Sounding Bored is my semi-regular column on the state of the appraisal profession. Righteous USPAP indignation runs rampant in the appraisal profession and I worry it is leading to our demise as an industry.
Take the case of Mike Lefebvre, a Realtor in Massachusetts, who also happens to have an appraisal background.
There are many appraisers who were originally real estate agents and in fact, I believe there are still states that require appraisers to have a real estate sales person’s license in order to get their appraiser license.
Mike has an interesting approach to getting a listing. He performs an appraisal on a potential listing rather than a broker market analysis (BMA) because it is more detailed and helps him properly price the property. He uses that appraisal as part of his marketing effort. In many ways, he is being more professional as an agent by providing a more thorough analysis for his clients than a BMA affords.
Since pitching a listing is not a federally related transaction and he discloses (and it is apparent) that he has a vested interest in the eventual transaction by the fact he is an agent paid on commission, I don’t see this being a problem or a violation of USPAP.
Of course, I would love another perspective on this.
However, I often see more seasoned appraisers make a habit of needlessly scaring clients, banks and agents by using USPAP as a grey fogging tool…almost like the way a consumer feels reading an insurance policy…it is something so confusing that it is not meant to be understood, except by appraisers.
And THAT, in my humble opinion, is one of the things that is killing the appraisal profession. USPAP was in place during the housing boom so it is apparent that this standard alone is not the panacea of the lending industry. Create so much confusion that you motivate the industry to find alternatives.
Others see it differently, and this email is the inspiration for this post.
Mike forwarded me an email sent by an appraiser. I am not familiar with him but he appears to be well-qualified as an appraiser in his market judging from his web site. I’ll even assume he is a good appraiser and a nice person.
The appraiser was “sickened by Mike’s performance of an appraisal on each of his listings to more accurately price the property and alludes to connecting him to bank fraud (the irony is that USPAP clearly forbids appraisers to mislead their readers, which this email is treading awfully close to that, no?):
>From: [kept anonymous]
Date: June 6, 2008 10:07:42 PM EDT
To: mlefebvre @verizon.net
Subject: Re: Inquiry About 30 Jefferson Road, Franklin, MA – why would you bias yourself like this? Ever hear of USPAP?
>You do understand that when you do an Appraisal you must adhere to USPAP including “I have no present or prospective interest in the property that is the subject of this report…..”
>How can you do an Appraisal on a property you list, this is sickening to see.
>Do you know what constitutes acceptable versus unacceptable business practices? This is required in all 50 States. Follow this link…
>Giving a comp check without an Appraisal IS BANK FRAUD.
>Ethics? Do you understand them? Follow this link to learn more about what an Appraiser is required to do and what not to do.
>In addition to our Appraisal services we can also offer sessions for your office on how to be compliant with USPAP.
>We “VALUE” your business! Specializing in honest and accurate results!
>[deleted content to keep anonymous]
>“Think about USPAP and how to follow it now, or you may get a long time to think about it in prison later.”
>“People only think USPAP Requirements are stupid until they are caught and punished for not following them.”
I think having USPAP is a good thing, a necessary thing. The fact that the lending industry went to hell in a handbasket isn’t because every appraiser didn’t follow USPAP. The problem is much bigger than that.
We all need standards to live by and the public needs to have comfort that when they order an appraisal, they understand what they are being provided. If an appraiser has a potential conflict, it must be fully disclosed.
I also think this sort of threatening message is self-serving and shouldn’t be tolerated either. You don’t use USPAP as a weapon to create mass hysteria in the public domain as a way to generate business. That makes the profession look even worse than it already does.
Good grief.
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Jonathan,
I am taken by surprise.
While I would agree with you about the tactics employed by the anonymous crusader, I think you and Mike LeFebvre are spinning and missed the point.
If Mike wants to call what he does an appraisal and certifies it pursuant to USPAP as such, he obviously can’t truthfully include the pivotal certification of having no interest in the outcome, present or prospective.
I read Mike’s defense and it is clear he completes appraisals in these circumstances to augment his real estate sales efforts. Until Mike is paid with something other than a commission at closing, he is clearly an intended user, equally with the buyers and sellers he says he serves.
It is time, and USPAP recognizes this (even though I’m not sure the ASB always does), that the real estate appraisal are completely objective. Untainted by selling or lending.
We’ve got miles to go, but Mike’s is a siren’s song, distracting the appraisal profession from its goal. Mike’s confusion stems from wearing two hats. It is not uncommon for rationalization to replace reality when a guy with two hats wears them at the same time.
As for the scare tactics employed by Mr. Anonymous I agree they are inappropriate (at least equally as much as Mike’s ignorance of his appraisal obligations), and in all fairness to him, that is the way the ASB and this State’s regulators interpret USPAP, and most appraisers aren’t sufficiently trained to know differently.
I think your position on this is rather superficial, but my guess is most real estate agents welcome its lack of depth.
Mike, even as an appraiser, can continue to produce his reports in and remain in compliance with USPAP, but he can’t call ’em appraisals until the credibility of the result is insulated from Mike’s conflict of interest.
Call ’em Market Studies or something other than an appraisal or let somebody without “skin in the game” to complete them.
To the extent the reputation of the appraisal industry is an issue, muddying up conflict of interest will not enhance that.
ah, if I follow your logic than no appraiser can do tax certiority work because they are hired as an advocate even though they disclose this. They can not perform divorce or litigation because they are working for one side of the case, often as an advocate (ever wonder why there is nearly always a high and low appraiser in these matters? It’s nearly universal and no disclosure. That’s a double standard
A national relocation company requires Appraisers who want to get work, to pay a fee. This has to be disclosed. Why is this different? The guy is performing an appraisal and the parties know he gets a commission.
All I am saying is that if someone has a potential conflict it needs to be disclosed. That doesn’t mean they can’t dobthe appraisal if the parties are not aware of such a potential.
We differ. Conflict of interest in professional is almost impossible to explain away, so why compromise your reputation by trying to trivialize it?
Disclosure is no substitute for an absence of conflict of interest.
As for your examples. Tax work is explicitly exempted from the prohibition against advocacy. If you join litigation as an advocate appraiser, you have crossed the line and it matters not whether the judge considers you an advocate or not choose to focus on high and low appraisals. Indeed, if the judge does that then there is a good chance the objective appraiser has failed to explain himself fully. As for the relo commission, an appraiser is nuts to get anywhere near that deal.
And conflict of interest does mean to your credibility you can’t do it if there is even a perception that your objectivity is compromised. I can’t imagine a circumstance where Mike could escape that perception in his real estate sales.
Sometimes, when disclosure might not work to dispel the perceptions of compromise, abstinence is required of the consummate professional. Like it or not, that is the way it is. Can’t have your cake and eat it too.
I’m glad you brought this up. I’m surprised by the lack of understanding of this concept in the profession. Maybe its a holdover from our cottage industry roots when feelings and intentions were important to this issue.
Edd – terrific explanation – I agree with you but I think it comes down the jargon – I think it’s the use of the word “appraisal” that sets everyone off down different paths (and that is a HUGE issue for the industry to deal with). I do think the purity of the concept of non-bias valution is pretty detached from common appraisal practice and boy do I love purity.
I’d guess the vast majority uses the word “appraisal” (in my relo, divorce and litigation examples) I had recommended that Mike call them something else.
Jonathan,
You are correct. Appraisers, being the truth tellers we want to believe we are should have more respect for the language.
If only “appraisal” were the only word that had been bastardized in this profession. Unfortunately it is one of many, but USPAP does distinguish it from valuation services, which I think should be outlawed completely. (That is another discussion, but so much for alienating real estate agents and 90% of the LOs). I think it is no small coincidence that reports that are not appraisals are called appraisals. It is done to make what ever is going on happen, no doubt
Keep telling Mike what ever it is you’re telling him. We have got to press on toward the goal of professionalism. It is imperative.
While I may not chew Mike out the way Mr. Anonymous did, I believe he has the firmer foundation among you.
I’m glad to see that this part was printed…
You do understand that when you do an Appraisal you must adhere to USPAP including “I have no present or prospective interest in the property that is the subject of this report..”
Because that says it all and if you do what you did, I can’t tell you how ill what you did makes me feel. I sincerely hope you have learned by this and will not continue doing that.
When you are the one violating USPAP is just an extreme cheap shot and a cop out for you or the author to say some nonsense like I am hiding behind USPAP. You sir are violating USPAP and I am not hiding at all. Whether or not USPAP does or does not fit the way that you decide to do business outside the law, because you don’t like it or don’t think it makes sense is a falacy for an argument. When you got your license as an Appraiser you voluntarily agreed to follow USPAP. Did someone force you to become an Appraiser?
If you do not follow the rules you are part of the “problem.” If you think the rules need to be changed then write to the Appraisal Foundation, rather than being critical of being caught in the “cookie jar – red handed.”
We are going to hell in a handbasket in part because Appraisers – some of them feel it’s okay to make their own rules and not follow USPAP. You don’t get to make up your own rules and have the audacity to tell someone that it’s okay. PLEASE! There is absolutely no excuse for your behavior and the columnist should be ashamed of himself as well!
The 2 anon comments were sent to Mike from the appraiser who started this whole thing. I kept his name out of it. You can see the threatening tone even here. More productive to have an engaging dialog than to communicate to anyone in such a manner.
I thoroughly agree with Anon that Mike’s practice makes a mockery of USPAP and Mike is a problem for an industry struggling to maintain its relevance while trying to gain professional status. It matters not whether Mike chooses to follow the rest of the rules. Violation of the conflict of interest provision invalidates whatever else it is he is doing in the name helping buyers and sellers (which is BS-he’s doing it for himself). Disclosure, as I have said is hardly a cure. The appraisals Mike produces for his listings are fundamentally flawed, cannot be certified and should carry the warning, “ABSOLUTELY USELESS DO NOT RELY ON ANYTHING IN THIS REPORT.”
Now to the business aspect of this. Mike, and many, many other appraisers (this is not an isolated or small problem) cheat by doing “comp checks”, “hitting numbers”, not honestly executing the certification and cutting corners. And what is the cause of this once ignorance is eliminated (which, following Anon’s diatribe, Mike certainly cannot claim)? COMPETITION!
Mike uses his USPAP flawed appraisals to get listings. He must think it gets him ahead of the guys who follow the rules. And there is the problem. Following the rules is expensive. Some guys just won’t play on a level playing field when it comes to business.
I’m not nearly as concerned with Anon’s tone as I am with Mike’s cheating. Anon is right. If we appraisers don’t crack down on these cheaters, who will? Without jealously protecting our objectivity (which has truthfulness at its heart) we completely loose our relevance and we will never make it to the professional status we covet.
I’m not at all sure dialog is what is needed. Acton is. I think Mike should either stop immediately or be required to answer to the State and possibly be required to surrender his license. And I also think Anon took a real risk in letting Mike know who he is. That was courageous, and I admire that. I don’t get why the messenger is being shot for delivering the message in an offensive manner.
So Jonathan, I think your characterization of Anon behaving somewhat rabidly, even though it may be accurate, deflects us from the issue. Mike and his cheating is the real issue and there is no excuse for it. Anon is taking a hard line and I think he is correct. Mike’s behavior is personal problem for all appraisers.
Mike should either decide to play by the rules or choose the hat he likes the most and give up the other one. Mike and his ilk are harming the appraisal profession and are pariahs on the business of appraising in their geographical areas. They are not competitors, they are cheaters.
Edd – How on earth is Mike cheating? Tell me how the actual report is flawed? You are losing your objectivity I am afraid which is disappointing. Compare what he is doing to a BPO that would usually be done? Are you suggesting that if he has the skills to do an appraisal report to more accurately price the property, thats a disservice to his customers for him to do it? As if that is deceiptful? And what on earth does this have to do with a comp check btw? Of course doing a more thorough analysis gives him credibility – thats why he is doing it. Are you suggesting that only full time appraisers can perform an appraisal? Again, how the heck is this “cheating” and what does this have to do with his “behavior.” C’mon Edd – we don’t need to bring our profession down like this – think about what you are saying.
If the report contains the certification that the appraiser, has not present or prospective interest in the subject that is also his listing it is clearly flawed.
Give me a minute. There is a lot of bait in that post. You packed a bunch of loaded issues in there and I want to make sure I stay on point, which is Mike’s use of his ow appraisals (not BPOs) for his own listings. I believe we need to make some distinctions here. Maybe we need a give and take on this issue, because I absolutely have done my best to explain the problem and we are not on the same page.
Are you confusing an appraisal with a BPO? Did Mike not employ his appraisal credentials for his own purposes in lieu of a BPO? What did I miss? Does Mike not certify his appraisals and just casually refer to his reports as a BPO completed by an appraiser?
You seem to see the discussion (or its tone) as bringing the profession down. I see it as a long past due and necessary discussion if the profession is to make it out of the dark ages.
All of what I am basing my opinions on comes right out of your post since I have no access to what Mike is doing other than through your comments. If you misspoke then I might change my mind. If not then we got some talking to do and I now think this is going to take some possibly significant time and effort.
Since Mike’s efforts are characterized as an appraisal and he is licensed then certification is required. There in lies the problem for me. Do you consider a knowing and deliberate violation of USPAP to get business to be fairly characterized as cheating? If not, then what would you call it?
OK. I’m avoiding the other gauntlets and cutting to the issue.
I suppose some of the confusion may spring from what Mike says he is doing. The way this scenario was presented, or maybe the way I interpreted the presentation, leads me to think Mike is completing appraisals, not BPOs, for his listings.
I think it is important, if for nothing more than the sake of clarity in this discussion, to make sure we are talking about appraisals as opposed to some other valuation service.
I think that Mike’s enhanced skills in valuing property is certainly of benefit to everyone involved. However, if he certifies his opinions and conclusions pursuant to USPAP there is certainly a question as to the veracity of the certification under the circumstances.
Among the several mandatory (not optional) appraisal certifications set out in SR 2-3 is:
“I have no present or prospective interest in the property that is the subject of this report..”
A listing agent certainly has both a present and prospective interest in the subject property. I understand Mike is appraising, certifying, listing and presumably selling these properties.
Please tell me how the certification with respect to the lack of his present and prospective interest does not come into play.
I will talk about my objectivity, cheating and flawing if I can get past this obstacle. I’m even willing to talk about how to talk.
Ok, lets talk solutions instead of USPAP geek speak: if a real estate appraiser becomes a real estate agent and has higher valuation skills than the typical agent and wants to showcase their market knowledge and skill to the public, how can this be done? I don’t think the answer is “I wouldn’t touch that with a 10 foot pole.”
I am thinking the report is called an evaluation and the appraiser fully discloses the report was done for their benefit – to price the property and to better illustrate ho it was done. Thoughts?
USPAP geek speak vs solutions. Let me see, which would I choose?
I think there may be problem in the show-casing, but maybe that is how it is done in those circles. Some are always reaching to get others to understand, “how impressed I must be with me.”
OK, no certification? Yes? Although for Mike, I sorta like the ten foot pole solution at least as long as he represents himself as an appraiser. There are some of these cross-overs who use the same card and are appraiser/agents. I really have no problem with listing appraisals and listing BPOs as long as neither is misrepresented.
As for Mike and appraising his listings, the best he should hope for is some kind of evaluation label. More power to him and its hard to tell, but if real estate agents actually knew how to appraise it might work out better all around. As it stands, Mike can’t truthfully certify his listing appraisals. If he doesn’t like that, change USPAP.
Geek-speak??????????????????
Now that the issue has boundaries, you wanta carry on about some of the other stuff?
If objective means I have to be neutral or flexible with clear USPAP violations, then I’m not headed there.
I guess I got to the cheating part by assuming Mike was certifying his appraisals of the properties he listed. If the certification isn’t cheating then it is at least a lie. I also assume there are other similarly situated appraiser/agents who follow the rules. Gaining a competitive advantage by breaking the rules is cheating where I live.
If you lie or cheat in any manner on an appraisal it is fundamentally flawed in my dictionary.
Edd – I’d say that’s “geek-speak” with a lot of solution thrown in. 😉 Well said! and thanks.
The labels “cheating and lying” comments are superfluous “drama-speak”- the guy wants to do a better job pricing his listings and wants the consumer to know that it was more thorough – and he is labeled a liar, cheater and criminal. That’s wrong.
What irritates me in general is there is a “whole lot of righteous indignation in this profession goin’ on” and that is being taken as wisdom and expertise. When someone is doing something out of the box and they are doing it wrong or need to modify their approach to be compliant, then for goodness sakes, tell them without the name calling “you’ll burn in hell” approach which is what the motivator for this post did, probably without realizing it because it was automatic.
I just sent him an email asking for his participation – hopefully he will join this discussion. Mr. Anonymous probably has a wealth of experience and ideas to share with Mike or any others on this subject.
This reminds me when a lender hires and appraiser to review the work of his competitor. Many appraisers see this as a chance to attack to a standard they may not even follow, because it is an opportunity to get more business from that client. For all the dinners, banquets and events this profession dreams up, it doesn’t seem to bring many of us together and thats sad.
Well, I’m mollified, but I still kinda like the impact of “cheating and lying.” Got attention it did. Guess I’ll reserve those for real estate agents. I take it Mike’s course is now corrected.
I have no idea if sanctimony was involved or not, but if Anon only gets upset because he lost business then shame on him. On the other hand if Mike cheated and got the business then shame on him.
Let’s talk about why this profession eats its young. It is a sign of lack of professionalism and from whence did that come? In a former life I stood in a well and addressed the bench as a member of the bar. There the education entry requirement was rigorous, and the discipline of practitioners was meted out pretty much in person by the presiding judge. For litigators everything is done in public and the incompetents pretty much are relegated to water boys.
No such thing here in appraising. Cloaks of secrecy envelope everything done in appraising and communication is pretty much relegated to exchanging niceties. Appraisers are just simply undereducated and unaccountable in my view.
Among other things , I recommend a masters degree in economics or a related field as a basic requirement to sign an appraisal and then appraisals should be open for any one to read.
My peers think I am nuts, but I don’t think we will begin progress in cleaning our house until those are implemented. Perhaps then appraisers will have sufficient respect for one another than to use or abuse USPAP to gain competitive advantage.
Cloaks of secrecy, exchanging niceties – bingo! Very well articulated and I agree completely with your view. The bar is too low IMHO.
Gentlemen,
Although I’ve enjoyed the exchange, I think the solution is as simple as terminology. When I first received the original e-mail from Anon, I went to the most knowledgeable source I knew on the topic, Jonathan. We were connected by a mutual friend and I reached out to him asking for his thoughts.
Jonathan’s first response was perhaps calling it an “appraisal” was the root of the issue. I agreed and took his advice to heart. It should be known that I never included a certification with the report. I merely used the sales comparison grid from the 1004 report because, as an appraiser, that is mentally how I had learned to analyze and evaluate real property values. It is the main tool I employ to perform a valuation.
I position my experience to both buyers and sellers as a benefit. For buyers, when we submit an offer I present a sales comparison grid (no certification included) demonstrating to the seller that we are not simply “low-balling” them, but merely demonstrating (on paper, in B&W) that my clients’ ability to purchase this property is contingent upon them obtaining financing, and that financing in contingent upon the property appraising by an independent third party. Understanding the rules and guidelines that appraisers must operate under, I feel I can fairly accurately predict which properties represent the most comparable sales. It is merely a method of cutting to the chase and supporting what we feel is a fair market value offer. If there is a bidding war (remember those?) or my buyers ARE in fact trying to low-ball a distressed property, this approach is useless.
For my sellers, I leverage my appraisal experience in much the same way. Analyzing the market data to demonstrate to them (on paper, in B&W) what value the most recent market data is indicating. I use the sales analysis grid, but no certification. Trust me, most times (especially recently) the result is not what the sellers want to hear! I’m not winning listings for the price I come up with, but rather for a straight-up, honest analysis of the market value. The sellers ultimately must decide on their listing price, not me.
As a real estate agent, I understand clearly the detrimental consequences with overpricing and “riding the market down” and my “evaluation” (is that the term I should be using?) is intended purely to show my sellers what, in my professional opinion, is the optimum price to minimize their time on the market and maximize their profit. At the end of the day that is my fiduciary duty to my sellers.
By calling it an “evaluation performed by a certified residential real estate appraiser”, and NOT including any type of certification, do we agree that I am in compliance with USPAP? I disclose my representation of either the buyer or seller and clearly state the purpose of the evaluation is to best determine the property’s most likely current market value.
I was an appraiser first and when I got into the sales side I was frankly appalled at the way some (most) of my Realtor colleagues priced properties. I am merely trying to bring some of my appraisal experience into the buying and selling side of the transaction to increase efficiency and hammer home the concept that the market determines values. It relates to the concept of transparency where all the cards are laid face-up on the table and it’s up to the parties involved to work out a solution that is acceptable to everyone. I’m merely trying to leverage my experience as an appraiser to get to that solution quicker.
Edd, I’m letting the “comp checks”, “hitting numbers”, “cheating” and “reporting to the State” comments slide under the umbrella of a simple misunderstanding and confusion of terms. Fair enough?
I am by no means an expert on this subject. I learn something new everyday and I sincerely appreciate the benefit of the knowledge provided by those smarter than myself. So tell me guys, are we closer to getting on the same page?
Jonathan,
The basic insight on this, is that there is an obvious conflict of interest. The requirement to not have a present or prospective interest in the property is a very serious one. An Appraiser is supposed to be unbiased, where a realtor is supposed to be supportive of his or her client. When you are both this is a big conflict and an obvious USPAP violation. You cannot do both like that on the same job, there are situations where USPAP allows that. Such as you Appraise it for a client, who the client is or is not has nothing to do with it. AFTER (not during), the Appraisal a client (owner, seller, lender, etc…) calls you and ask you to act as either a listing agent or a selling agent, can you do it, yes!! This is totally different then the case of 30 Jefferson, he has an interest in the outcome of the property, yet as an Appraiser you swear you don’t, so which is it? Your credibility is at stake, the public expects the Appraiser to be different than the Realtor/Broker/Sales Person/Listing Agent/Sales Agent. When you meet a realtor you normally assume they have a commission at stake and in most cases throughout the U.S. they do not get paid, unless the deal closes, even when that is not the case they work for the interest of the buyer or the interest of the seller, given that how can you possibly simultanteously be both an Appraiser and a Realtor? You can’t.
Please don’t tell me I’m trying to scare people, I’m not trying to tell anyone that I am perfect, but I really do my best to follow all the rules all the time. I too am a Broker and know many Appraisers that are brokers, and I don’t personally know any Appraisers that would do both, ever, even with the case where it is allowed, being an Appraiser first and then a realtor later, but never at the same time. If you have no rules, or you just follow what you feel like doing, then you cannot honestly say you are an Appraiser. When you become an Appraiser you agree to follow USPAP, you do not get to pick and choose, you follow all the rules all the time. There are situations where there are “jurisdictional exceptions,” but this obviously is not one of them. From the sound of what I saw on the posts on your website on this issue, they promote non-compliance with USPAP which is hugely distructive. If you don’t like the rules, you should fight to change them, not break them. If you knowingly break them, you violate ethics, if you un-knowingly break them you lack competence. So the question here is was it an ethics violation or a competency violation??
Scaring the public? Obviously, USPAP doesn’t scare more than a fraction of Appraisers and so many of them and others have no respect for USPAP, because of the many that have no ethics and just violate, violate, violate. If you do not have the integrity to follow the rules, you have nothing! There is also a mangarment rule, that requires the Appraiser to disclose fees, which would like apply here as well, but since you can’t accept in assignment like the way he does, it’s just another violation to add to the list.
Now, Relative to this USPAP Standard 2-3 says….. (this incidentally has nothing to do with whether it is for a loan or a private consumer, it does not matter and because it is in USPAP, you MUST adhere to it)
—
the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions.
—
I have no (or the specified) present or prospective interest in the property that is the subject of this report and no (or the specified) personal interest with respect to the parties involved.
—
I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.
—
my engagement in this assignment was not contingent upon developing or reporting predetermined results.
—
my compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.
The Conduct rule in part states; “An Appraiser must perform assignments with impartiality, objectivity, and independence, and without accomodation of personal interests.”
I think the whole key is being “impartial” and if you are an agent connected with the property, you are “partial” because you have an interest in the property. Taken to the extreme, if you even show the property as a realtor or look at it as a potential buyer, you have expressed an “interest” in the property and the “interest” is at least valid for the period of time the property is offered and available for sale. We used to say, “past, present or prospective interest,” but notice todays wording is “present or prospective.” Thus, technically IF you had no interest in the property, no intent of ever selling, listing or buying the property, per USPAP you could do it later. I would suggest if you did it later, though you have an appearance of impropriety to those that understand the role of an Appraiser – to protect the “public trust.” How can we really trust you if you could stand to benefit by your answer as an Appraiser??
I hope that answers, your questions. Your statement “good grief” is more than a little intimidating and made me think you support selective violation of USPAP. As an Appraiser you do not get to interpet when to apply the rules and when not too, you MUST apply them all the time when you act as an Appraiser. In this case the individual tarnished his credibility and said he was both relative to the same property at the same time.
If my comments, scare a few people as you suggest, that’s damn good, I hope to scare a few more, a lot more actually. If it helps more people learn and follow the rules, again, I consider that a damn good thing. If they don’t like the rules let them fight to change them, but don’t use your disdain for the rules to violate them.
If the certification isn’t signed then all of what I said is just wasted. It wasn’t from confusion, it was from misrepresentation as to what was done. Mike, I think what you are doing, now that you yourself have eliminated the go-betweens and explained it, is just ducky. Wish more agents would do it. It is novel to think of agents who know what value is.
Now what the hell is it that Anon was complaining about? I sort of get the drift that appraisers can only complete USPAP compliant appraisals. Think?
Is that it Anon? If so, the mistake is apparently that you think every valuation an appraiser does has to be a certified appraisal according to USPAP. That might be where this thing got steered wrong. Now that Mike has explained it, 85% of the posts above including the one you just made are of no relevance whatsoever. And there never was cheating or lying or that other stuff either, but the story sure didn’t get told right until now.
And then maybe Jonathan, who didn’t do a very good job from the get-go of hitting the nail I saw on the head, is right to call the thing Mike is doing by another name. Some things that look like appraisals are not, so why call ’em that?
Anon, if Mike is signing the cert and telling us he didn’t then I’ll still ride in your wagon. If, on the other hand, your comments aren’t supported by something like that then you have a flat to fix. I’ll help you fix it, but you gotta listen and you seem pretty well entrenched.
Thanks Jonathan for hosting this. The issue is one of substance, even if we didn’t have any facts to back it up. I’ll bet your cocktail parties are a blast. How about cocktails over USPAP? Geek with a vodka sour.
Haha – thanks Edd. You were hung up on the cert doc and I didn’t realize it – yes – that would be lying cheating stealing and using bad manners if signed.
Have you been to one of my parties? Dull as dirt, as they say. 😉
Try starting a discussion about any one of the remainng USPAP issues (by last count there are some 3,000) next time. That should get everybody home sober and before bed time.
Guys,
Here is the link to the issue at question:
Click the “APPRAISAL” tab up top (should be changed to “EVALUATION” tab, right?)
The image posted to the left was just a random appraisal report page mistakenly posted by my buddy helping with the HTML for the site. That image DOES indeed have a certification and signature! But when you click on the image you can download only a one (1) page PDF of the sales comparison grid, with no certification attached. Looking at it again, I can see where the confusion was born for Anon.
This is just my honest attempt to demonstrate support for our list price from the mind of someone who has sat on the other end of the transaction many times. Please take a look at the presentation and offer suggestion how I can better employ this technique.
The punch line is that the house FINALLY went under agreement and is pending sale significantly below the value I came up with last Fall on this report! (In my defense, we got an offer within 2.5% of my value around Christmas time last year and my seller balked at it. Said, “No Thanks”. You can lead a horse…..)
Guys,
Here is the link to the issue at question:
Click the “APPRAISAL” tab up top (should be changed to “EVALUATION” tab, right?)
The image posted to the left was just a random appraisal report page mistakenly posted by my buddy helping with the HTML for the site. That image DOES indeed have a certification and signature! But when you click on the image you can download only a one (1) page PDF of the sales comparison grid, with no certification attached. Looking at it again, I can see where the confusion was born for Anon.
This is just my honest attempt to demonstrate support for our list price from the mind of someone who has sat on the other end of the transaction many times. Please take a look at the presentation and offer suggestion how I can better employ this technique.
The punch line is that the house FINALLY went under agreement and is pending sale significantly below the value I came up with last Fall on this report! (In my defense, we got an offer within 2.5% of my value around Christmas time last year and my seller balked at it. Said, “No Thanks”. You can lead a horse…..)
Make my vodka sour a double and hold the geek, please!
As Jonathan suggested you have disclaimed the appraisal thing, but I wonder why you set up the impression in the first place. If you didn’t set it up you wouldn’t have to take it down. Now that we know that what you are doing can’t be an USPAP compliant appraisal, I have to ask what is still there on your site that might make us think it is?
If I understand the duties of an agent, it is that they are to be an advocate, which is of course for a plethora of reasons the antithesis of being an appraiser. Tell me, what part of being an appraiser helps advertise selling real estate. Does it make clients think you know something the other guys don’t?
Maybe its like those little fish outlines some of us Christians put on our cards and other places. I’ve heard that is to inspire trust in the viewer. Maybe buyers would see your appraisal and think, “Gosh, that guy has to tell the truth because he is an appraiser.” Maybe not. My point now is why even worry about what they think?
Anyway telling sellers what their house is worth when they don’t want to hear it may not work too well according to the example you posted. Think that seller will say you really were the smartest guy around or just dis you for listing too low to start with?
I’ve heard as a business model listing agents don’t routinely tell sellers what they don’t want to hear. I’ve also heard there is a buyer’s only agency where you could really strut your stuff.
So now we see how Anon went astray. Why wouldn’t he have?
Now what was it we were talking about?
Oh yeah, if I were selling houses, I don’t think it would be a good idea to advertise that I am also a lawyer. But, it might attract clients. Why not offer your sellers an appraisal from one of your five independent appraiser friends to be posted on your site, certification and all? The real deal, no disclaimers needed unless you offer to pay the appraiser a part of the commission.
You sound to me like an earnestly honest person. Can you tell me why you want people to know you are an appraiser.
Mike,
You’re mixing advocacy with indepence, objectibity and impartiality and that is a NO-NO. You CAN take a postion, but must fulfill that role and make sure the client understands that.
I also understand what the intenton was……..but….
I have a link for you as well. I strongly suggest you read it. AO-21 is the best Advisory Opinon in the book. The fact that you suggest that you “change” the tab to “Evaluation??” proves you do not understand your “role” (see the AO before responding please). You can not do “an appraisal” and then call it something else?? To absolve yourself.
Understanding the first issues helps resolve the second. The rule of thumb is 1) what is the clients expectaion? 2) how can that be met and under what circumstances. The AO is CLEAR in illustraion #1-Liz Ross a realtor AND appraiser who provides BOTH types of valuation services (on different occasions) described in the AO. Please review illustration #1 and #4. #4 involves litigation but lines 289-295 sum it up.
AOs/Answer_A21_illustration1.htm.
The circle and the definitions on page a-68 also help with understanding. The certification langauge is one thing…the understanding is another…..and if anyone out there is wondering when USPAP applies (read same Advisory Opinion) it applies by law, regulation, agreement or choice. I think MA is still not mandatory yet and I doubt there is a regulation. The point is that ” choice “, in the absence of the law regulation or agreement forces one to ask themselves, Why shoud I comply?..and the answer is located in the Preamble “to promote and maintain a high level of public trust”.
Joe,
Super USPAP class explanation. Except for the contingency ratification that the client understands Mike’s role. I don’t think it matters what the client understands else the disclaimers would rule the issue.
Mike and Jonathan must also be mixing in rationalization. Anon got their attention, I hope your explanation does as well.
I think Mike wants us to believe he can remain objective in all sorts of weather because that is what his intentions are. The weight of general experience augurs otherwise. The wisdom on this issue clearly warns Mike away from doing what he is doing.
That brings me to Jonathan. Why don’t you see what Mike is doing as a dangerous thing Jonathan?
Joe points out that until a reasonable person is misled by what Mike is doing we probably don’t have a USPAP violation without the cert. But Joe is right, if a reasonable person thinks what Mike is doing is appraising and some kind of damage ensues-trouble will too.
I have a sneaking suspicion Mike is advertising his appraisal abilities to promote the trust of possible clients in his ability to accurately price real estate sales and if USPAP is intended for that, this is the first time I’ve heard of it.
But, for now I’m waiting for Mike to tell me his primary motive for posting appraisal/valuations-whatever for his listings. When I know that I can safely assume what Mike is trying to get the public to think his role is.
Then Jonathan can craft a disclaimer for it and come up with a new name for what it is.
A certified general who just lost his license, but who also gave many of us a helping hand when we needed it had a philosophical comment about what appraising is. It is, he said, all smoke and mirrors. Apparently that thought has outlived its usefulness.
With all these USPAP experts chiming in I thought I’d ask this question. I review appraisals done for property owners seeking to have their assessments reduced. It used to be that the “representatives” who filed the paperwork on behalf of these people would usually hire third party appraisers to deal with the valuation. Lately however, there have been some appraisers getting into this business and some are doing more than just the appraisal. I don’t know what their fee arrangements are but if they are “representing” the owner, as well as doing the appraisal, it seems to me they can’t work on a contigency basis, whereby they would get a percentage of any reduction. But if they were to charge a set fee, say $400 for the appraisal plus $500 to do the paperwork and negotiate a settlement, would that violate USPAP?
Todd,
You are correct. Standards 1, 2, 4 & 5 must be observed here if you are doing both the Appraisal and the “Appraisal Consulting.” You can charge a flat fee for each, no problem, as long as your fee is not contingent upon the outcome of the settlement. Remember the comments in Standard 4 …..”However, the purpose of an assignment under this STANDARD is always to develop, without advocacy, an analysis, recommendation, or opinion where at least one opinion of value is a component of the analysis leading to the assignment results. ”
“The ETHICS and COMPETENCY RULES apply to the appraiser performing an appraisal consulting assignment. Appraisers practicing under this STANDARD must perform the assignment with impartiality, objectivity, independence, and without accommodation of personal interests.”
The amount of the fee charged does not matter, so long as it is not contingent, you get paid no matter what happens. So it does not violate USPAP IF you FOLLOW the rules and do it properly.
Todd,
If you are doing the “Appraisal Review” and the “Appraisal Consulting,” then obviously you follow Standards 3, 4 and 5 and potentially 1 & 2 as well, depending on how the review is handled. Again, as long as you follow USPAP and any applicable State laws, etc.. you are okay.
The response to Todd’s question according to the ASB is somewhat complicated. Why should the tax protester have to hire somebody else other than the appraiser if the appraisal is all that is needed? Here is FAQ 218 copied from the AF USPAP link:
FREQUENTLY ASKED QUESTIONS
Question: A client feels that her property is over assessed by the County. Shes asked me to perform a tax consulting service that involves advocacy for her position and Id like to charge her on a contingency fee basis. This assignment would not include an appraisal. I have two questions: Is this service allowed under USPAP? If not, can I perform this assignment outside of USPAP?
Response: You cannot perform this assignment under USPAP. An appraiser, in appraisal practice, cannot be an advocate. The Conduct section of the ETHICS RULE states:
An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests.
An appraiser must not advocate the cause or interest of any party or issue.(Bold added for emphasis)
Appraisal practice is defined as:
valuation services performed by an individual acting as an appraiser, including but not limited to appraisal, appraisal review, or appraisal consulting.
Furthermore, none of the certifications in USPAP allow any bias, contingent compensation, or direction in value that favors the cause of the client.
Absent any law or regulation to the contrary, you may complete this assignment outside of USPAP, as long as you are very clear about your role. The ETHICS RULE also states:
An appraiser must not misrepresent his or her role when providing valuation services that are outside of appraisal practice.
I very rarely understand what the ASB has to say, and this is one of the more confusing to me.
I think what the ASB is focused on in this comment is that an appraiser cannot be influenced. Most likely an appraisal that does not support the cause of a client is not going to see the light of day. So the question as a practical matter boils down to an appraiser who presents an appraisal that supports the client’s issues on appeal, which is fairly indistinguishable from advocacy. I have heard it said that the appraiser is advocating for the appraisal. Maybe that clarifies it, but I still think the real focus is on the appraiser not making up stuff to advance any cause of the client.
Contingent fee arrangements present the same problem. If the contingency puts the appraiser’s skin in the game, i.e. the more tax savings the higher fee, it is nigh on impossible to argue that the appraiser isn’t being influenced by something other than market facts.
Rather than moving in and out of USPAP let’s just simplify the problem and remember that influencing the outcome of the appraisal is the problem. The more the arrangement is structured to guarantee the performance of the appraiser the greater the scrutiny.
Mike is somewhat in the same pickle. He is using his appraisal credentials and abilities to attract clients, and then finding himself in a spot where he moved out from under USPAP.
I don’t know about you, but I think the ASB stuff particularly with respect to this question is something like now you see um, now you don’t.
But then, the ASB has the official job of interpreting USPAP. The rest of us just tag along with no authority whatsoever.
Jonathan directed his discussion of this event to the manner in which appraisers address one another. The nuances of USPAP and the ASB interpretations of them will no doubt provide fuel for arguments for decades, so maybe he is correct that it is more meaningful if we discuss professionalism.
I believe the profession has become leaderless and overly competitive. The result being lack of respect among appraisers for one another as well as a lack of respect for what appraisers are employed to do and the way they do it.
FIRREA imposed appraisal as a burden on the mortgage industry. A burden the mortgage industry likens to an unnecessary and unfair tax on its activities. And the mortgage industry has still not asked that it be imposed. Appraisers seem to have been basically unsuccessful in convincing anyone involved that they provide a necessary of helpful service to those who are forced to be clients and intended users.
Add to that the fact that there is no universally understood vernacular among appraisers and that there is an almost total lack of meaningful education and oversight within the profession and I think we have the explanation as to why there is a lack of respect within and without the profession for what we do or even intend to do.