What’s All the Fuss About?

VaCAP Board

VaCAP Board

Coalition of Appraisers in Virginia at Virginia Coalition of Appraiser Professionals
Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.
VaCAP Board

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USPAP Compliant Hybrid Online Forms? Risks With Hybrid ReportsThere is no form that is USPAP compliant…

There have been numerous articles and discussions on blogs, social media and other forums concerning alternative products, mainly Hybrid Appraisals. The profession is truly divided on the topic. Some see it as a race to the bottom, others see it as another revenue stream.

Regardless if you are for or against completing these products, we need to remind all appraisers that there is no form that is USPAP compliant. The appraiser’s actions are what will make a report USPAP compliant. If the product is an online form, which most are, make sure you are able to add an addendum to add any necessary commentary for USPAP compliance.

Also don’t forget Virginia requires the appraiser to disclose the amount paid by an AMC within the report. So if an AMC is involved, you need to add some verbiage as to the amount you were paid. The VREAB has disciplined appraisers in the past for noncompliance of this consumer protection disclosure.

From Working RE Magazine…

Liability Concerns

“Craig Capilla, a trial lawyer with the Franklin Law Group who specializes in real estate appraiser cases, says that the single most significant issue that appraisers face when performing hybrid appraisals is the reliance on third party data, subject property inspection or otherwise. “An appraiser must have a reasonable expectation for relying on information that he or she has not personally observed. This is not a new requirement. It is something the appraiser must remember when developing any opinion of value. However, the risk with hybrid reports is that the appraiser gets too comfortable and fails to adequately address this issue,” says Capilla”

Further in the article Pat Turner, VaCAP President states:

“If you have unreliable and incomplete data, then the result will be misleading. Imagine all the things that might be missed or intentionally omitted by an inexperienced or unethical inspector: rear decks, rear stamped concrete patios, extravagant outdoor kitchens, not to mention all of the potential defects that might be overlooked or under reported by the so-called inspector. Imagine the omission of powerlines right behind the property, a collapsed roof on a detached garage behind the property, or other important information about the surrounding structures or neighborhood. I’m not going to trust a real estate agent who is willing to go by the house for $25 to tell me what condition the house is in. All of this is in the name of a cheaper product. It cheapens our profession and provides inaccurate and misleading information to the consumer,”

See the entire article here.

And sometimes it is the homeowner that rejects the hybrid appraisal. AppraisersBlogs published an article recently where a homeowner felt unsafe and kicked the unlicensed property inspector out of her home. The homeowner had some strong words for the lender who ordered this report. Well worth the read. See the article here.

Legislative Update

HB 1453, changing the definition of evaluation, was heard yesterday in subcommittee. The subcommittee recommends the bills with a passing vote of 8-0. The bill will now move back to the General Laws Committee for a final vote. See the bill here.

VaCAP Board

VaCAP Board

Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.

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14 Responses

  1. MLA says:

    Appraisers must be compliant with USPAP; whether an appraisal is rendered on a napkin or a billboard makes only secondary difference.  The cliche regarding substance & form comes to mind.  Moral of any appraisal story —- it’s the appraiser’s opinions, analyses and conclusions that must be meaningful and not misleading.

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  2. The form never dictates USPAP compliance or conformity. Having said that, the hybrid-pseudo-desk-top-avm-comp check style-who knows who-did-what-to-whom or for how much style reports are C R A P!

    STOP the pretense. ASB and anyone else that is pretending it is feasible to do credible, USPAP complaint appraisal reports for $25!

    JUST STOP IT! I apologize for being indelicate in verbiage, but I’m fed up with all the institutional apologizing for bad ideas and various people trying to argue that “theoretically these can be done”.

    Sure, if it is done under a blue moon, on a thursday during leap year in a town with only two properties and all buyers and sellers are either stoned or drunk!

    In the real world they cannot be reliably performed! This is  WHY we had the damn standards adopted in the first place!

    STOP giving people like Clear Capital the pretense of being able to put out credible products like the one for 5557 Windwood Rd, Atlanta GA 30 page “desktop” that claims to be a USPAP compliant “Appraisal Report” option.

    This and another equally bad report prepared by an Indiana appraiser named ‘Shoven’ is making the rounds in Facebook right now. 

    As near as I can tell, the property address is probably correct. Everything after that gets a little more sketchy.

    I have no doubt it will appear soon in AB for all to see first hand. I tried posting it now but cant figure out how.

    NO MORE TAF/ASB talking out both sides of their mouths suggesting these can easily be done “as long as they comply with USPAP”.

    The one referenced above never had to conform to USPAP as its not for an FRT but the point is it CLAIMS to be USPAP compliant!

    Might as well have these things done in India as Indianna for a Georgia property by an appraiser licensed in In; Ia, GA, and a couple other states.

    People STOP WORKING FOR CRUD COMPANIES! STOP ACCEPTING SCRUD WORK FOR CRUD FEES!

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  3. Xpert says:

    Liability…that should be enough to keep anyone away for the pennies they want to pay for these hybrid garbage!

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  4. Jason says:

    All these years lenders would  never allow appraisers to use the trainees appraisers trained to inspect on their own, but all of a sudden, it is OK to use their runners.

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    • A. Brown says:

      Agree. We couldn’t use trainees who have been working with us full time to inspect and cosign reports. We couldn’t use people who we have invested hours teaching, but yet some flunky can go out and do one of the most important parts of the process.

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  5. David Buckley says:

    I hate to state the obvious – any of my peers figured out – if your appraisal does pass the USPAP test (take the course) – your Appraisal board is limited to USPAP violations. Love to hear others views on this

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    • Actually you are wrong. MY Board (California BREA) requires appraisals performed by licensed appraisers to be USPAP compliant, BUT more importantly-since Clear Capital appears to be operating out of here-California Law requires AMCs NOT TO COMMIT fraud or to deliver misrepresented reports. The appraisals at issue clearly claim to be USPAP compliant, so whether they ‘had’ to be or not isn’t the issue. Each states IMPLEMENTING laws for FIRREA vary somewhat and there are subtle differences-but I don’t know any that allow fraud, or deliberate deception in appraisals.

      The FRAUD perpetrated on the crowd funding investors (aka ‘client’) ; and even the flip-purchaser that was given an as repaired market value of $100,000 (which the property simply doesn’t appraise for according to other involved follow on parties) is something ALL states Appraiser/AMC Boards should have an interest in. Certainly it is in the jurisdiction of CFPB.

      The comparatively minor issue of clear capital charging a fee for a commercial service and using mls pictures is up to the individual mls boards to decide whether it constitutes copyright infringement.

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  6. derek says:

    this type of report would be nightmare – don’t know how thorough the inspection might be, but I doubt there would be any reliable information as to the condition, quality, updates, maybe even room count or verification of GLA. without these facts, backed up by interior photos, my comfort level would be nil, for any amount of fee – on a different topic, having only done a couple of appraisal on homes with solar, long ago, and having no definitive data on contributing value at that time, now I have a sale with a seller owned solar panel system – the lender actually want a value opinion – I have read all sorts of literature and discussions in regard to the most reliable way to valuate other than paired analysis, which is not possible. furthermore, the appraisal institute apparent approved calculating program (pv value) requires much more data than I can get – I know there are ways of determining income approach, cash flow, etc, I have worked on these variables for a ‘value’, but the figures appear to be way out of whack considering 7+ years to break even, not to mention aesthetics, maintenance, and the fact that some states are not allowing for buy back of unused electricity, only storing for future use. mls show all of 5 homes with solar, no mention of solar on 3 of the listings, and all in different neighborhoods and styles – anyone else having or had this situation? form my perspective, I still see no evidence on any market based impact

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  7. David Buckley says:

    Fraud, and lack of competency is clearly covered in USPAP. So, lets get real and agree that such a report as you are describing is NOT USPAP compliant. Short of fraud, lack of competency and other acts of moral turpitude, the point is USPAP requirements NOW for report writing are easy. It makes sense to pass the first test rather going in with an easy fix as a violation and opening up the entire report (methodology) to new interpretation. Pay attention at your next mandatory USPAP course. That, under FIRREA, is the limit of most board authority in the majority of States. PS – Clear Capital still ranks as the worst AMC, I wonder who some of the other hard to do business ones are. Dave

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    • David – you are right – to a point.

      If USPAP is not required then it doesn’t matter if USPAP covers fraud, competency or anything else.

      THE specific reports in question are being portrayed as USPAP compliant – and they are not remotely so. The degree of misrepresentation is so severe that fraud immediately comes to any informed, rational readers mind.The inability for the ‘as repaired’ properties to actually sell for the as repaired market value opined has resulted in the reported inability of the investor to pay his investors as agreed. These are no longer hypotheticals. People have lost real money already.

      The fervor in my posts is because I READ the entire report and people that did follow up on this let me know so called ‘comps were actually bulk property sales (undisclosed) with as many as 3 to 5 ‘duplexes’ in what is being shown as a single property sale comparable. Verbiage In two very different reports is virtually identical.

      So, until some one shows me a completely USPAP compliant hybrid I will continue to contend that they are not ‘possible’ in the environment in which they are ordered and used. That environment is the one where the amc gets paid $250 and the out of state or overseas “appraiser” gets $25! No idea what the purported real estate agent gets or got.

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  8. David Buckley says:

    I recommend you take the latest USPAP course ASAP. USPAP is NOT concerned with policing appraisal fraud. That is no longer a USPAP mission. It all about report writing compliance. You describe a problem to which there is no solution.D

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    • David – I passed my uspap courses. Since when is USPAP unconcerned with outright fraud? You dont think telling the truth in an appraisal is covered? You think it is ok to deliberately mislead? It seems we must have taken different courses. You think that if USPAP does not use the actual word ‘fraud’ that it is ‘unconcerned with it’? SR1 is not about report writing. It is about developing a credible opinion of value – requirements for performing the actual appraisal – not report writing. Preamble, definitions, competency, ethics, etc are about both development and writing up reports.

      YOU may want to consider a remedial course yourself. For what its worth, USPAP has no ‘mission’. They are rules requiring specific performance. TAF and ASB have missions. Ones they seem to have become confused about.

      Im not writing about a problem with no solution. Im writing about a basic underlying principle of being an appraiser. Its called integrity and doing our jobs! TAF has long lost sight of the ball as far as preserving the public trust goes.

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  9. Baggins Baggins says:

    You’re both right. Sadly, appraisal ethic only applies to appraisers. Rendering our rules inadequate to govern others. Either these distributors must abide by similar rules or we will continue to lose. Ranking amc’s is subjective. The ‘worst’ are the most profitable and get the most accolades, to the point they have even sold stock options. Obey. Consume. The product being manufactured is you.

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What’s All the Fuss About?

by VaCAP Board time to read: 2 min
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