"...USPAP Does Not Allow Appraisers To

[Verne Hebert]

appraisers to solicit or complete home inspections work on properties they appraise."

This is a quote from an article from Working RE ONLINE.

USPAP instructors. Any comments?

 

[Bob Ipock]

I never saw that...do not believe USPAP specificly addresses that. I would believe it would be a conflict .....but not that it is in USPAP directly.

 

[Otis Key]

I'm not a USPAP instructor but, if it's put into full perspective it makes more sense to me:

Shevlin said he benefits from cross marketing, earning many appraisal referrals from his home inspection clients. (It can not work the other way around, however: USPAP does not allow appraisers to solicit or complete home inspection work on properties they appraise.)

Conflict of interest!? Perceived?

Conduct (ETHICS RULE)
An appraiser must perform assignments ethically and competently, in accordance with USPAP and any supplemental standards agreed to by the appraiser in accepting the assignment. An appraiser must not engage in criminal conduct. An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests.

In appraisal practice, an appraiser must not perform as an advocate for any party or issue.

Comment: An appraiser may be an advocate only in support of his or her assignment results. Advocacy in any other form in appraisal practice is a violation of the ETHICS RULE.

 

[Richard Carlsen]

MY take is that USPAP has no control over what an appraiser does other than when performing his/her duties as an appraiser. USPAP cannot tell a person that they cannot do a certain job of their choosing. USPAP can restrict an appraiser from taking an appraisal assignment where there is a conflict of interest but they have no authority over the appraiser after the assignment is completed or outside of the appraisal process.

 

[Mr Rex]

I'm both and was told that as long as it is understood that when you are doing a Home Inspection that you are acting only as a home inspector or vice versa it's OK. Have been told very specifically that to avoid blurring the line, to avoid advertising both services on the same card etc. Have only done one or 2. Could make the case that as a Home Inspector that I know more about the condtion of the subject than just about anybody and can transfer that knowledge to the appraisal report. I will not do both for a mortgage transaction, private parties only.

I look forward to further USPAP elaboration here.

 

[George Hatch]

What are the expectations and how are the services being solicited and presented? I mean, could an appraiser be engaged to perform a home inspection based solely on their expertise as an appraiser? Doubtful, but theoretically possible. If it did go that way, such an inspection could technically fall under the category of Appraisal Practice as defined in USPAP even though there is no value opinion being developed. Much the same as teaching an appraisal course (no value opinion involved) also falls under USPAP because it is classified as part of appraisal practice. So in this appraiser-engaged-to-inspect scenario, none of the performance standards (SR1 - SR10) would apply, but the balance of USPAP would apply. Ethics Rule, Competency Rules, Definitions, etc..

I think most people would consider that scenario a stretch, though. More than likely, an inspection would stand by itself as a separate "valuation service", apart from Appraisal Practice as defined in USPAP. So there would be no "USPAP-compliant inspection service" and it would probably be wrong to solicit that type of work in that manner.

We don't generally have a problem discerning the difference between selling a property and appraising it because a realty agent acts as an advocate whereas the appraiser is supposed to be the disinterested third party. Those roles directly conflict with each other.

But what about a home inspector, who also asserts their work as being unbiased? I don't see a conflict in the roles. In fact, there were a number of articles published in the trade mags in years past about appraisers diversifying by offering hazardous materials assessments, radon testing, well testing and other related "value added" services in addition to their appraisal work. The idea being that a combo appraisal-radon test-lead based paint assessment service would be both more expedient and more convenient to the consumer than ordering separate services from separate vendors. If the individual had the expertise to offer the service, who better (in an ethical context) than an appraiser to offer the service?

How would it be if the value-added service were wrapped into the appraisal assignment as one of those "client extras" that contribute to the scope of work? Would having the elements of the home inspection available to the appraiser whilst developing their opinion of value add to the appraisal process? I'm sure it would in at least some cases.

As for separate services on the same property, that's where it might get a little murky. The different roles don't necessarily conflict with each other the way that brokerage and appraisal conflict, but there is the certification wherein the appraiser certifies that they "have no present or prospective interest in the property or personal interest with respect to the parties involved". Inasmuch as there is a prior or future prospect of performing an additional non-appraisal service on the subject and having a relationship with one of the principals as a result of that other service it might be argued that the extra relationship runs afoul of the cert. If that's the case then we can get into hairsplitting about including the services as extras in the appraisal, too.

Obviously, the way to avoid the controversy is to avoid the controversy - when appraising a property limit your service to just the appraisal, and refrain from engaging in other activities on that property lest it be perceived as a conflict. Either that, or wrap the extra service into your scope of work at the outset of the assignment and make sure the service doesn't conflict with the impartiality of the appraisal. Not a very satisfying answer for some, but it is the conservative approach.

 

[Hall McClenahan]

I too look forward to following this discussion.

I would tend to believe that a home inspection and an appraisal could be done at the same time, without conflict, and without violating USPAP.

The Home inspection training falls nicely into competency and as was stated earlier also claims to be an unbiased.

As for separate services on the same property, that's where it might get a little murky. The different roles don't necessarily conflict with each other the way that brokerage and appraisal conflict, but there is the certification wherein the appraiser certifies that they "have no present or prospective interest in the property or personal interest with respect to the parties involved". Inasmuch as there is a prior or future prospect of performing an additional non-appraisal service on the subject and having a relationship with one of the principals as a result of that other service it might be argued that the extra relationship runs afoul of the cert.

I would agree that as separate services with separate inspections that could be argued. but with a single inspection it can't.

The only trouble is how do you get both orders at the same time without using one hat to gain work in the other. In rural areas it would not be an issue as you would be known to every joe in the county. The big market areas would be quite another story.

Hall

 

[Mr Rex]

That would be me, the rural guy. 2 Home Inspectors in my county, none in one I work regularly.

 

[jay trotta]

Just a thought here; if you do the HO Inspection first and note various problems; then do the appraisal, explaining all the problems you now know of, this would require a Check in that famous area; Box 4 - could this, at a future point in time be a problem :question: - IMO quite possibly, you will have now collected 2 Fee's with a potential additional Fee based on findings of problems, creating a 3rd Fee after the remedy.

Don't know ifn I would enjoy a day in court, in front of a Judge, providing a various aray of services for 1 property-collecting a variation of Fee's and then standing in front of him/her - trying to explain how "Ethical & UnBiased" all of my opinions were/are - really now.
And if ya buy that yer Honor, I gots some land in Fla I'm tryin ta Sell :lol:

ever notice how an Attorney will refer you to someone else, before they will try to solve all of your problems, even tho they vary dramatically- it is spread out for a reason, "variations of Opinions" - No bias there, no "self interest" - proper respresentation for each action; (Estate Settlements come to mind)

h34r:

 

[Mr Rex]

Ahh Mr Trotta: you speed reading, you are just hitting the high spots. Don't do mortgage work and inspections together. As to CB 4. Even if I did as you said, my Home Inspector Licensure does not allow me to do final inspections on particular items (unless its an electrical item and I also am a licensed electrician). IT REQUIRES me to recommend further inspection and repair by a licensed professional in that field. Kinda like what CB4 is intended in an appraisal.