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When Is A Review A Review?

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KHS445

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Joined
Aug 20, 2011
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Appraiser Trainee
State
Michigan
I have gone over Std #3 a number of times and I am of the opinion that I need to comply with it. However, given the circumstances I would rather not and prefer to provide a list of comments to our attorney.

Here is the situation. I am on the Board and the Executive Committee of a regional non-profit agency. Our agency is interested in purchasing a parcel of land from another non-profit. In order to provide their Board with some cover the selling non-profit requested the we provide them with an appraisal prepared by one of the appraisers on their approved list. We selected an appraiser from the list who is a Certified General & MAI and is located in the general area of the property to be appraised.

Now comes the issue. Our attorney was designated as the client so the report could be shared with us under attorney/client privilege and at least initially not be subject to FOIA. After about three months the report was received and attorney shared it with the executive committee in a closed meeting. Having both real estate and appraisal licenses and having stayed on the subject property three to five days annually for the last 30 years, I was asked my opinion of the appraisal. In the context of the meeting I said I felt there were errors of both fact and omission. I pointed out a couple things like inconsistent adjustments between comparables and lack of consideration regarding zoning differences, critical dune issues, wetlands, etc. between the subject and the comparables. I was very careful not to mention anything about my feelings regarding the value conclusion, enough other Board Members gave their opinion that I didn't need to.

Our attorney has asked me to give him some bullet points regarding things that are either factually incorrect or items that were omitted in the report that should have been included. This information would be used by our attorney to request that the appraiser consider making corrections to the report. My communication would be directly with our attorney and would be covered by attorney/client privilege.

My interpretation of Standard #3 is that I must comply fully with this standard. I was wondering if anyone else had a different opinion given that no opinion of value (up, down or the same) would be provided and this communication is between myself and the non-profit Board's attorney.
 

Joyce Potts

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Feb 6, 2005
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Certified Residential Appraiser
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Florida
When you're a certified appraiser and you opine to the development or reporting of another appraisal, you've stepped over the line into a Std 3 review, regardless of the circumstances you posted in the OP, in my opinion. Many will disagree.

You're in a complicated situation. There's the legal or USPAP compliant aspect, and the reality.

My advice: You already crossed the line. Get your work file in order and signed certification.

As to giving the attorney bullet points - you're in a gray area that you're now trying to switch over to a consulting position, and if put to a true USPAP standard test, I would predict would fail. You can't conveniently switch hats.

When it comes to attorney client privilege, does that attorney represent you or have you been formally engaged by that attorney or his client? Tread lightly.

In hindsight (gotta love hindsight) you should have refrained from commenting on the appraisal and been engaged by the board or attorney to act as a consultant. That is NOT to suggest that you're acting as an advocate, but that's a grey area, IMO as well. Thin ice.

Given that you already commented as to the development and reporting, technically / legally I don't think you're able to act as a consultant. That said, I think this is where USPAP is evolving to get in line with the litigation and legal aspects of civil law, and I'm sure I've just opened myself up to major criticisms. And that said -- I've been in your situation more than once and totally understand the conflicts.

Again, there's the legal aspects and the reality and chances of someone who knows enough to challenge your situation and file a complaint... I'm just say'n......

Here it comes. Bring it.
 
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jay trotta

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Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
Joyce, I agree and IMO once you "peek" and form an opinion of any part, STD.3 becomes applicable; you are on the razors edge;

OP: "In the context of the meeting I said I felt there were errors of both fact and omission. I pointed out a couple things like inconsistent adjustments between comparables and lack of consideration regarding zoning differences, critical dune issues, wetlands, etc. between the subject and the comparables."

It would appear to me, your Review is within the context of; STD 3 (you need a work file, because you have met the requirements of a verbal review) within the context of the "meeting" and you appear to have pointed out, discrepancy's within another's work product.

Good Luck
 

Terrel L. Shields

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May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Std 3 and 4 are together now. I disagree if you are in a quasi-governmental "agency". You are functioning as a board member not an appraiser. But you should simply recommend an outside review or better a second appraisal. Otherwise you are potentially opening yourself to criticism as a competitor. There is a reason it is hard to find a doctor to testify against another doctor.
 

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
Sorry, no jurisdictional exception via a governmental board member without specificity by a court or state statute. But I’m listening.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
I agree with Terrel.

If you are a board member and acting in that capacity, you certainly have the ability to point out factual discrepancies; especially with your attorney (your organization, which you sit on the board, is his client).
Your attorney is the named client for the report, so he can ask whatever questions he wants. Your organization, by virtue of your attorney being the client, is an intended user. Your observations, based on what you describe, does not constitute a SR3/SR4 review.
You have no client.
You have no assignment.
You are not producing an appraisal review.
You are not signing a certification.

The issue isn't so much with your client discussing the items with the originating appraiser. The issue is that the other organization you are dealing with may or may not budge from the appraisal. In that case, I definitely agree with Terrel again; your organization can either (a) get the original report reviewed by an independent appraiser who will need to follow the USPAP standards regarding review, or (and I'm surprised this isn't in the contract) you and the other organization pick a new appraiser and you are both clients.

Good luck!
 

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
I agree with Terrel.

If you are a board member and acting in that capacity, you certainly have the ability to point out factual discrepancies; especially with your attorney (your organization, which you sit on the board, is his client).
Your attorney is the named client for the report, so he can ask whatever questions he wants. Your organization, by virtue of your attorney being the client, is an intended user. Your observations, based on what you describe, does not constitute a SR3/SR4 review.
You have no client.
You have no assignment.
You are not producing an appraisal review.
You are not signing a certification.

The issue isn't so much with your client discussing the items with the originating appraiser. The issue is that the other organization you are dealing with may or may not budge from the appraisal. In that case, I definitely agree with Terrel again; your organization can either (a) get the original report reviewed by an independent appraiser who will need to follow the USPAP standards regarding review, or (and I'm surprised this isn't in the contract) you and the other organization pick a new appraiser and you are both clients.

Good luck!

Since when is a STD 3 review predicated on the four factors you cite above?
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
Statements of facts are not appraisal practice, nor opinions.

You are already an interested party to the transaction.

Stick to the facts make no opinions and you are not practicing appraisal practice.

.
 

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
If I’m at a cocktail party and someone asks me to verbally comment on an appraisal he shows me on his phone and opine as to the development and or reporting, and I’m a certified appraiser, that’s a pass of USPAP? Number on a napkin is an opinion and subject to USPAP if your’re certified.
 
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