USPAP Q&A

[Anonymous]

:roll: Question # 3 on this month's Q&A from the Appraisal Foundation regards a State that requires a 5 year sales history on the subject property.

Does anyone know what State or States have this requirement?

Are there any other State Specific supplemental standards that should be considered?

Does anyone know if there is a listing of State Specific supplemental standards published anywhere?

https://www.appraisalfoundation.org/html/PD...s/2002-01qa.pdf

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[Tom Hildebrandt]

Fred

I do not know what state, if any, prompted the ASB to provide the Q/A. It may just be an example provided to show how state regulatory agencies could impose additional standards through their policy statements.

I know of no one spot to go and find these state mandated standards. I would be willing to bet that most states could not even identify their own since they are often published informally via newsletters and public meetings.

I have real concerns with state agencies that would promulgate such standards without exposing the proposed supplemental standards for formal peer review. For example, a rogue board could promulgate a policy in their newsletter saying that Marshal and Swift Valuation Service will not be accepted as an acceptable basis for the cost approach.

Since most boards have full say over the newsletter, and obtain no input from the appraisal communty on the contents, such policy statements could just be expressions of the personal preferences of the board members, and would not further the cause of professional appraisal services or the general welfare of the public.

North Carolina has had one instance where they tried to institute such a supplemental standard. Several years ago, they published an article which stated that in North Carolina, no appraiser can do a "drive by inspection." Over a period of several months since the lending industry raised such a stink, the board "clarified" its ruling saying you could do a drive by inspection, but if you missed something that an interior inspection would have noted, you would be guilty of a USPAP violation in that your scope of work was insufficient.

In the "clarification" statement, the verbage in the proposed draft which explained how to correctly utilize an extraordinary assumption was removed because several of the board members strongly argued that an extraordinary assumption is just another tool for the "bad appraiser."

The current policy of the board is that an appraiser doing a drive by inspection does so at his peril. The majority of the members on our board will find an appraiser guilty of a USPAP violation if a subsequent event reveals that an material item impacting the value conclusion (or credibility of the appraisal) was not noted by the appraiser because the scope of the appraisal was limited to a drive by, even if proper disclosure of the issue was presented.

For those who chose to believe no board could be doing this to there fellow appraisers, come and attend some NCAB meetings. Ask Charlie Bass (MAI) what he thinks about this issue. He has publically told the ASB members at a regulators training session that if they come to North Carolina and do an appraisal assignment in which the scope of work is less than a complete inspection, he would take their license.

In addition to getting such individuals off appraisal boards, I believe the only correct way to resolve such potential problems is for all boards who propose to enact any supplemental standards must submit their proposed standards as an administrative rule change and get endorsement from all professional trade organizations.

Regards

Tom Hildebrandt GAA

 

[Anonymous]

In 1991/92 I distinctly remember there were a number of old timers who thought appraisal boards were going to be business protectors, not a"real" regulatory board. They thought the boards should function to promote them ("the experienced') and making the rest as serfs. They quickly found themselves outnumbered by the newbies and found out that things they had done for 20 years were inadequate under USPAP.

It is obvious many of these old fossils are still around.

 

[jtrotta]

Fred, read the other posts and couldn't actually determine what your question wasa, so I went back and re-read.

Never heard of any State that requires a 5 year sales history; but now that it's been brought up -
*I have a question what good is a 5 year sales history??????????????????

If the economy; interest rates; and the stock market float all over the place, why is it so important to predjudice the Real Estate business??????

 

[David C. Johnson]

<span style='color:darkblue'>Good question, jtrotta.

Actually, the current North Carolina Appraisal Board (c-NCAB) was discussing the requiring of a five year history just very recently at a business meeting. Not only would it be impractical (as one or more members argued) since, for instance, expired listings are also part of this "history" and some areas do not even have MLS, it would be pretty useless, just as you suggest.

I cannot help but wonder if this chosen "hypothetical example" used for the particular Q/A question was perhaps based on an actual issue/concern posed to the Foundation by the NC board. In fact, I am also wondering if at least the last two questions were specifically tailored for the current NCAB.

If so, they probably should be a bit more careful not to give the current NCAB ideas. Watch and see if this board doesn't try to justify its unconscionable and unlawful repudiation of the USPAP's Standard Rule 3 (requirement for legitimate appraisal reviews) for disciplinary issues/questions by claiming its eradication as a Supplemental Standard! Ridiculous? No joke, I bet their thinking about it! They were unsuccessful in trying to trick the entire NC General Assembly into unknowingly approving this repudiation by slipping a line into a completely unrelated bill during last year's short session. They were busted red-handed by NAR's lobbyist in NC -- who was tipped off by the appraiser I happen to have an appointment with on Friday (who has graciously agreed to help me out with an appraisal assignment I have way over in his neck of the woods -- again). Thanks for reminding me of him, Tom. He was asking about you. By the way, he cannot wait to see our board cleaned up and has been up here in Raleigh recently speaking with several of his many friends "on the Hill."

I have a new post in the "Improving the Profession / Political Action" forum everyone should check out. In fact, I decided to post it because of reading this thread. If any at the ASC are intimidated by the current NCAB, they probably should not be. It appears imminent that the makeup of this board is going to be corrected. Once you read the post, the following will make more sense:

The study of mob action is almost a science all on its own. My guess is that some of our better board members probably got caught up in the unusually persuasive force of a few "eager instigators" at the hearing discussed. But that's just how mob rule works. It's just something one must always watch out for, recognize for what it is, and resist at all costs.

Regards,

David C. Johnson, Raleigh</span>

 

[Tom Hildebrandt]

Terrel

This is not the case in North Carolina; this board thinks the old school way and thinks any appraiser but the "old boys club" is suspect.

J. Trotta

You posed the question "What good is a five year property history?" In many residential properties being appraised for loans, I would agree that it is of little significance. However, in condemnation work, the property history over a 10 to 20 year period can provide some real insight into value issues such as condemnation blight.

I personally do not see much merit with increasing the minimum residential reporting requirements under USPAP to beyond one year. I beleive the burden is should remain with the appraiser to determine the appropriate scope of work and research beyond the minimum limits.

Regulators want something that is enforceable. Proving the scope of work is wrong is much harder than a flat out failure to research for a five year requirement. Stated differently, one year may not be long enough to "catch" fraud and flips, with a five year requirement which would be selectively enforced, you can hang whoever you want. Most of the drive for changing USPAP from a content document to more of a how to document comes from regulators who want a more black and white document.

Regards

Tom Hildebrandt GAA

 

[Richard Carlsen]

I have always thought that the place to get a real sales history would be from the Title Companies with the title insurance or mortgage policy. Since there is an owners policy or a mortgage policy issued on nearly every transaction, why not have them review the sales history (which they do in the matter of doing their title search anyway) and make a simple statement of fact?

I too have wondered what the previous sales has to do with Market Value today except as a knee jerk reaction to some housing scandals in the 70's.

 

[David C. Johnson]

Tom,

Read Terrel's post more carefully.

No doubt much truth in his words.


Regards,

David C. Johnson, Raleigh
NC State-Certified General R.E. Appraiser
www.boardwatch.org

 

[Ross (CO)]

Is someone (some guideline) really so time-specific that a cut-off point in researching sale history means you do or do not put a 1-liner of data at bottom of grid column ? I think they just want to know what THE LAST SALE was ! , whenever it was. I have already checked the MLS history and the Assessor's online database....so I am VERY likely to know when the last sale was, and I give that last sale date and price, whether it was 3 years ago, 7 years ago or 12 years ago. Seeing how that property has sold over the years may be like watching a pig move through a python's belly....you want the last sale, you got the last sale. What's the big deal ?

 

[Tom Hildebrandt]

David

I reread his post, my comments to him imply that I agree that the NCAB is not one of the ones who recognize that the world is changing and that the NCAB is part of the "old boy club. "

Terrel is also right that some states get it, Florida seems to have a pretty good grasp on the appraising world in the twenty first century.

Regards

Tom Hildebrandt GAA