Brian Weaver
Senior Member
- Joined
- Apr 16, 2005
- Professional Status
- Gvmt Agency, FNMA, HUD, VA etc.
- State
- Illinois
The following will appear as an article in our March newsletter:
Wells Fargo released a product on February 13th that they refer to as an RVS Desktop. I read their 24-page highlight and instructional sheet.
For a $55 fee, an appraiser will complete this “Desktop” assignment. It appears to be a hybrid form somewhere between the nearly forgotten 2065 Qualitative Report and its preposterous, prehistoric ancestor, the old 704 form. They label it a Restricted Use Appraisal Report.
Make no mistake. This IS an appraisal.
Of note, if an appraiser submits a report with a value you are charged $4 as an FNC/AppraisalPort fee.
Already the appraiser is down to netting $51 for their trouble. This is also predicated on the appraiser’s ability to grind this out product within two days. Aside from this, the appraiser must make corrections within 24 hours.
Assignment Conditions
First, let’s examine what USPAP states about assignment conditions. Under the Scope of Work Rule we have:
“An appraiser must not allow assignment conditions to limit the scope of work to such a degree that the assignment results are not credible in the context of the intended use.”
There are nine numbered assignment conditions referenced as “RVS Desktop Appraisal Report Minimum Requirements”.
1. Local MLS as the primary data source.
This begs the question, “What if your most meaningful sale wasn’t in the MLS?” Maybe the appraiser has the best sale in his/her files and it was a FSBO. According to this first assignment condition; the appraiser is prohibited from using it, aren’t they? On the other hand, if you don’t use it, you’ve misled the reader and have committed a USPAP violation by omission.
2. There is an AppraisalPort charge to you of $4 for each assignment completed and returned with a value.
This is the appraiser’s problem.
3. There will be no fee paid for a “No-Hit”, and no charge to you for returning a “No-Hit” through AppraisalPort. (Note: This product has a “No-Hit” component which means that either it is an ineligible property type or you were unable to develop a credible value. The compensation of $55 takes into consideration that you will from time to time have a “No-Hit”. For more on “No-Hits”, see the report instructions on page 6.)
They point out that the appraiser will receive NO FEE if the subject property is classified as a “No Hit”. Their examples of a “no hit” are when the appraiser:
• Cannot produce a credible value (e.g., insufficient subject data)
• Determines the subject is an ineligible property type
• Is unable to meet the identified minimum report requirements
• Determines the subject is zoned commercial/industrial (check “Other” box and state zoning)
• Determines the subject is not at Highest and Best Use. The appraiser must check the appropriate box that supports the reason for the “No-Hit.” If “Other” is checked then the appraiser must provide a brief comment with the reason why it is a “No-Hit”. The appraiser then submits the form through AppraisalPort and the assignment is completed.
Keep in mind that this is NOT a staged assignment. If the appraiser marks “No Hit” then the appraiser is done. Do not pass “go”; do not collect $55. For the tidy sum of nothing, the appraiser must figure out and report back any of the bulleted points. Imagine that you drive 25 miles one way just to squint at the zoning map (that isn’t online) and you discover that your subject house sits on a site zoned B-2 commercial. You now must drive back 25 miles and check the box for “No Hit” and be happy about the nice day you spent in the car for free.
4. There will be no additional charges to you for using Data Express provided that you are only accessing the RVS Desktop Form and Location Map features. Using any other features (plat map, comps search, etc.) will result in additional charges (refer to published pricing plan in Data Express). RVS and WSS are not responsible for any additional charges that you incur completing these assignments.
Now they’re telling the appraiser that additional exhibits and research will result in additional charges. The more the appraiser tells them; the less they stand to make. It’s not the fee that’s the issue; it’s the charges. It appears to fly in the face of:
An appraiser must not allow the intended use of an assignment or a client’s objectives to cause the assignment results to be biased.
Seems a bit biased, doesn’t it? The incentive is to keep the report “thin” and the incentive is purely financial.
5. The Service Level Agreement (or turnaround time) is two (2) days.
Good luck with this.
6. All of these reports will be reviewed by the RVS Quality Control Department and reports returned to you for correction must be resubmitted within 24 hours.
Good luck with this too. Imagine if their QCD wanted the appraiser to remove some of the additional exhibits (that were also charged to the appraiser on the upload) that the appraiser felt was necessary.
As we all know, reports are not USPAP compliant. Only appraisers can achieve that. So, how does this form stack up?
Strictly speaking their own Scope of Work contradicts the first assignment condition or Minimum Requirement. While the Minimum Requirement insists on the appraiser using MLS data as the primary source; the SOW states that a source can be “prior appraiser files”.
Which is it?
The SOW further states the following:
“The appraiser has excluded the Cost and Income Approaches to value, due to being inapplicable given the limited scope of the appraisal.”
In other words, the Cost and Income Approaches are excluded because Wells Fargo doesn’t want to see them. Isn’t this the appraiser’s call? What if the condo unit is rented and there’s an active rental market? What if the subject house is two years old and is in a new subdivision?
They’ve also included the following:
“At the client's request, and unless otherwise noted in the report, the following extraordinary Assumptions have been made: (1) The subject is considered to be in average overall condition, and (2) There are no adverse environmental conditions (hazardous wastes, toxic substances, etc.) in, on or in the immediate vicinity of the subject property, and (3) The subject's projected use is not intended to change, and (4) There are no significant discrepancies between the subject's public record information or other data source(s) and the existing site or improvements. The use of any extraordinary assumptions might have affected the assignment results.”
So, if the subject property is located in Hartford, Illinois where four million gallons of gasoline have seeped into the ground, creating a widely known underground plume, then the extraordinary assumption appears to be a silver bullet, right?
Wrong. What Wells Fargo SHOULD have included was a Hypothetical Condition which is contrary to what exists but is supposed for the purpose of analysis.
An appraiser relying on the EA for the Hartford example would be subject to discipline. And yet, the Statement of Assumptions and Limiting Conditions still contains the following:
“3. The appraiser has noted in the appraisal report any adverse conditions observed during the analysis of the subject real property or that he or she became aware of during the normal research involved in performing the appraisal. Unless otherwise stated in the appraisal report, the appraiser has no knowledge of any hidden or unapparent conditions of the real property or adverse environmental conditions (including the presence of hazardous wastes, toxic substances, etc.) that would make the real property more or less valuable, and has assumed that there are no such conditions and makes no guarantees or warranties, expressed or implied, regarding the condition of the property. The appraiser will not be responsible for any such conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because the appraiser is not an expert in the field of environmental hazards, the appraisal report must not be considered as an environmental assessment of the real property.”
Wells Fargo would have the Hartford property appraiser rely on the EA while attesting to the limiting condition that they noted the environmental condition somewhere in the report. Maybe they did so in the exhibit that they had to pay to upload.
But then, maybe this would result in a “No Hit”.
I could go on but I think that we can all see where this is going. The Illinois Appraisal Board cannot prohibit appraisers from using specific forms. Appraisers need to think about the consequences that await them for failing to follow USPAP. It may end up costing far more than $55.
Wells Fargo released a product on February 13th that they refer to as an RVS Desktop. I read their 24-page highlight and instructional sheet.
For a $55 fee, an appraiser will complete this “Desktop” assignment. It appears to be a hybrid form somewhere between the nearly forgotten 2065 Qualitative Report and its preposterous, prehistoric ancestor, the old 704 form. They label it a Restricted Use Appraisal Report.
Make no mistake. This IS an appraisal.
Of note, if an appraiser submits a report with a value you are charged $4 as an FNC/AppraisalPort fee.
Already the appraiser is down to netting $51 for their trouble. This is also predicated on the appraiser’s ability to grind this out product within two days. Aside from this, the appraiser must make corrections within 24 hours.
Assignment Conditions
First, let’s examine what USPAP states about assignment conditions. Under the Scope of Work Rule we have:
“An appraiser must not allow assignment conditions to limit the scope of work to such a degree that the assignment results are not credible in the context of the intended use.”
There are nine numbered assignment conditions referenced as “RVS Desktop Appraisal Report Minimum Requirements”.
1. Local MLS as the primary data source.
This begs the question, “What if your most meaningful sale wasn’t in the MLS?” Maybe the appraiser has the best sale in his/her files and it was a FSBO. According to this first assignment condition; the appraiser is prohibited from using it, aren’t they? On the other hand, if you don’t use it, you’ve misled the reader and have committed a USPAP violation by omission.
2. There is an AppraisalPort charge to you of $4 for each assignment completed and returned with a value.
This is the appraiser’s problem.
3. There will be no fee paid for a “No-Hit”, and no charge to you for returning a “No-Hit” through AppraisalPort. (Note: This product has a “No-Hit” component which means that either it is an ineligible property type or you were unable to develop a credible value. The compensation of $55 takes into consideration that you will from time to time have a “No-Hit”. For more on “No-Hits”, see the report instructions on page 6.)
They point out that the appraiser will receive NO FEE if the subject property is classified as a “No Hit”. Their examples of a “no hit” are when the appraiser:
• Cannot produce a credible value (e.g., insufficient subject data)
• Determines the subject is an ineligible property type
• Is unable to meet the identified minimum report requirements
• Determines the subject is zoned commercial/industrial (check “Other” box and state zoning)
• Determines the subject is not at Highest and Best Use. The appraiser must check the appropriate box that supports the reason for the “No-Hit.” If “Other” is checked then the appraiser must provide a brief comment with the reason why it is a “No-Hit”. The appraiser then submits the form through AppraisalPort and the assignment is completed.
Keep in mind that this is NOT a staged assignment. If the appraiser marks “No Hit” then the appraiser is done. Do not pass “go”; do not collect $55. For the tidy sum of nothing, the appraiser must figure out and report back any of the bulleted points. Imagine that you drive 25 miles one way just to squint at the zoning map (that isn’t online) and you discover that your subject house sits on a site zoned B-2 commercial. You now must drive back 25 miles and check the box for “No Hit” and be happy about the nice day you spent in the car for free.
4. There will be no additional charges to you for using Data Express provided that you are only accessing the RVS Desktop Form and Location Map features. Using any other features (plat map, comps search, etc.) will result in additional charges (refer to published pricing plan in Data Express). RVS and WSS are not responsible for any additional charges that you incur completing these assignments.
Now they’re telling the appraiser that additional exhibits and research will result in additional charges. The more the appraiser tells them; the less they stand to make. It’s not the fee that’s the issue; it’s the charges. It appears to fly in the face of:
An appraiser must not allow the intended use of an assignment or a client’s objectives to cause the assignment results to be biased.
Seems a bit biased, doesn’t it? The incentive is to keep the report “thin” and the incentive is purely financial.
5. The Service Level Agreement (or turnaround time) is two (2) days.
Good luck with this.
6. All of these reports will be reviewed by the RVS Quality Control Department and reports returned to you for correction must be resubmitted within 24 hours.
Good luck with this too. Imagine if their QCD wanted the appraiser to remove some of the additional exhibits (that were also charged to the appraiser on the upload) that the appraiser felt was necessary.
As we all know, reports are not USPAP compliant. Only appraisers can achieve that. So, how does this form stack up?
Strictly speaking their own Scope of Work contradicts the first assignment condition or Minimum Requirement. While the Minimum Requirement insists on the appraiser using MLS data as the primary source; the SOW states that a source can be “prior appraiser files”.
Which is it?
The SOW further states the following:
“The appraiser has excluded the Cost and Income Approaches to value, due to being inapplicable given the limited scope of the appraisal.”
In other words, the Cost and Income Approaches are excluded because Wells Fargo doesn’t want to see them. Isn’t this the appraiser’s call? What if the condo unit is rented and there’s an active rental market? What if the subject house is two years old and is in a new subdivision?
They’ve also included the following:
“At the client's request, and unless otherwise noted in the report, the following extraordinary Assumptions have been made: (1) The subject is considered to be in average overall condition, and (2) There are no adverse environmental conditions (hazardous wastes, toxic substances, etc.) in, on or in the immediate vicinity of the subject property, and (3) The subject's projected use is not intended to change, and (4) There are no significant discrepancies between the subject's public record information or other data source(s) and the existing site or improvements. The use of any extraordinary assumptions might have affected the assignment results.”
So, if the subject property is located in Hartford, Illinois where four million gallons of gasoline have seeped into the ground, creating a widely known underground plume, then the extraordinary assumption appears to be a silver bullet, right?
Wrong. What Wells Fargo SHOULD have included was a Hypothetical Condition which is contrary to what exists but is supposed for the purpose of analysis.
An appraiser relying on the EA for the Hartford example would be subject to discipline. And yet, the Statement of Assumptions and Limiting Conditions still contains the following:
“3. The appraiser has noted in the appraisal report any adverse conditions observed during the analysis of the subject real property or that he or she became aware of during the normal research involved in performing the appraisal. Unless otherwise stated in the appraisal report, the appraiser has no knowledge of any hidden or unapparent conditions of the real property or adverse environmental conditions (including the presence of hazardous wastes, toxic substances, etc.) that would make the real property more or less valuable, and has assumed that there are no such conditions and makes no guarantees or warranties, expressed or implied, regarding the condition of the property. The appraiser will not be responsible for any such conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because the appraiser is not an expert in the field of environmental hazards, the appraisal report must not be considered as an environmental assessment of the real property.”
Wells Fargo would have the Hartford property appraiser rely on the EA while attesting to the limiting condition that they noted the environmental condition somewhere in the report. Maybe they did so in the exhibit that they had to pay to upload.
But then, maybe this would result in a “No Hit”.
I could go on but I think that we can all see where this is going. The Illinois Appraisal Board cannot prohibit appraisers from using specific forms. Appraisers need to think about the consequences that await them for failing to follow USPAP. It may end up costing far more than $55.
