs. I have built pole barns, and my father built a many of them. "New construction". Horse pucky. The P & S are in my head. My dad never wrote them down, but we could start on a barn of X dimension and know where every purlin belonged, every girt and how they would be cut. When I had a barn built on my farm last year, there was a one page sheet saying the barn will be 32' x 80' x 14', open span, dirt floor, 29 ga. sheet metal and 5" x 5" or equivalent treated poles and the price was X dollars. That is all. What you know about the proposed construction determines how accurately your estimate is, but USPAP pretends that it is important to have a copy of the P & S in your file. One-half the houses outside cookie cutter spec houses end up bigger, smaller, lesser or better than those worthless plans you have.
Our court system is overrun with people. It is broken and cannot be fixed. That is the only reason to regulate appraisers or any other profession. The regulators are surragotes for a real court. And regulatory bodies, federal or state, are inept jurists. It is a sorry way to regulate anybody. I would rather face a court, except that it might be 3 years before you could get into one. With a real court, then appraisers could face the music under something besides a kangaroo court, and have some expectation of a professional judgment of your innocence or guilty. Who regulates the regulators? You are in a crap shoot with these guys. If one of your competitors happens to be on the board, he might even excuse himself (but you can bet he'll let his buddies on the board know what he thinks.) I have seen this in action where board members argue vigorously during the discussion on a subject, then excuse themselves from the vote so as to argue they were "neutral."
The Standards Board serves no purpose but to annoy the state boards without any clear directives that actually make this profession better. Lest we forget, they don't have a mandate to make us better. They have a mandate to perpetuate themselves by seeking better ways to punish us for things, for the most part, that they have made into a crime. Example? The three reporting options of Std 2. Doing compliant Std. 1 work is all for naught if you call a report "Self-contained" and the board determines you have not completely expounded on something, but otherwise it would have been, at a minimum, a summary. That terminology did not exist (therefore could not have been trespassed) prior to 1994.
Terrel Shields

 

[Anonymous]

Tom said
<<our board has adopted USPAP as the standard for all real property appraisal work, regardless of ehether it is FRT or not. Ergo, it is the standard. The law is the law. It may be right, it may be wrong, but it is what it is. >>

Actually the law is not law, not case law anyway. What should happen if a judge throws out USPAP and declares it unconstitutional? Regulators know when to hold em and when to fold em. They know if they keep sanctions cheaper than the cost of appealing, they can likely go on forever because no one will appeal to a REAL judge. It simply is not worth it. The regulators, in the mean time, can play with peoples lives and livlihood without fear of recrimination. Once a member of "the board" you gain special status as a maven of USPAP and will never be seriously challenged by your peers on the board. I see appraisers who have impeccible credentials because their work is never questioned because they have impeccible credentials....duh.

 

[David C. Johnson]

<span style='color:darkblue'> Terrel:

I noted several instances of words of wisdom and also some valuable pieces of information from your two posts, a few of which I have listed below and plan to remember. I will comment at some length on one and may get around to the others another time:

Regarding board members and the "judgment by your peers" deal:

"...They are our COMPETITION and therefore, by definition
cannot adjudicate without bias..."
_____________

"...If you reciprocate into Okla. like I do, from Arkansas, and
2 years from now you decide not to do any more work in Okla.
and do not send in your fee for the third year of their 3 year
license, your name goes on the registry as having a "revoked"
license in OK..."
_____________

"...USPAP treats mineral rights as if they were a business
interest, i.e.- patents, franchises, goodwill, and other intangible
assets..."

Do they?
_______________

"...If the ASB passes regulations that require a degree and testing
of cont. ed as proposed, and someone loses a license because
of failing a cont. ed class, and they are not degreed
(but grandfathered), are they no longer qualified to appraise?..."

That's an interesting twist. Maybe the solution would be that they do not get credit and have to take another class -- which might not be a bad idea anyway under the described circumstances.
_______________

"...I see appraisers who have impeccable credentials because their
work is never questioned because they have impeccable credentials
...duh." -- Yogi Bara?

"Today punishment is punitive." -- Yogi Bara?

Are you sure you are the original author of these lines? They are excellent, but we really do need to be unendingly vigilant about plagiarism -- I always am. Always. Actually I cannot swear I've ever heard them before or at least the exact place and time, so I will not be alerting anyone to consider pressing charges this time -- but they sure did read real familiar just now. In fact, It was déjà vu, all over again. :lol:

(In all seriousness, that first line about the credentials is right on the money. I will guarantee that is one of the best, longest-lasting perks for board service -- No doubt about it. The sorriest of appraisers for over 30 years is automatically the recognized grand master.)
______________________

"...If one of your competitors happens to be on the board, he might even
excuse himself (but you can bet he'll let his buddies on the board know
what he thinks.)"

I have seen this elevated to an absolute art form. In one such case, immediately prior to start of the "hearing" (actually it was a contested denial of entry into the profession via the results of a criminal background check as part of the Board's Character Screening process). A board member asked the father of the applicant/respondent, in front of the other board members, if he would rather him step down from hearing the case. (The father had driven up that morning with his son to be a character witness.) The affect and tone of the question (mannerisms, body language, sly grin, etc.,) very definitely had a ring of: 1) "I know all about you and your son" and 2) "needless to say, you sure don't want my knowledge shared with the other board members!"

The father didn't have a clue what to say; you might say he was ambushed without warning (hey, I think I am starting to get the hang of this). The chairman quickly suggested the decision was for the board member to make, not the father. The board member somewhat ceremoniously recused himself (but stayed put in his seat). The MAI's son's petition for reconsideration of his application was denied after deliberation, because, as a board member pointed out, "he would be in peoples' houses." The board member was also an MAI. Ever wonder why AI members so often hop on a plane to National for AI disciplinary concerns? Actually, it reminds me so much of something I once said, or wrote, or something, it was déjà vu, all over again: "...They are our COMPETITION and therefore, by definition cannot adjudicate without bias..."

(Side Note: Actually, we can all be relieved the kid didn't get prison for this -- first offense or not -- because of scofflaws just like these there's not enough room left for Kenneth Lay and others -- yeah, like they're looking at doing any time. I don't care what he and his wife cry about being completely broke and destitute and down to their very last multimillion, he made an absolute skilling on the backs of others and should be sent to his room for at least an hour or more.)

Oh, yeah, the crime that showed up from the criminal background check was a deal where an APB ("All Points Bulletin" for those who never watched, or were to young to remember, Dragnet or even Starsky & Hutch) had just been flashed for a bank robbery in progress (if I remember right, but at least that or something equally serious such as a fresh axe murder, a raping, the bouncing a check to a CE provider, etc.). This college kid gets bigtime pulled over near Asheville because his klunker car matches the APB's description. Bummer, man. With all side arms drawn and shotguns leveled, in a instant he's spread eagle against the hood of his car, handcuffed and otherwise apprehended. Sure enough, the body & car search reveals a reefer (marijuana cigarette to those who never attended college -- by the way, I attended but never inhaled). Bam. Busted. Criminal record. Super bummer, No career in appraising -- he'll have to do law, or accounting, I guess.

Hey, another quick aside -- sorry, just can't resist: Ex-NC State Senator Swain from Asheville (one of my old stomping grounds when I worked for Xerox in my early twenties) once told me about wrecking his car drunk. He was also stuck; the car was stuck. But *fortunately* he had the half finished bottle with him (incredibly, I failed to ask the most important of questions, What Brand? -- I have been haunted by this inexplicable momentary loss of judgment for many years now, but under the circumstances, as you will see, I can only assume it was "Southern Comfort"). When the law showed up, he explained to the officers that he damn near got killed when he was run off the road by some crazed pothead. It wasn't so much the impact of the crash, but more his heart and nerves, but fortunately, he had just gotten by the liquor store for his wife and was able to immediately pop the top, and drink down to here, to calm down. Case closed. The senator, an attorney, walked (well, as best he could, remember, he drank down to here).

Thanks, Terrel !

Regards,

David C. Johnson</span>
____________________

<span style='color:darkred'>Corrections, Retractions, Additions, etc. (you get the idea):

The following two sentences from this post could use some clarification:

"...The MAI's son's petition for reconsideration of his application was
denied after deliberation, because, as a board member pointed
out, 'he would be in peoples' houses.' The board member was also
an MAI."

The board member who is "also an MAI" was the one who recused himself, and was not the board member who commented that the son would be in peoples houses. Also, this was Charlie Bass, MAI, not Bart Bryson, MAI. Bart, whom I use to work for, is a longtime friend of David Moore, MAI (the father) in Western North Carolina. Bart was either absent that day or had already recused himself. David Moore is a well respected appraiser in Asheville whom I've known for years. I have little doubt but that his son would have been an asset to the profession and certainly would have had excellent instruction and experience under his father.

While I'm at it, I met ex-State Senator Bob Swain on Xerox business. He was not at all ashamed of this story (while certainly not any supporter of drinking and driving). It was very clear his secretary, who added to the story, had heard it many times before. Among other things, I believe he did traffic case lawyering.

One more thing. I agree with much found in Terrel's posts in this thread and like his style, but hold differing views on several issues discussed.

dcj</span>

 

[Anonymous]

Actually I am a fan of the great Yogi, but the words are mine as far as I know. The scenario of getting stuck of the Registry due to not paying a third year of the license fee in Oklahoma actually happened to an Arkansas appraiser, and the story was in the last issue of the Arkansas board bulletin.

In USPAP, page 3, definition of Intangible Property (Intangible Assets): nonphysical assets including but not limited to franchises, trademarks, patents, copyrights, goodwill, equities, mineral rights......

Therefore your opinion of value for mineral rights should be developed under Standard 9 (business appraisal)

This does provide one out should an appraiser be sued because, say you appraised a farm for $1000/ac and that was used as a basis to set a sales price, and immediately after the sale the owners leased the minerals for $2,000/ac. Previous owner suing you for the difference. You could claim that you only appraised the "real" property rights and minerals are defined as intangibles therefore, unless you appraised the farm as a business, you were not asked to appraise the minerals or consider their impact upon the value.

 

[Anonymous]

Tom said <<Are you suggesting that Title XI is the only reason USPAP and the Appraisal Foundation exist, and if so, why in the world would there have been the impetous to include other valuation services (personal property, business, etc) in USPAP?>>

According to George Harrison, many of the AF members would like to do away with valuation standards not dealing with real estate. He argued last year in a USPAP class that the ultimate goal of the AF is to merge into the international standard being adopted in Europe, which basically blends accounting procedures and appraisal procedures.
Title XI is the only reason USPAP exists as a broad based and adopted standard. Further, were it still privately espoused by the societies today, we likely would not have the idiotic 3 reporting options adopted in 1994 with the limited vs complete. The absence of an Appraisal Foundation would not mean the end of regulation for appraisers. It might mean the constant changes would come to a screeching halt and appraisers would have real imput into changing those rules on a state level. Today you can write until you are black in the face and 99% of the letters support or oppose a particular position, but the minds are already made up. What has the Std Board under the direction of the AF thought up so far that has not been adopted? Only the radical rewrite of USPAP supported by the majority of persons writing in. Otherwise, any thing they propose for public comments is already a done deal and I will bet within 3 years we will be required to have a degree and we will be tested for Cont. Ed, likely with an increased requirement to at least an additional 2 hours of CE each year.
Terrel

 

[Tom Hildebrandt]

Terrel

I am sorry but I do not follow the logic of the argument on this Title XI.

Title XI deals with real property in federally related transactions. This is a relatively narrow spectrum of appraising. How did/does Title XI make the AF widen the scope of standards? I do agree that Title XI made the states adopt USPAP, but the recognition of USPAP is broader based than just real property in lending.

I understand the issue put forth by Harrison that our standards will ultimately blend or merge with other international standards; in the global economies it is only natural. I think that the global nature of the world today is the best argument why individual states should not be setting standards for appraising.

Maybe I am too tainted by what I see in North Carolina. USPAP is completely irrelevant to these guys. It has taken 6 years for a member of their staff to grasp the fact that a Standard Three review does not require a value opinion. They still do not understand that there is a difference between development and reporting, and they firmly believe, as apparently does Illinois, that if a piece of analysis is not in a report and a third party reader then disagrees with a conclusion, the appraisal is not credible and the report is misleading.

Regarding my comment of the law being the law and your response. It is true, the boards make their own rules and conveniently ignore those they do not like. Well, at least in North Carolina that is what happens. But I fail to see who that system will become better without federal oversight.

If the states like NC, Georgia, Kentucky and others get rid of the federal oversight, who is going to put pressure on these boards to do things correctly? Not the individual appraiser. Appraisers, by and large, are not political animals, and pay little attention to their boards. Even when individual appraisers speak, they are ignored. The trade organizations rarely speak. At the NCAB hearing for Std 3 reviews, only ASA and the Realtors Appraisal Section spoke for (no trade organization spoke against Std 3, for those who want to know, the AI refused to take a position) and the board just ignored them.

If we are going to have state regulation, I do not see how we can risk not having a strong federal oversight, and an independent body that promulgates and interprets standards. Otherwise we will have even worse chaos than currently exists.

Regards

Tom Hildebrandt GAA