What now for CA appraisers?

[Bob Ipock]

Seven complaints since 1990. Everyone of them was for low value. Everyone of them was dismissed because my reports were compliant and reasonable. Every appraiser should be able to defend and explain how the arrived at value. This nothing new. We are all responsible for every appraisal we sign.

 

[Salty]

Support your adjustments and show your work in an addendum attached to the report - charge accordingly. Done and bulletproof. Oh, and think about ditching the $2,500 fireplace adjustment - its just dumb.

 

[Civic]

Seven complaints since 1990. Everyone of them was for low value. Everyone of them was dismissed because my reports were compliant and reasonable. Every appraiser should be able to defend and explain how the arrived at value. This nothing new. We are all responsible for every appraisal we sign.

Times changed, we are in Cancel Culture.

 

[J Grant]

Parties vested in a deal tend to file complaints when values are "low", but lenders in a buy back or agencies tend to file complaints when values are "high"

A OMV should not be judged whether it is high or low, it needs to be judged whether it is credibly supported. - supported both by the appraisal development and by the data.

Make your opinion well supported so it can resist a challenge . And perhaps add certain comments to explain other sales considered but not used. What more can we do...If an increase in complaints is substantial ( which I doubt, but who knows ) if it is substantial, fees will rise and more will appraisers quit because there comes a point where it is just not worth it.

 

[Terrel L. Shields]

I don't see how it changes anything for appraisers. We're responsible for what we do.

I have to disagree. I think more appraisers will now second guess themselves when they come in somewhat low....but not real low. Contract price is $500,000 but you have no comps to support a price over $480,000....hmm. Do I come in low or look for a higher priced comp? Or maybe your primary 3 comps are $500,000, $460,000 and $480,000. Isn't the temptation to go with the highest number even with it was the $460,000 house that was the most similar in age and size? And if the buyers or sellers are of a different ethnicity to you??? I think the temptation to keep everyone happy will be overwhelming.

Sure if the adjusted price ends up $410,000, you are probably going to be able to defend that. Now, if the economy staggers a little this year - maybe only a 10% correction and home prices stall??? as the song says...

 

[Overimprovement]

Seven complaints since 1990. Everyone of them was for low value. Everyone of them was dismissed because my reports were compliant and reasonable. Every appraiser should be able to defend and explain how the arrived at value. This nothing new. We are all responsible for every appraisal we sign.

So 7 in 32 years. That is one every 4 1/2 years or so. I am not picking, rather, I am sincerely curious if your statement would be the same if there was a complaint per month on average.

Now we don't know if the number of complaints will actually increase or not. I am putting my money on yes. And who knows what the frequency will be, but ANY increase in state complaints, where WE have to jump through all the hoops to defend a value which is already properly defended in the report already, is too much.

One other thing to consider--and this is so like bureaucrats who never think about tomorrow, only today--what if complaints DO increase, but only in certain demographic or geographic segments? The reality is appraisers will simply start declining work in those segments. We can all stand on a high horse and say "of course I wouldn't!". But if any appraiser thinks assignment A will stand a one in 4.5 year chance of getting a complaint filed with the state, while assignment B will stand a one in 1 month chance of a complaint, well we all know the answer to that hypothetical.

 

[Overimprovement]

Of course, the other, less stressful but more unethical option, is simply to never come in 'low'. This is the new look of the comp check folks.

 

[Elliott]

Just like on 'concessions' a few additional sentences can make appraiser's lives easier.

From 1004 Cert:

"14. I have taken into consideration the factors that have an impact on value with respect to the subject neighborhood, subject property, and the proximity of the subject property to adverse influences in the development of my opinion of market value. I have noted in this appraisal report any adverse conditions (such as, but not limited to, needed repairs, deterioration, the presence of hazardous wastes, toxic substances, adverse environmental conditions, etc.) observed during the inspection of the subject property or that I became aware of during the research involved in performing this appraisal. I have considered these adverse conditions in my analysis of the property value, and have reported on the effect of the conditions on the value and marketability of the subject property.

15. I have not knowingly withheld any significant information from this appraisal report and, to the best of my knowledge, all statements and information in this appraisal report are true and correct.

16. I stated in this appraisal report my own personal, unbiased, and professional analysis, opinions, and conclusions, which are subject only to the assumptions and limiting conditions in this appraisal report.

17. I have no present or prospective interest in the property that is the subject of this report, and I have no present or
prospective personal interest or bias with respect to the participants in the transaction. I did not base, either partially or
completely, my analysis and/or opinion of market value in this appraisal report on the race, color, religion, sex, age, marital status, handicap, familial status, or national origin of either the prospective owners or occupants of the subject property or of the present owners or occupants of the properties in the vicinity of the subject property or on any other basis prohibited by law."

[Insert] "Not withstanding any of the certifications above. The appraiser selected comparables which support higher values for properties which could be considered to be racially influenced and may have a lower value if comparables were only selected within the immediate neighborhood of the subject."

 

[Terrel L. Shields]

Seven complaints since 1990.

zero complaints since 1990, but one of my subs got a complaint from a MB - same issue - "too low"...but he had to go to a hearing and pay a lawyer to attend with him at the state capitol - Jefferson MO. $1k. Another appraiser I knew fought off a complaint and paid her attorney $600. An instructor I knew (RIP) was reimburse all but $500 over a complaint. One of my mentors was drug before the board by the same CG complainant who worked ROW appraisals. After that trip when that complaint confused the book and page numbers with the MLS numbers (same format - YY-NNNNN) making wild claims about those numbers being wrong, the board warned the complainant that he'd before the board with another pointless complaint. Another long time appraiser, who had a rival on the board, lost his license and ended up in court. He won and the judge said the state didn't prove their case. He got his license back only to get a "bill" for $1k from the state. His lawyer told him it was not right but it would cost more than it was worth to fight it. He did it, finished his license term then retired early.

I have been sued. I was sued under RICO statutes. I was sued under Packer & Livestock Act. I was accused of being party to a conspiracy to defraud someone who bought the property from their own cousin...who was not sued. The Federal court rejected it once, then twice, and finally dismissed it. Since only a state issue was actionable, it should have been in state court but since it was filed in Federal court, it remained in Federal court. They appealed to St. Louis - 300 miles away. Trust me, E & O rarely pays for everything. In the end, and using my own lawyer, it cost me $6500, mostly for the trip to St. Louis where my lawyer got all of 7½ minutes to make the case (the other time allotted to the bank and chicken company also sued. And that was over a six year old appraisal that was actually done 4 days after the property transferred from the seller to the buyer/complainant. And their argument, of course, was that the value was 'too high' and I appraised it for the amount of the mortgage....(something I wasn't even aware of, the bank had lent 100% because they were carrying the note from the seller who was behind and the amount of money owed was the sale price.) The outcome was the same, six years later the buyers were under water and so they sued. This was a cloud that hung over me for 2 years...and that case is now used by LIA and other E & O carriers to support claims that exceed the statutes of limitations.

Complaints are a "big deal" and escaping 7 times without cost? You are lucky lucky lucky. I doubt the average appraiser will be than lucky. I know 2 appraisers that were forumites here from Arkansas. We got a new investigator an MAI. Hard boiled SOB. I actually worked with one of the forumites when doing an estate that had 2 rentals in Little Rock, and he was a LR native. His work was good, I saw nothing wrong with it. But he had faced a complaint from a broker in his area and the prior investigator (and our first one- and a very thorough one) found no fault. He got another complaint from the same broker and the new guy pillared him...so he got up and that night resigned his license and went to work for HP as a computer tech. The other case was a law student who was working with his brother. Same hard complaint ripping into the report. He stood up, pulled out his license and handed it to the investigator... walked out finished his degree and is now working as an attorney in Little Rock - in fact, worked as an intern at a firm I did business with in the oil boom. Sorry to say, but luckily the hotshot got seriously ill - lasted about 1 year and the board was getting complaints from appraisers about him already. We don't miss that kind of investigator.

 

[Terrel L. Shields]

a few additional sentences

They are not going to read this anyway- be it good defense in the courts or not.