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What constitutes an "Appraisal"?

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Joined
Jan 13, 2002
Professional Status
Retired Appraiser
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Florida
Sure appears to me that many are calling any kind of 'value estimate' or 'value opinion' an "Appraisal".

Especially the lenders! They call anything they use to guess at the property value an 'Appraisal' even if it's only a BPO or AVM. "The appraisal came in at $X" is what they tell the borrower... then charge them for an appraisal.

I want legislation that REQUIRES them to call whatever they are using anything they want to EXCEPT an appraisal - unless it is a USPAP compliant APPRAISAL that was COMPLETED BY A LICENSED APPRAISER.

:twisted: :twisted: :twisted:
 

Restrain

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Jan 22, 2002
Professional Status
Certified General Appraiser
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Florida
Each state seems to set their own guidelines. In Texas, BPOs are explicitly to be used ONLY for getting listings and the State is emphasizing that. In other states, that's not necessarily the rule. Can you outdo the Realtors who make money doing these?

Roger
 

Verne Hebert

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Joined
Feb 25, 2002
Professional Status
Certified General Appraiser
State
Montana
Great thought Pam.

If this occurred, I think it would benefit the community and all citizens; differentiating the difference in how a market value was developed. Myself, being knowledgable of the appraisal industry, would immediately mean something to me to know how a value was developed.

I think this would solve numerous problems down the road as things evolve. If, as a borrower, I am being charged 31 barracudas for an "appraisal" and was informed (without asking, by law) that this "appraisal" was a mathematical model rather than having a professional actually going to my property-this would be informative and important to me in my further decision making with regard to the property.

This would be a huge benefit for the appraisal industry--to truly defined the difference.
 
A

Anonymous

Guest
Did you ever notice that the only people who can charge money for legal advise are lawyers, the only people who can collect a commission for a real estate transaction are brokers and the only people who can prescribe medicine are doctors? The reason for this is that these professions are properly regulated by state laws designed to keep unqualified individuals from harming the public.

The appraisal profession is not properly regulated. Licensed appraisers must meet educational standards, pass tests and comply with USPAP and in my opinion this is good. The problem is that the states allow unlicensed individuals to provide valuation services. This is like allowing a nurse to perform brain surgery, after all she is in the medical business.

Appraisers must demand the same treatment as other professionals from state regulators. I think that the first step is for us to establish the level of regulation which we want and then present it to the state legislatures.
 

Bill_FL

Senior Member
Joined
Aug 23, 2002
Professional Status
Certified General Appraiser
State
Florida
Pamela,

It is in the Florida Law:

475.611 Definitions.--

(1) As used in this part, the term:

(a) "Appraisal" or "appraisal services" means the services provided by certified or licensed appraisers or registered assistant appraisers, and includes:

Perhaps the lenders simply need to be educated. This would be a good job for the group Greg is putting together.
 
Joined
Jan 16, 2002
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General Public
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North Carolina
Pamela

Interesting thoughts. But of course these things are all political. Lets take a look at a different aspect of the problem since it is not unique just to brokers.

Lets take North Carolina. Our appraisal law says all appraisals must be done according ot USPAP. However, the NC Department of Transportation routinely sends property owners offers to purchase based on Value findings" they call appraisals. These value findings are basically an opinion by some one, not necessarily an appraiser although it could be an appraiser, that the underlying land value is $ and there is nothing in the acquisition that would make them think that the property owner was entitled to any thing but the land value on a pro rata S/F or P/A price of the land value. Now an appraiser may have gathered the sales data to show general land values, but there is no "appraisal" relating the sales data to the subject. So a portion of a one acre lot may be valued the same a portion of a 1,000 acre tract.

The NC DOT uses these on improved properties as well. The area appraiser tells the contract appraiser to not use the income or sales approach, just use the cost approach. The appraiser is also told that before he considers damages or benifits on these properties, he needs to get permission from the area appraiser who would make the decision. Anyone out there see any standards problems of independece or objectivity in this practice?

Another example. A home on a lot on a busy street being widened. The NC DOT staff appraiser does just a cost approach on this home saying there were no sales for comparison. Now, it was a 3 bedroom 2 bath ranch in the most marketable portion of the city, only about 150 sales, about 2/3 of which were ranches, had occurred in a mile of the subject in the past year. Anyone see problems with this? Yet area appraiser signed off on it an forwarded it on to the NC DOT state appraiser for final signature. Yep, approved saying it was a USPAP compliant report. Guess who is our new Deputy Director? The former State Appraiser; this is the head guy in charge of investigating USPAP violations in our state. This is the same guy who says one does not need to do Standard three reviews to know that an appraiser has violated USPAP. In short, good appraisers do not need USPAP.

But I digress, the real problem is that the enforcers in the various states have no interest in going after the broker or the other state agencies that are doing bad work. It is far easier to go after those that their friends turn in as bad appraisers.

Now in NC the appraisal board was asked to take a look at the entire process in NC DOT several years ago. They said that so long as the NC Dot is only doing condemnation work, the NCAB will not involve itself in these cases. In short, they will turn a blind eye to the lack of compliance for their buddies, lets not make it ahrd for the state to do its job, lets just go get the competition of our buddies.

Regards

Tom Hildebrandt GAA
 
Joined
Jan 16, 2002
In the early days of FIRREA (when policy and procedures were being formulated) I wrote numerous letters, etc. trying to get federal licensing
because it appeared obvious to me (and numerous others) that what was
being proposed would lead to the chaotic system we see today. We had
our chance in the 1980's, but as usual the banking lobby and their cronies had their way.

Can you imagine any other profession operating in this fashion ? What would brokers say if appraisers could sell real estate without a license ?
Try practicing medicine or law without the appropriate license and watch
how fast the government comes down on you. Hell you can't even drive a cab, truck, or motorcycle without the correct license !
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Shoot Joe! You can't even get paid for cutting hair without a license!!!!!

This is absolutely insane!!!!
 

Austin

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Virginia
Tom: Let me tell you a story about agencies taking land by condemnation in Virginia. Our church purchased, three years ago, 96 acres of land for a new church complex. A power company decided to build a gas fired 850 mw power plant in the city and the gas line to feed it crossed our church property. I had to work with the person handling the taking as the church representative. I asked about before and after damages. He replied that they didn’t get into that, they just paid for average comparable land prices pro rata. I said no way Jose, that be agin the law around here. Then one day I read in the newspaper that upon further review the new power plant has decided that the time was not right to build the plant. The city and power company say they have the power license and will complete the taking of the land for the gas line right-of-way and try and sell the package to another company. I let the city manager know that a private company can’t take property by condemnation for speculation. The gas line people disappeared and we have not heard a word from them since.
 

Steve Owen

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Missouri
Pamela, I think we have it pretty well covered in Missouri:

339.501. 1. Beginning July 1, 1999, it shall be unlawful for any person in this state to act as a real estate appraiser, or to directly or indirectly, engage or assume to engage in the business of real estate appraisal or to advertise or hold himself or herself out as engaging in or conducting such business without first obtaining a license or certificate issued by the Missouri real estate appraisers commission as provided in sections 339.500 to 339.549

Of course, they put in some loopholes a little further down that you could drive a truck through. Seems a lot of the clientele were concerned about there not being enough licensed appraisers in rural counties, so they made the law basicly not apply in those counties. There are specific exceptions that allow brokers to do a BPO, but they can't call it an appraisal. It's not a perfect law, but it's way better than it used to be; I know one guy here locally that went out of business when the law went into effect.
 
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