USPAP Complaint

[MJ Rock]

Lawyer contacted me to ask if this is an appraisal or merely consulting assignment as appraiser x ascerts. The lawyer wants to hire an appraiser to refute the appraisers claim in court.

Apparently, client A used the appraisers letter for an unintended use and a 3rd party relied upon it. Now the 3rd party wants to sue.

According to the lawyer, The appraiser never inspected the dwelling but relied on verbal descriptions from Client A. The property was verbally described as horrid condition, Mold infested, roof damaged, well/septic needs replaced, structural damage. House virtuality worth zero dollars due to condition verbally described. The appraiser never inspected the site or dwelling. Client A wanted to sale in less than 10 days and wanted to know if 10k was a reasonable selling price.


Letter received from lawyer addressed to Client A states (names excluded):

On (dated), the client A , consulted me in reference to the above property. Based on specified terms, the clients criteria, and verbally represented conditions of the dwelling, the selling price of $10,000 was considered a reasonable selling price for the above referenced property.

Subsequently, the property did sale for $10k.

Does this one paragraph letter to Client A violate USPAP? Is this letter an appraisal or consulting assignment?

Your thoughts. We may assume that the appraiser spelled out all limitations of use, etc. to Client A and had no knowledge of the letter being used by any other person or 3rd party.

 

[Richard Carlsen]

Oh my gosh. Is the USPAP Swat Team ever going to have fun with that one.

Key words: work file, departure, scope of the work, just to name a couple.

Too busy this morning to really get into it but please send me an invitation to drawing and quartering of that appraiser if you would.

 

[Hal Mann]

That it is in the form of a letter is not in and of itself a violation. Depends on what is behind it.

 

[Otis Key]

Three words:

Opinion of value

Perception!?

Appraiser was contacted because of??????????????????????





ding ding ding

S/He is an appraiser.

 

[Randolph Kinney]

You don't have much in the way of proof such as an engagement letter that spells out what it is that was expected. USPAP is clear about one thing;

APPRAISER: one who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective.

Comment: Such expectation occurs when individuals, either by choice or by requirement placed upon them or upon the service they provide by law, regulation, or agreement with the client or intended users, represent that they comply.

So lacking documents, it comes to "expectation" of the client.

 

[Ramon Tate]

That's right. Depends on the expectations of the client per the service representations by the appraiser. The pre-assignment documentation, notes, and ?phone logs of the appraiser? along with the assumptions and conditions that accompanied the letter will define what it was and wasn't.

Did the letter restrict its use to the client only? If the reference to "selling price" is considered = to "asking price", then I'd lean toward it being consulting. If the "selling price" reference was interpreted as "value", then things could get nasty.

 

[Verne Hebert]

I am surprised this was put in writing.

I'd say consulting.........not knowing much. No explicitly stated reconciled value per any definition.

 

[Randolph Kinney]

Originally posted by Verne J. Hebert@ MFLA,May 20 2005, 12:53 PM
I am surprised this was put in writing.

I'd say consulting.........not knowing much. No explicitly stated reconciled value per any definition.

Per USPAP:

APPRAISAL CONSULTING: the act or process of developing an analysis, recommendation, or opinion to solve a problem, where an opinion of value is a component of the analysis leading to the assignment results.

Comment: An appraisal consulting assignment involves an opinion of value but does not have an appraisal or an appraisal review as its primary purpose.

 

[Terrel L. Shields]

You rendered an opinion of value. You are an appraiser. You did not do your due diligence that is the minimum expected of any professional. Yer butt is a meatball.

 

[George Hatch]

Appraisal Consulting is about making recommendations to solve a problem, not about agreeing or disagreeing with a value opinion developed by an appraiser or other party. The opinion expressed in the letter is one of value (specifically, what is an appropriate selling price), not a recommendation on whether to sell or to hold, to fix or to demolish, to rent or to leave vacant, etc..

An opinion of value is an appraisal and the individual who developed that opinion did so while acting in the capacity of an appraiser, so the relevant questions here are:

1) Was the Appraiser obligated as a matter of law or agreement to comply with USPAP, and

2) SR1 - was the scope of work that went into that appraisal sufficient for the intended use and intended user(s) of the assignment, and

3) SR2 - was the appraisal communicated to the client and intended user(s) in a manner that was meaningful and not misleading.

If the appraiser was dumb enough to not protect themselves by accurately identifying the intended use and intended users of his/her value opinion, there might be an opening in there big enough for this apparently unintended user to sneak in there and claim some standing in the assignment. Appraisers often think of the disclosure requirements in USPAP as being oriented to the client's well-being, but I've always thought of them as being very appraiser-centric.