Verifying Sales

[DTB]

As someone with a law degree I have watch the discussion of hearsay on this thread with some bemusement. One of the courses that every law students takes is the Rules of Evidence, and a significant portion of that semester long course is focused on the hearsay rule. Although hearsay is generally inadmissible into evidence in court, there are many exceptions to the hearsay rule that do allow hearsay to be admitted into evidence. One of the exceptions to the hearsay rule is the business records exception, which allows the admission of hearsay that is part of business records kept in the normal course of business (In the federal courts, the business record exception is Rule 803(6) of the Federal Rules Of Evidence, which can be found here: http://federalevidence.com/rules-of-evidence
State rules of evidence have a similar business records exception).
Clearly, the statements made by a real estate regarding the subject property and/or comps that are documented in the appraisal file would be admissible under the business records exception.

Really? Not everything in the business record hearsay exception is necessarily admissible is it?

 

[timd354]

Really? Not everything in the business record hearsay exception is necessarily admissible is it?

Yes, if a record is kept in the normal course of business, it genrally is going to be admissible into evidence. Below is rule 803(6) from the Fedral Rules of Evidence (FRE) - commonly known as the busines records exception to the hearsay rule (most/all states have a similar exception to the hearsay rule):

Rule 803. Exceptions to the Rule Against Hearsay — Regardless of Whether the Declarant Is Available as a Witness

(6) Records of a Regularly Conducted Activity. A record of an act, event, condition, opinion, or diagnosis if:
(A) the record was made at or near the time by — or from information transmitted by — someone with knowledge;
(B) the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit;
(C) making the record was a regular practice of that activity;
(D) all these conditions are shown by the testimony of the custodian or another qualified witness, or by a certification that complies with Rule 902(11) or (12) or with a statute permitting certification; and
(E) neither the source of information nor the method or circumstances of preparation indicate a lack of trustworthiness.

 

[residentialguy]

As someone with a law degree I have watch the discussion of hearsay on this thread with some bemusement. One of the courses that every law students takes is the Rules of Evidence, and a significant portion of that semester long course is focused on the hearsay rule. Although hearsay is generally inadmissible into evidence in court, there are many exceptions to the hearsay rule that do allow hearsay to be admitted into evidence. One of the exceptions to the hearsay rule is the business records exception, which allows the admission of hearsay that is part of business records kept in the normal course of business (In the federal courts, the business record exception is Rule 803(6) of the Federal Rules Of Evidence, which can be found here: http://federalevidence.com/rules-of-evidence
State rules of evidence have a similar business records exception).
Clearly, the statements made by a real estate regarding the subject property and/or comps that are documented in the appraisal file would be admissible under the business records exception.

But we can state we heard them say such and thus took it into account when developing our report. We don't claim to be certain that it is true, merely that we were told such and acted accordingly (to reconcile the statement with what we observed from other sources).

Yes, if a record is kept in the normal course of business, it genrally is going to be admissible into evidence. Below is rule 803(6) from the Fedral Rules of Evidence (FRE) - commonly known as the busines records exception to the hearsay rule (most/all states have a similar exception to the hearsay rule):

Rule 803. Exceptions to the Rule Against Hearsay — Regardless of Whether the Declarant Is Available as a Witness

(6) Records of a Regularly Conducted Activity. A record of an act, event, condition, opinion, or diagnosis if:
(A) the record was made at or near the time by — or from information transmitted by — someone with knowledge;
(B) the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit;
(C) making the record was a regular practice of that activity;
(D) all these conditions are shown by the testimony of the custodian or another qualified witness, or by a certification that complies with Rule 902(11) or (12) or with a statute permitting certification; and
(E) neither the source of information nor the method or circumstances of preparation indicate a lack of trustworthiness.

Thank you!

 

[DMZwerg]

Agreed. This level of hearsay is acceptable in an appraisal report.

What I have been trying to say is that it is not hearsay to US unless the agent says "somebody told me <such-and-such>", we have heard it from the horse's mouth directly (the agent). When we go to tell another, then WHAT the agent said is hearsay but we are witness to them saying it. Subtle difference.

In regards to verifying, the MLS reports may well be "hearsay" as the person who wrote the listing may well not be the agent that saw the inside of the property, and we already know it may be bias as at that point it is written by an agent of the seller, when we call to verify the listing agent is typically no longer an agent of the seller and IS one of the persons who likely witnessed the transaction directly. In other words involved in the transaction without being a principal. What they say they observed or no is not hearsay, what we say they said they saw or knew is almost certainly (dependent only on how we phrase it, AFAICT).

Edit:
Just saw tmd & ResGuy's most recent posts and I stand corrected ... as we are operating in our course of business what we report is almost certainly NOT hearsay and the same would apply to what a RE Agent tells us (as that is also part of his course of business). So, I was wrong up above as it applies within the scope of our profession.

Why wouldn't it be "hearsay"?
Not a lawyer, but likely in part because I take notes as to what they said, including the date and time I called them

 

[redfish]

I apologize if I used the term "Nobody". I will say this. I have not seen one appraisal where the verification included any of the following terms: "Buyer", "Seller", "Listing Agent", "Selling Agent", or "Outside Broker".

With regard to our hiring process for appraisers, our company has no control over appraiser selection. We utilize national AMCs and the VA Portal; they select the appraiser. Damned AIR forces this issue.

AIR requires that you continue to use an appraiser that doesn't do their job?

 

[redfish]

I like to confirm condition of a sale through the buyers agent whenever possible, as well as why the buyer chose that particular house over others. Sometimes I find out tidbits about other potential comps based on these conversations. I also try to go to open houses to see future comps myself. We don't have scratch and sniff in the MLS, and importantly, the MLS is a tool for the agents to sell property. Not all is as appears.

For instance I just saw a house that looks quite nice in the listing, but it smells like cigarette, has poorly laid laminate floors, a rise between hall and bathroom flooring that is noticble, and the kitchen cabinet drawers seem to be off their gliders and very cheaply made. None of this shows in the listing and the listing waxes poetic about how well the house is maintained. The floor plan is awkward and there is some funkiness about it and the listing has about 600 sqft extra in size in the GLA by counting the garage.

Some of this information I would be able to pick up from the buyers agent, some from assessor, and likely nothing from the listing agent.

I do the same, call the buyers agent that is. I like to ask what other homes they showed their client. Conversations usually lead to information ancillary to the original information I was seeking.

 

[DMZwerg]

I do the same, call the buyers agent that is. I like to ask what other homes they showed their client. Conversations usually lead to information ancillary to the original information I was seeking.

Yep, who better to comment on the condition of comparable sales than somebody who was in multiple properties and compared the condition of each woohoo

 

[Delta85]

What I have been trying to say is that it is not hearsay to US unless the agent says "somebody told me <such-and-such>", we have heard it from the horse's mouth directly (the agent). When we go to tell another, then WHAT the agent said is hearsay but we are witness to them saying it. Subtle difference.

In regards to verifying, the MLS reports may well be "hearsay" as the person who wrote the listing may well not be the agent that saw the inside of the property, and we already know it may be bias as at that point it is written by an agent of the seller, when we call to verify the listing agent is typically no longer an agent of the seller and IS one of the persons who likely witnessed the transaction directly. In other words involved in the transaction without being a principal. What they say they observed or no is not hearsay, what we say they said they saw or knew is almost certainly (dependent only on how we phrase it, AFAICT).

Edit:
Just saw tmd & ResGuy's most recent posts and I stand corrected ... as we are operating in our course of business what we report is almost certainly NOT hearsay and the same would apply to what a RE Agent tells us (as that is also part of his course of business). So, I was wrong up above as it applies within the scope of our profession.

Why wouldn't it be "hearsay"?
Not a lawyer, but likely in part because I take notes as to what they said, including the date and time I called them

Sorry but its all hearsay unless you view it with your own eyes. It's just hearsay that is acceptable for appraisal purposes and fulfills our due diligence.

Having a realtor tell you the home was in mint condition, or a dump, either way, is anecdotal data. They could be avoiding certain details either on purpose or forgetfulness.

 

[Renee Healion]

Just call the agent reports "excited utterances" and there is your exception to hearsay.

Because agent interviews fall under the Courtroom Drama section of USPAP.

 

[DTB]

Really? Not everything in the business record hearsay exception is necessarily admissible is it?

Yes, if a record is kept in the normal course of business, it genrally is going to be admissible into evidence. Below is rule 803(6) from the Fedral Rules of Evidence (FRE) - commonly known as the busines records exception to the hearsay rule (most/all states have a similar exception to the hearsay rule):

Rule 803. Exceptions to the Rule Against Hearsay — Regardless of Whether the Declarant Is Available as a Witness

(6) Records of a Regularly Conducted Activity. A record of an act, event, condition, opinion, or diagnosis if:
(A) the record was made at or near the time by — or from information transmitted by — someone with knowledge;
(B) the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit;
(C) making the record was a regular practice of that activity;
(D) all these conditions are shown by the testimony of the custodian or another qualified witness, or by a certification that complies with Rule 902(11) or (12) or with a statute permitting certification; and
(E) neither the source of information nor the method or circumstances of preparation indicate a lack of trustworthiness.

Are you certain, double hearsay would not be applicable?

In Estate of Poulus, Justice McCormick of the Supreme Court of Iowa noted that:

"We have long held that medical and hospital records are admissible, upon proper foundation, as an exception to the hearsay rule. We have recognized, however, that this does not necessarily make everything in the records admissible.... [H]earsay statements in medical and hospital records which are not germane to physical condition or medical treatment are inadmissible unless nonprejudicial.

"This is referred to by commentators as the double hearsay rule. The hospital record is hearsay. It is admissible under an exception to the hearsay rule. But it may include recitals of statements of others, including the patient. This included hearsay is the subject of the double hearsay rule. Included hearsay is inadmissible, upon proper objection, unless it independently comes within a recognized exception to the hearsay rule."