USPAP On Physical Characteristics

[J Grant]

I've never done an appraisal that got broadcast to the whole world....and I don't run around sharing facts about the properties I go in with outsiders. I disclose and describe and photo physical characteristics and anything that might impact value or legal use such as permits/lack of permits in the report that goes to the client .

With nearly every house ending up on Zillow, photographed on Google Earth, on public records which includes floorplans, if listed ends up on RE websites imported from MLS...hard for an owner to believe the physical characteristics of their property are private these days. Without any input from us, the physical characteristics are available from many sources.

 

[normando]

Each time I do an appraisal, I don't know what to expect. I preview the public information but once I go inside the house, things change. It happens so many times which makes our profession very interesting. I don't understand why doctors and lawyers have confidentiality with their clients but USPAP allow us to discuss physical characteristics which we should not be doing. The public can just look at the physical characteristics from the internet.

 

[TRESinc]

I don't understand why doctors and lawyers have confidentiality with their clients but USPAP allow us to discuss physical characteristics which we should not be doing. The public can just look at the physical characteristics from the internet.

how would the public know what is contained in your report unless you told them? the only people who know what is contained in my reports are my clients, the people lending their money based in part on the physical characteristics of the subject property.

 

[Gobears81]

I took USPAP last week and was thinking about many issues raised here. Many banks have engagement letters stating that anything not available through public record is confidential. If there is renovation or unpermitted work not known by the assessor, it is confidential by those standards. It is interesting that this issue is raised, yet rental data, cap rates, expense ratios, etc. are readily shown in many commercial appraisals, and to me, that has more implications on confidentiality than physical characteristics, yet we aren't discussing that.

 

[Terrel L. Shields]

I've never done an appraisal that got broadcast to the whole world

if you go to court, it is often part of the records if anyone wants to look.

that has more implications on confidentiality than physical characteristics, yet we aren't discussing that.

Banks do not want any information supplied by them to be made "public" because of their bank lending laws, not only because of GLB. But they share data otherwise unless the consumer proactively opts out. Some details about the Gramm - Leach - Bliley Act. PS - facts about the property is not "financial information".

GLBA defines financial institutions as: "companies that offer financial products or services to individuals, like loans, financial or investment advice, or insurance". ... financial institutions similar to, and including, these:

• Non-bank mortgage lenders,
• Real estate appraisers,
• Loan brokers,
• Some financial or investment advisers,
• Debt collectors,
• Tax return preparers,
• Banks, and
• Real estate settlement service providers.

Question. How many of you provide a privacy notice in your reports? You are considered "financial institution" when appraising for a bank.
The privacy notice must explain the information collected about the consumer, where that information is shared, how that information is used, and how that information is protected. The notice must also identify the consumer’s right to opt out of the information being shared with unaffiliated parties...

The client cannot opt out of:

• information shared with those providing priority service to the financial institution
• marketing of products or services for the financial institution
• when the information is deemed legally required.

(A) The term “nonpublic personal information” means personally identifiable financial information—

(i) provided by a consumer to a financial institution;​

(ii)resulting from any transaction with the consumer or any service performed for the consumer; or​

(iii)otherwise obtained by the financial institution.

COMMENT
First, the GLBA does not protect consumers. It unfairly places the burden on the individual to protect privacy with an opt-out standard.​

 

[Ken B]

define "financial information"

I bet functionally defective floor plans won't be part of it.

 

[Mark K]

I've yet to find an assessor who relies upon the MLS or even subscribes to it.

In this state many of the Assessors subscribe to the local MLS. When perusing the files at the Assessor office, you will often find the sales disclosures files have the MLS sheet included.

As far as what USPAP allows or not, good luck using it as a defense if you get sued for breach of confidentiality. I don't see a lawsuit happening but if it does, you better have more than USPAP to back you up.

Disclosing or disseminating private/non-public info learned during your role as an appraiser is a bad idea. Professionals shouldn't do it.

 

[Terrel L. Shields]

Disclosing or disseminating private/non-public info learned during your role as an appraiser is a bad idea

Among your peers, it is appropriate because both of you are regulated under GLB as "financial institutions". And GLB is basically an "opt out" law. The borrower would have to proactively opt out of GLB to evoke "confidentiality" regarding "facts"...Facts (such as house descriptions in and out) are that and only appraisal confidentiality is keeping you from reporting the results of your analysis of those facts. I am free to let another appraiser know what is in your house unless you tell me not to.

So how many of you have a privacy statement in your reports? You are supposed to, right? CPAs do.

Disclosure Notice

Providers of personal financial services are required by law to inform clients of our policies regarding privacy of client information. We have been and continue to be bound by professional standards of confidentiality by the Uniform Standards of Professional Appraisal Practice. These standards are even more stringent than those required by law. Therefore, we have always protected your right to privacy.



Types of Nonpublic Personal Information I Collect


We collect nonpublic personal information that you provide for the purpose of preparing real estate appraisals and real estate consulting reports.



Parties to Whom I Disclose Information

For current and former clients, we do not disclose any nonpublic personal information obtained in the course of our practice except as required or permitted by law. Permitted disclosures include, for instance, providing information to third parties who assist us in preparing and analyzing data during the course of providing services to you. This includes co-appraisers, technical support staff, and paid researchers. We stress to those third parties the confidential nature of information being shared.

We do not disclosure nonpublic confidential information to unrelated third parties, except where required by law to do so.



Protecting the Confidentiality and Security of Client Information

We retain workfiles of appraisals and a "true copy" of the appraisal for a statutory five years. We maintain physical, electronic, and procedural safeguards to comply with our professional standards.






Please call if you have any questions, because your privacy, our professional ethics, and the ability to provide you with quality financial services are very important to us.

 

[Gobears81]

In this state many of the Assessors subscribe to the local MLS. When perusing the files at the Assessor office, you will often find the sales disclosures files have the MLS sheet included.

I've also seen some assessors really drill down on some of these properties and research LoopNet data, etc.

As far as what USPAP allows or not, good luck using it as a defense if you get sued for breach of confidentiality. I don't see a lawsuit happening but if it does, you better have more than USPAP to back you up.

Disclosing or disseminating private/non-public info learned during your role as an appraiser is a bad idea. Professionals shouldn't do it.

On the commercial side, there is a lot of disclosure on the sale write-ups of financial data-GIM, expense ratio, cap rate data, etc. Also, there are comparable rentals openly shown on reports: expiration date, commencement date, and lease data. I think USPAP should provide more guidance regarding this-I don't typically present comparable rentals in an open format (ie some data is redacted), but do have some financial data such as GIM and cap rates in the comparable sale write-ups.

 

[Terrel L. Shields]

PS - our assessors don't use the MLS and I think that the MLS won't allow them unless they are members of the board and to do that someone has to have a Realtor license or Appraiser's license.

FYI
There are two parts to this "nonpublic confidential information"

Note that confidential information does not mean everything that is "nonpublic" information.