FREAB Meeting - February 5, 2018 - EVALUATIONS!!

The Florida Real Estate Appraisal Board will have their first meeting of 2018 on Monday, February 5, 2018. The FREAB meets in Suite N901 (ninth floor) at 400 West Robinson Street, Orlando, FL. The meeting starts at 8:30 AM.

The legal agenda is light; only four cases are on the docket. All involve consideration of a Settlement Stipulation by the FREAB. Nevertheless, there is always a chance something interesting will be discussed, and a learning opportunity will result.

Things are bound to get interesting around 1:00 P.M. At that time the board is scheduled to take up a Discussion of Evaluations. This discussion was prompted by amendments to Chapter 475 Part II as a result of HB 927, passed by the 2017 Florida Legislature, and signed into law by Governor Rick Scott. The amendments became effective October 1, 2017.

There is plenty to say about the amendments, and the attempt to soften standards applicable to the services provided by Florida Appraisers. Rather than reproduce everything here, Appraiser Active suggests you take a look at the documents to be considered by the FREAB, including the comment letter from yours truly. CLICK HERE. My comments start on page 29 of the pdf.

If you have a chance to attend the meeting and weigh in, I'm sure the FREAB will welcome you comments. If not, the meeting will be live streamed. TUNE IN and hear the conversation and how the board decides to proceed. If thee TUNE IN link above does not direct you to the GoTo meeting page, use this LINK and click on live stream.

Tips in the Mailbox

Over the weekend, along with a stack of the regular mix of bills, political advertisements, and solicitations for contributions, I found the Second Edition, Spring, 2016, APPRAISALBUZZ Magazine.

Quite a mix of articles, some written by folks I've met and know, as several by folks I know from other forums and events. It's different, and worth a read.

The purpose of this post is  to add one additional suggestion to the article authored by yours truly "Litigate This, Five Things to Think About Before Taking the Plunge". As noted in the piece, the list is not exhaustive, and many more points could be added, but I was on a work count limit.

Here's the addition. When working on the terms of your engagement, make sure to negotiate a records retention agreement. The closing orders for some cases require all parties to return or destroy their records related to the case. Of course, this will cause an appraiser trouble with the Uniform Standards of Professional Appraisal Practice, and in some instances, their state law. Make sure the terms of your engagement allow retention of records in such as way to permit you to comply with the Record Keeping Rule, and your state law.

Florida Legislature - Major Fail

Appraiser Active has already posted about CS/HB 5007. The bill is making its way through the legislative committee process. The bill, originally with the title, "Reducing and Streamlining Regulations" includes amendments to statutes regulating several professions. Among them are real estate brokers and real estate appraisers. Two sections related to real estate with the potential to weaken consumer protection.

In addition, the legislature appears to be making an attempt to solve a problem related to how the Uniform Standards of Professional Appraisal Practice is interpreted by some Administrative Law Judges as a result of a Florida Appellate Court ruling. See pages13 and 14 of the Staff Analysis for the explanation.

Below is the language proposed. Other specific references to the Uniform Standards of Professional Appraisal Practice in Chapter 475 Part I and Part II are removed. I'm not sure if the amendments will do what is intended because the section below, from page 19 of the bill, is a major FAIL.

Section 19. Section 475.628, Florida Statutes, is amended to read:


475.628 Professional standards for appraisers registered, licensed, or certified under this part. The board shall adopt rules establishing standards of professional practice that meet or exceed nationally recognized standards of appraisal practice, including those standards adopted by the Appraiser Qualifications Board of the Appraisal Foundation. Each appraiser registered, licensed, or certified under this part must shall comply with the rules Uniform Standards of Professional Appraisal Practice. Statements on appraisal standards which may be issued for the purpose of clarification, interpretation, explanation, or elaboration through the Appraisal Foundation shall also be binding on any appraiser registered, licensed, or certified under this part.

 Please join me, and let your representatives know that the Appraiser Qualifications Board of the Appraisal Foundation does NOT adopt standards of appraisal practice. That would be the Appraisal Standards Board of the Appraisal Foundation.
 
I'm anxious to see what the Appraisal Subcommittee has to say about the proposed language.
 
 

Pick a Number - Take #2

On Valentine's Day, KCBS out of San Francisco, aired a story about homeowners with low appraisals, and how they are "fighting back". It's not a new story, nor is it a new argument. Appraiser Active has posted on the topic several times since the HVCC took hold back in 2009. HERE, HERE, and HERE. Folks in the brokerage community have documented plenty of sad tales and a number of stories have been written in newspapers and magazines.




Some of the claims appear to have merit; others are outrageous. The video at the link above  is included because we take issue with a couple of statements made by the "experts".

“An appraisal is just an opinion,” said Tara-Nicholle Nelson, consumer educator at Trulia.com.

Sorry, Ms. Nelson, but I must disagree. An appraisal may be stated as "an opinion" but the opinion is stated in the appraisal report after research and analysis of relevant evidence, application of reason and logic, and development of the necessary approaches to value. An appraisal must be developed and reported in accordance with applicable standards, such as the Uniform Standards of Professional Appraisal Practice (USPAP), and standards and guidelines required by client groups, government agencies, and individual clients.

Ms. Nelson also claims that “Appraisers are under regulation and under pressure to be much more conservative because they took so much pressure for inflating values at the top of the market,”

Appraiser Active has heard plenty of claims from appraisers about pressure from clients and some AMCs to be conservative, but must have missed the regulation that requires "conservative" opinions of value.

A real estate broker in the video makes the claim that 1 out of 7 deals is killed because of the appraisal. That may be her experience, but she goes on to whine about the buyer's reaction "when an appraisal doesn't come in at value".

Here's a clue for you, my dear: The negotiated sales price is not necessarily the value of the property. It may be an indication, and should certainly be considered in the development of the appraisal, but it's only one small bit of the mountain of data that will be collected, verified and analysed.


Take a look at their story, HERE, and make sure to read the comments.

Just had to get that off my chest.

WHAT ABOUT THAT WELLS FARGO RVS DESKTOP APPRAISAL?

UPDATE!! - APPRAISER ACTIVE receives NASTYGRAM from Wachovia!

UPDATE #2 - JONATHAN MILLER weighs in - Will Wachovia send a NASTYGRAM his way?

This post has been modified in response to the email received yesterday (February 15, 2010) from the friendly, helpful folks at Wachovia.

This is the message sent to me by Wachovia.

Greetings,

Recently the following posts were added to your forum, the links of which are included below:

http://appraiseractive.blogspot.com/2010/02/what-about-that-wells-fargo-rvs-desktop.html

The posts include information that is confidential, proprietary, and intended only for the use of the owner of the e-mail address listed as the recipient of the original message. The posts did not include the email disclaimer originally included and is shown below for your review:

The information contained in this electronic message is confidential, proprietary, and intended only for the use of the owner of the e-mail address listed as the recipient of this message. If you are not the intended recipient, or the employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, dissemination, distribution, copying of this communication, or unauthorized use is strictly prohibited and subject to prosecution to the fullest extent of the law. If you are not the intended recipient, please delete this electronic message and DO NOT ACT UPON, FORWARD, COPY OR OTHERWISE DISSEMINATE IT OR ITS CONTENTS.

Please remove any and all posts that include the information of this email in whole or in part, as this is a violation of its intended use.

Please advise me if legal recourse is necessary to have these posts removed from your website.

Thank you,

Jose J. Ramirez

Web Developer III

Residential Valuation Services

Telephone (210)543-5921

Fax (210)543-3128

Mail Code T7400-01E

Email jose.j.ramirez@wachovia.com

Well!

In response, here is the modified post:

Appraisers across the county found a communication in their email inbox from a firm affilliated in some way with Wachovia with an announcement for an exciting new opportunity.

YAY!!!!

What did the communication say?

It described the merger/acquisition of Wachovia by Wells Fargo and the resulting creation of two appraisal groups within Wachovia Settlement Services. These are Wachovia Settlement Services (WSS) and Residential Valuation Services (RVS). These two groups apparently share resources and will continue on that path.

The communication (which, by the way, DID NOT come to me from Wachovia) goes on to describe a new "product" to be used for loan servicing ad default appraisal needs for divisions of Wells Fargo.

The new "product" is the Wells Fargo RVS Desktop Appraisal. Included was a link to a PDF with instructions and guidance for:

• Compensation
• Appraisal Requirements
• Instructions for completing the "product"
• How to submit your name and be awarded contingent fee assignments for this exciting "product"

These folks also announce that appraisal requests would start on Saturday, February 13th. SATURDAY!! What's up with these folks?

Included in the correspondence was LINK to THIS "NIFTY" GUIDE.

---------------------------------------------------------

It's yours to decide if you would like to accept an assignment from an outfit that cannot spell "APPRAISER".

It's yours to decide if accepting assignments that pay $55.00 (net $51.00) is part of the business plan you have adopted.

It's yours to decide if you believe it's safe to upload a jpg of your signature to such a reputable company.

Compliance with USPAP, however, is not a choice for the appraiser.

For starters, let's take a look at just one small problem with this offer; it's a contingent fee arrangement.

Fees (Compensation), Charges, and Service Level Agreement (SLA)

1. The fee (compensation) paid for completing this product is $55.

2. There is an AppraisalPort charge to you of $4 for each assignment completed and returned with a value.

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.)

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.

5. The Service Level Agreement (or turnaround time) is two (2) days.

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.

For those of you certified in Florida, it might be wise to take a look at Chapter 475, Part II, particularly 475.624 (17):

(17) Has accepted an appraisal assignment if the employment itself is contingent upon the appraiser reporting a predetermined result, analysis, or opinion, or if the fee to be paid for the performance of the appraisal assignment is contingent upon the opinion, conclusion, or valuation reached upon the consequences resulting from the appraisal assignment.

That's it for now. If time permits, we might get around to noting some other problems with this offer. In the meantime, it's your decision.

Questions-Professional and Geographic Competency

Over the last few weeks, dozens of Realtors, Borrowers and Sellers have contacted me and Appraiser Active relating horror stories about appraisers with an apparent lack of Professional or Geographic Competency. Their tales disclose appraisers from over 100 miles away accepting and completing assignments, appraisers with no access to the local Multiple Listing Service doing the same, and appraisers routinely using short sales and properties marketed as "pre-foreclosures" as Comparable Sales.

Although such stories are not new, they are becoming much more prevalent since the implementation of the Home Valuation Code of Conduct (HVCC). Appraisers are bound by something called the Uniform Standards of Professional Appraisal Practice (USPAP). Within the USPAP are a number of Rules and Standards; among them the Competency Rule.

Mike Kennedy, a New York State Certified Residential Appraiser, suggests Real Estate Agents, Appraisers, and Loan Originators should supply owners and borrowers (and their Listing Agents) with a "flash card" to phone interview ANY Appraiser contacting them for access PRIOR to setting an appointment to help determine the competency level of the appraiser.

Here's his list of questions, with a couple of minor modifications:

• what license do you hold, what is the number?
• when did you first obtain your license?
• are you a licensed or certified appraiser, or are you a trainee appraiser?
• where are you from?
• when was the last time you appraised a property in my neighborhood?
• do you know any of the local long term Realtors or Agents in this area?
• after visiting the property how long will it be until the report is delivered to the lender?
• do you have any idea approximately how much my home is worth? ballpark? (you may not get an answer to this question)
• do you have access to the local Multiple Listing Service? Does my Assessor know you? (my Assessor-County Property Appraiser knows me, but only because I ran against her in the last election. This answer to this question is important in locations where the Assessor is THE source of property and sales data)
• please give me a general physical description to enable me to recognize you at the appointment

The appraiser's answers will help you gauge his/her Competency to accept and complete the assignment. If the Lender does not insist on Professional and Geographic Competency, the borrower should. After all, they are entitled to a copy of the appraisal report and will be responsible for repaying the loan.

Here is reprint of the COMPETENCY RULE from the 2008-2009 Edition of the Uniform Standards of Professional Appraisal Practice. My emphasis on the points that may be of interest.

COMPETENCY RULE

Prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must properly identify the problem to be addressed and have the knowledge and experience to complete the assignment competently; or alternatively, must:

1. disclose the lack of knowledge and/or experience to the client before accepting the
   assignment;
2. take all steps necessary or appropriate to complete the assignment competently; and
3. describe the lack of knowledge and/or experience and the steps taken to complete the
   assignment competently in the report.

Comment: Competency applies to factors such as, but not limited to, an appraiser’s familiarity with a specific type of property, a market, a geographic area, or an analytical method. If such a factor is necessary for an appraiser to develop credible assignment results, the appraiser is responsible for having the competency to address that factor or for following the steps outlined above to satisfy this COMPETENCY RULE.

The background and experience of appraisers varies widely, and a lack of knowledge or experience can lead to inaccurate or inappropriate appraisal practice. The COMPETENCY RULE requires an appraiser to have both the knowledge and the experience required to perform a specific appraisal service competently.

The COMPETENCY RULE requires recognition of, and compliance with, laws and regulations that apply to the appraiser or to the assignment.

If an appraiser is offered the opportunity to perform an appraisal service but lacks the necessary knowledge or experience to complete it competently, the appraiser must disclose his or her lack of knowledge or experience to the client before accepting the assignment and then take the necessary or appropriate steps to complete the appraisal service competently. This may be accomplished in various ways, including, but not limited to, personal study by the appraiser, association with an appraiser reasonably believed to have the necessary knowledge or experience, or retention of others who possess the required knowledge or experience.

In an assignment where geographic competency is necessary, an appraiser preparing an appraisal in an unfamiliar location must spend sufficient time to understand the nuances of the local market and the supply and demand factors relating to the specific property type and the location involved. Such understanding will not be imparted solely from a consideration of specific data such as demographics, costs, sales, and rentals. The necessary understanding of local market conditions provides the bridge between a sale and a comparable sale or a rental and a comparable rental. If an appraiser is not in a position to spend the necessary amount of time in a market area to obtain this understanding, affiliation with a qualified local appraiser may be the appropriate response to ensure development of credible assignment results.

Although this Rule requires an appraiser to identify the problem and disclose any deficiency in competence prior to accepting an assignment, facts or conditions uncovered during the course of an assignment could cause an appraiser to discover that he or she lacks the required knowledge or experience to complete the assignment competently. At the point of such discovery, the appraiser is obligated to notify the client and comply with items 2 and 3 of this Rule.

USPAP 2008–2009 Edition
©The Appraisal Foundation

Thanks to Michael Kennedy for the list of questions. Here's Mike's contact information if you would like to take advantage of his expertise:

Michael E. Kennedy
New York Certified Residential Appraiser

Owner - KENNEDY APPRAISAL COMPANY

LEGAL, FORENSIC REVIEW, AND MORTGAGE APPRAISERS EXCLUSIVELY SERVING
ROCKLAND & ORANGE COUNTIES IN THE SOUTHERN HUDSON VALLEY NY SINCE 1993

email MEK2@frontiernet.net

phone/fax (845)782-1996