Knowledge is Everything

Reviewer Following AMC Instructions May Be Violating State LawsConversation with an AMC Reviewer

The following was sent to VaCAP from a member. We thought it was important to share as it demonstrates how important it is for each appraiser to be knowledgeable of the statutes and regulations we all must follow. It may help make your interactions go a little more smoothly.

“I completed an appraisal for a purchase transaction in a rural area and the opinion of value was below the contract price. The report included five comparable sales, three of which were within 2 miles and had equivalent gross living area. The other two sales were larger and bracketed other amenities. A list of sales the agent gave indicating how the list price was established was also included; none of which supported the list price or contract price. Each sale provided by the agent was addressed as to why they were not comparable. The report was completed and uploaded to the AMC.

Several hours later, a revision request was received asking to compare another sale to the subject. This sale sold $21,000 higher than the opinion of value. The request had the reviewer’s name and direct phone number should there be any questions.

Well I took this opportunity to call the reviewer. Here is how the conversation went:

Appraiser: I am calling about the revision request sent on file number 1234. I am inquiring about the source of the sale. Can you please advise where the sale came from?

Reviewer: One of many sources we use.

Appraiser: Can you tell me which one?

Reviewer: I don’t recall. We have several we use.

Appraiser: Was the sale viewed for comparability to the subject before asking for it to be addressed?

Reviewer: I am not knowledgeable in that market. I am licensed in XYZ state and only familiar with three counties. I look for additional sales in the general market area based on the parameters in the report and generally look at square feet, bed and bath counts.

Appraiser: Are you aware Fannie Mae guidelines specifically state Reviewers, Underwriters, and AMCs are not to ask the appraiser to address a sale unless the sale has been reviewed for appropriateness and the inclusion of the additional sale will make a material difference in the value opinion?

Reviewer: My employer requires me to look for additional sales when the opinion of value does not meet the contract price. The lender will also find this sale and ask you to address it.

Appraiser: Did you actually look at this property on whatever source you used? This is a ranch style home in a PUD with a monthly HOA fee and is connected to public water and sewer. The subject is a colonial style home in a rural area with well and septic systems. Not exactly apples and apples. Even being licensed in another state, you as an appraiser should know these properties are not comparable. In your opinion, is this sale better than the sales used in the report.

Reviewer: Your report is well written and your opinion of value is supported. I did not see any errors in your report. I am just following the instructions given to me by my employer.

Appraiser: Are you aware Virginia statute allows an AMC to perform a USPAP technical review only. If you are looking for additional sales, it sounds like you are performing a Standard 3 Review. Being license in XYZ state certainly makes you competent to perform a USPAP compliance review, but if you are not licensed in Virginia, how are doing anything more?

Reviewer: We have a list of states that can we use and Virginia is not on that list.

Appraiser: I understand. You do realize that it is your license and your liability on the line don’t you? Virginia and the state you are licensed in will come after you, not your employer in the event of a complaint filed for unlicensed activity.

Reviewer: crickets, crickets, and more crickets

Appraiser: Are you still there?

Reviewer: Can you please address the sale within your report so I can send it to the lender?

Appraiser: Are you sure you want me to address this sale within the report? This will provide a permanent record that Virginia Statute may have been violated and that appraisal services without proper licensure may have been done? Are you sure you want me to do that?

Reviewer: I am going to forward this to the lender as is.

Appraiser: Thank you.”

This AMC employee followed the instructions of her employer and may have violated:

Virginia Statutes
54.1-2020 (A)
54.1-2021.1 (B) (2) (i)
54.1-2022 (A)
54.1-2022 (C) (8)

And Virginia AMC Regulations
18 VAC 130-30-160 (7)
18VAC 130-30-160 (10)
18 VAC 130-30-160 (13)

Then there is the issue of Appraisal Independence, which was never discussed with the Reviewer. The sale price of the sale being asked to address was significantly higher than the opinion of value.

We completely understand following your boss’s instructions to keep your job. We don’t even fault this Reviewer for working at an AMC. But how are you a licensed appraiser and not understand and follow USPAP? Are staff appraisers and reviewers working for AMC’s so desperate for a fair wage they are ignoring our basic covenants? What about that internal moral compass that tells us right from wrong?

Our continuing education requires us to take a USPAP update course every two years. Appraisers should know USPAP extremely well. Our licensing fees include a printed copy of USPAP and it is available on line as well. There is no excuse for any appraiser not understanding and following USPAP. It is readily available to each of us for reference.

Having a conversation with AMC staff and talking intelligently can only happen with knowledge. When was the last time you read the Statutes and Regulations that we all must follow? They were just updated 07/01/2017.

Did you know 54.1-2020 of Virginia Statutes states the following?

“Appraisal management company” means a person or entity that (i) administers a network of independent contract appraisers, receives requests for appraisals from clients, and receives a fee paid by the client for the appraisals and (ii) enters into an agreement with one or more independent appraisers in its network to perform the appraisals contained in the request.

At a recent meeting of the Virginia Housing Commission discussing SB 1575 one of the panel members of the work group pointed out the language in 54.1-2020 and it clearly states that the AMC is to be paid by the client. Have the AMC’s been in violation of Virginia law this entire time? Are consumers due a refund for the fee the AMC charged?

Read a little closer, “enters into an agreement with one or more independent appraisers.” It is clear as the sunshine outside; Appraisal Management Companies must use independent appraisers. Have many of the AMC’s been in violation of Virginia law this entire time?

See Virginia Statutes and Regulations for Appraisal Management Companies here.

See Virginia Statutes and Regulations for Appraisers here.

Knowledge is everything!

VaCAP Board
Image credit flickr - Tom Hilton
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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42 Responses

  1. Avatar Ralph says:

    This appraiser has a great grasp of USPAP!  Kudos to the appraiser! However, this only re-enforces my decision that firing all AMC’s was the best decision I ever made. I used to get CRAP like this years ago from Street Links, asking me to consider condos as comps for attached SF dwellings. Never mind that I told them a condo does not have ANY land ownership, in addition to fees  It was infuriating! I hope more appraiser’s push back, but sorry they are wasting their time while not being compensated!

  2. Avatar jeanie says:

    Excellent article vacap!

  3. Avatar wontobey says:

    I had a reviewer from CA review my report done in Baltimore, MD. The reviewer had no access to my data sources and used websites like Zillow to offer alternative comps. I filed a complained & turned the reviewer in to their board.

  4. Avatar Xpert says:

    Brilliant response! Adding a sale strictly to satisfy a client request defeats the purpose of an unbiased opinion and is misleading. The AMC reviewer can ask for another comp to help support value, but the reviewer actually picking the comp and insisting you use it is shaping appraisal content and is appraiser pressure, even if it doesn’t change value.

  5. Avatar Dave says:

    I made a similar response to an AMC last week. They sent me 7 addresses they wanted me to “consider” as comps and note in the report why I didn’t use these specific comps. After reviewing the comps I found 4 of them were current listing and not solds. I did include one of them in the “updated” report. After they reviewed the report they wanted me to state as to why I felt the new comp was comparable and not included in the original report and why I didn’t include the other six! I told them to shove it where the sun doesn’t shine. I’m sure I won’t be getting many more assignments from them…..  These request are getting under my skin.

    • Avatar wontobey says:

      Got a similar call last week…”Appraiser to add two additional comps, OK if they are listings”. What? First of all, listings ARE NOT comparable SALES! How did this get started? I can tell you…we have met the enemy and it is us.

      The more we do this stuff the more it is going to continue. In my case, I told the AMC I will add 2 listings & grid them but it will be an additional $100. Guess what happened?

      • Avatar BigAl says:

        I’ve found that when you demand an additional fee all of a sudden you find out how UNIMPORTANT these kinds of requests actually are!

      • “Appraiser to add anything” is a direction that in my opinion DOES violate appraiser independence rules. I do not respond politely to “appraiser to anything…” directives. If an Underwriter that identifies himself as an Underwriter for such and such a bank with a phone number identifies a concern and then ASKS me a legitimate question, I will answer it. TELLING me to jump through hoops doesn’t get a nice reply. Not identifying himself by name, title and company doesn’t get ANY polite reply except for me to tell them what I require from them.

    • Id like to know why the guy you cited even thought he had other comps to be considered.

      The Collateral Underwriter use license from FNMA to the AMC reviewer’s client does not permit anyone to send you additional comp requests on the basis of the CU unless they have ‘a human being has determined  the additional ‘new’ comp or comparables would likely make a difference. AMCs are not licensees on their own. They use their client lenders log in numbers to access CU to get the SSR. FNMA SAYS they want to know when their license agreement is violated.

      1. That is a huge flaw in the CU system (which is now also being used to rate our work despite original assurances it would not be).

      2. FNMA does not require that ‘determination’ to be made by an appraiser. For example, it can be a rural bank branch manager; local broker or (apparently) a parking lot attendant.

      3. CU can be manipulated (at the actual licensed lender level) to produce different search results. It can be set for a geo mapping search, radius search and variable distances

      4. In most cases, the SSR (with limited CU results) may show alternate comparable sales dating back to two years (default). That human noted above, is to screen out the obviously irrelevant stuff and only ask about the remainder IF AN IMPACT ON VALUE COULD BE LIKELY.

      THAT would be an SR 3 review result. CATCH 22! No lender is willing to pay for a USPAP compliant SR3 review…particularly one that may also require  SR1 and SR2 compliance. They expect the AMC to ‘ handle it’.

      In these narrow circumstances, Id file the complaint with FNMA. It will then go to the actual lender (not the correspondent ‘lender’). A couple of those complaints and I bet lender picks a new AMC. THEY don’t care about one single loan enough to violate a license. Only the broker cares about the one deal.

      The trick in the issue is whether the new comps came from a CU, or were independently developed though other sources.

      • Baggins Baggins says:

        Great reference. And if in doubt, copy the few lines you need from the early pages here.
        When challenged with absurd stips, especially CU results based in the hands of dangerous rather uninformed ‘reviewers’ whom usually are anonymous to me, I just copy their total request, copy the faq’s, respond in tedious detail, providing defense rather than change. Sure back in the day I may have changed something, these review systems are helpful if you’re not there yet. You know your skills as an appraiser have increased when you can predict the review shortfalls during your report development. You tailor the report to the challenge, something not possible through heavy reliance on automation. Almost always for me it boils down to copying something from Q6 or Q8.

  6. Avatar Carl says:

    I require clients to explain what is wrong with my analysis, and why “adding” their particular sale is required. The problem with bowing down to the client with no explanation is that it simply invites abuse. I’m all for fixing inadequacies. However, the expectation of free work with no explanation is entirely unacceptable. Kudos to this appraiser for not bowing down!

    • Avatar Anon says:

      @Carl…YES! I always ask them to tell me specifically  is wrong with the comparables already submitted that we need to look for more? I also state that a client not liking value is not a valid reason for a relook.

    • Carl, you are 100% correct (imho).!

      If the explanation is only that they are unhappy with the value-that’s not a reason.

      If a real reason is provided, then I look at it and honestly evaluate it. Sometimes it is no change-others it is a change and I make it accordingly along with explanation that the information was not previously available to me for whatever the reason was.

      To be honest folks, I simply don’t get an awful lot of revision requests. The guy that trained me 30+ years ago was brutally thorough and honest.

  7. Baggins Baggins says:

    The author or person is quite lucky to even deal with a licensed appraiser and know their name. Per Dave’s comments, additional complications arise because their review data will probably not match the effective date data. That’s why I post scanned in pdf copy 1 liners of my market data research, segmented filtered, unfiltered, 1 yr, 90 day, etc, post that within my report. There it is, the sales you want me to look at. Already in report with written addenda analysis of my approach, research filtration use, and selection criteria. It only takes an extra half hour and is smart simple report defense. Categorically the subject is best compared here here here under this this that criteria and matching. They’re probably on realquest or something to that regard and don’t view data the same way we do. If they want to pick apart my data and approach, they can do it the hard way and recreate my data set.


  8. Avatar Juliana Homstead says:

    I appraised a very unique (for the market) high end home on a 3 acre, waterfront site. Part of the homes uniqueness was that it had a walk-out basement with 2 BR’s above grade and 2 BR’s below grade. Basements are not common in this market, but the home was built on an elevated site that lent itself to a walk-out. Total GLA was 4,000 or so sf, while above ground GLA was 2,000 or so sf. The “basement” was such that the only rooms not having full windows and access to the back yard were a home theatre and a mechanical room. Needless to say, comparables were hard to find. I did find another sale that was built such that the entrance was elevated to a degree that you entered on the second floor in front and and the only access to the first floor was at the rear of the home, yet none of the GLA was below grade. I clearly explained in the report that the market would see the “basement” as GLA, but because it was technically below grade it could not be counted as GLA on the grid.  I used 7 comparable waterfront sales that were similar in total area and I applied the GLA adjustment I derived from the sold comparable sales to both the subject and comparables.

    The AMC sent a revision request stating: “appraiser to comment as to why they did not use the following comparable sales.”  The 4 sales were all 2,000 sf tract homes on 10,000 sf sites that were not waterfront. My response was simply, “because I would be an idiot if I used them.”  I then went on to explain the obvious (to anyone, but an AMC flunkie) reasons they were not used. I added; “please remove me from your panel and do not send me any more appraisal requests, as I do not have time for ridiculous revision requests by someone who clearly knows nothing about comparable selection.” As expected, I hear nothing and receive no more requests.

    Three weeks later, I get a call from a fellow appraiser. He indicates that he did a field review of the appraisal in question and tells me that it was very well written with all adjustments explained and supported and that he concurred with my opinion of value.

    Now, I am all of a sudden bombarded with requests from this AMC. I have just been hitting the delete button. Do you think they have learned a lesson? I doubt it.

    • Baggins Baggins says:

      What an excellent story.  We all have to make business decisions.  It’s common practice for these companies to ice you whenever a report yields elevated risk assessment score.  Then you wait a month or two, the review comes in, you’re vindicated and back in the circle of trust.  Oh lord, aint nobody got time fo dat.

    • Avatar Bill Johnson says:

      Your basement story has similarities to my appraisal last week Juliana (yet to fully play out / owner / agents). Instead of valuing a 5 bedroom, 3 bath, 2,600 sf home, it was instead a 1 bed 1 bath 1,300 sf home with a 1,300 sf basement (4 bedrooms, 2 bathrooms). An investor paid all cash ($515,000), sunk $100,000 into it, and the property was in escrow for $700,000. Its funny how the investor, both current agents, and of course public records/MLS got it all wrong. On paper the property is worth about $615,000, so if the investor is to learn a lesson, at least in this case it will be more or less what he paid for it plus improvement costs. Lucky for me, the VA reviewed it (no issues noted), and no AMC was involved. With a guess of 1 out of 500 homes locally having a basement, agents can go their entire careers without ever seeing one.

  9. Avatar Jack Of All Trades says:

    Gee wiz ….and to think that there are appraisers out there that want all AMC reviewers to be licensed appraisers. This is a good article.

  10. Avatar John Dorie says:

    Three things: First, what is the source of this so-called comp? Is it from a legitimate source? (Doesn’t sound like it is.) Is it available ‘in the normal course of business?’ Not if the OA did not have it.

    Second, can a reviewer be in a different state and not have geographic competency – YES. see FAQ #295. But when the reviewer bounces-back the report with a comp request, he/she has just crossed the line and now MUST possess geographic competency; which this reviewer does not have.

    Thirdly, and most important, refer the bounce-back request to FAQ 231 which deals with this exact scenario. FAQ 231 states in part, “An appraiser is not engaged for the purpose of supporting a contract price, but rather to form an opinion of, in this instance, the market value of the subject property.” (USPAP 2016-2017, FAQ 231, page 319).

    If you have not guessed, I am an AQB Certified USPAP Instructor. I recommend in my classes that  Standard 3 reviews not be performed; the liability is too great, and it’s too easy to make a mistake like this.

    • Avatar Rich Heyn says:

      John, do you think this activity amounts to a Standard 3 review? If so, how? Thanks.

      • Avatar J T Everette says:

        Rich, I think you missed a key part of the conversation., The reviewer stated the report was well written, the opinion of value is supported and there were no errors. That my friend, is an opinion on the quality of the appraisers work and brought it to the level of a  standard 3 review.

        • Avatar Rich Heyn says:

          JT, in the case above the reviewer told the appraiser the report was well written.  Yes, that does sound like an opinion as to the quality of the report.  If the reviewer were to have made that statement to his or her client, one could argue it would constitute a Standard 3 review.  But to have a Standard 3 review, there must first be an assignment, and an assignment must have a client.  The appraiser was not the reviewer’s client so there was no assignment.  No client, no assignment.  No assignment, no valuation service provided.  No valuation service provided, no Standard 3 review.  Be well.

          • Avatar J T Everette says:

            Rich, I disagree. The reviewer is an employee of the AMC, Her position is to review appraisals; hence an assignment.  Most likely there is not a formal engagement letter, but still an assignment does exist. The client is the lender. Both client and assignment definitely exist!  She stated her employer required here to search for additional sales when the opinion of value is below contract price. That is part of the scope of work for her assignment to review the report. This is more than a technical review for USPAP compliance. If this is not a Standard 3 Review, what is it?

            • Avatar Rich Heyn says:

              If I understand the article correctly, the reviewer’s comments regarding the quality of the report were communicated to the appraiser, not the AMC/employer/client.  I’m not speculating on what was communicated to the AMC/employer/client.  My contention is that the reviewers comments to the appraiser do not constitute a Standard 3 review.

            • Great comments and observations by all (seriously). One possible correction. The reviewer’s client is probably not the designated lender at all, but rather the “loan officer” at the correspondent “lender”. I haven’t  given that an awful lot of thought in awhile – That’s actually who engaged the AMC and arranged for them to get paid by the borrower. Yet they always say to show the funding lender as client. At the stage of still reviewing L/O or CU alt comps, the actual lender hasn’t even seen the appraisal yet.

              It used to be SO easy before all the micromanagement rules!.

          • Gee that must be the same rationalization state regulator appraisers use whose laws require them to follow USPAP, & they don’t!…but you do raise an interesting argument.

            Yet we’ve all been told at one point or another not to offer opinions on values of any kind at cocktail parties or among friends…no clients OR assignments there.

      • Avatar Mike says:

        If the reviewer is asking to address additional sales, an inference is being made they do not agree with the opinion of value. In order to make that inference, a review of the report must be done, whether an official SR 3 or not. An opinion of the quality of work has been made. In the case described, the reviewer verbally states an opinion on the quality of the appraisers work. This is a standard 3 review,regardless of the reviewers intentions. My guess is there is no work file for his review. It is a shame that the AMC employee, who is a licensed appraiser in another state, does not understand the limits of what he is allowed to perform and is willing to jeopardize his license for an AMC paycheck.

        • Avatar Rich Heyn says:

          Mike,  please see my response to JT above.  Thank you.

          • Rich,

            “Reviewer: Your report is well written and your opinion of value is supported. I did not see any errors in your report. I am just following the instructions given to me by my employer.”

            Someone using common sense would look to intent and not see an SR3 review. Merely someone saying I didn’t have or see any issues with your work (I’m deliberately rephrasing) ‘I’m only asking you to look at this additional comparable data because my employer directed me to’.The employer violated the FNMA license agreement with that.

            Then, on the other side of the aisle are our regulators. They absolutely would see it as being a review opinion (California in particular).Ask them.

            They will contend that reviewer is offering his own opinion (statement) that appraisers opinion of value is supported and the report was well written..and THAT opinion constitutes a review result.

            FNMA license prohibits communicating CU comps to appraiser without human determination result COULD be affected. Parking lot attendant can make that determination but none of us would listen to it. A review appraiser COULD make that determination (without an SR3 review); but he cant let anyone know, because unlike a VALUE opinion or AN EVALUATION opinion; any thoughts pro OR con or even hypotheticals of another’s work cannot be communicated for any reason without full compliance with SR1 & SR3.

            Soon a peer wont be able to mentor if it entails opinions about the work of the person being mentored.

            Catch-22. Capt. Yossarian & Major Major would be so proud of our regulators…

    • John, it’s unfortunate that a USPAP instructor thinks that anyone connected with a deal cannot provide data to an appraiser in a proper and professional manner.

      When did USPAP stop being a common sense principles and practices application based on what ones peers would do, rather than a basis for black and white prosecutorial causes?

      Doesn’t your typical cert and L/C stmt say you have the right to modify or amend if information not previously available becomes known (or words to that effect)? If no one is allowed to even tell me, how could I become aware of it?

      Your argument seems based on whether an appraiser should ever be obligated (morally or otherwise) to consider new information rather than on whether it makes any difference in the conclusion. WHY would you even care WHERE the information came from originally? Either it can be verified or it cannot be.

      If some out of state reviewer says “Gee, the model match house next door just closed escrow and was listed for 72 days on a different listing service, with no concessions; and it has 34 interior pictures showing the condition was essentially the same as the subject.” do you really think as an instructor, that the issue is best addressed by a FAQ rather than commonsense and SOUND APPRAISAL PRACTICE?

      Assume the above is true but the detailed mls also says seller will cons. up to $20k point sor cc for buyer & call to agent verifies that happened. The value remains the same and new comp did not make a difference, except perhaps to  further support the original value. NOTHING WRONG transpired!

      USPAP does not require perfection. Presumably it still allows for correction when appropriate.

  11. Excellent, real world story. Last year I took a staff appraiser position after being convinced by a colleague that I started with 30 years ago, that “there weren’t any issues”. That was so far from the truth. One of the reviewers told me that USPAP was a piece of sh**. He constantly suggested other, less compatible comps, that supported a higher value. The rumor was that this clown didn’t even have a license. When he argued for higher values, he referred to the loan officers (down the hall), as being the “authorities” that I would have to answer to. Later, it became apparent to me that all the staff appraisers that were employed by this AMC, had only worked as staff appraisers. It was a normal process for them to do what they were told without regard for their own independance and required USPAP guidelines.

    • Baggins Baggins says:

      Oh yes, this thread is rich with awesome stories.  I trained 4 years under parents.  I remember my step dad day one;  You could end up in an orange jump suit and shackles if you are dishonest with this job.  Like what!?  The vikings rule the day but we still hold out hope for a return to more honest policy.  The 1 year trainee guys, not enough.  The new exceptions for trainees, the wrong direction.  The non advocate position as an employee?  Good luck with that.

  12. Avatar Dave says:

    My son is 22 and will be finishing up college next year. He absolutely has no desire to follow my footsteps. He has seen all my frustrations with this profession over the years and said he wants do something actually enjoyable. I told him the job used to be fun 20+ years ago when appraisers didn’t have to deal with AMC’s etc. and could actually earn a decent living.   Wonder why the average age of an appraiser is about 55 and few people are interested in joining this profession…..

  13. Baggins Baggins says:

    You just can’t prioritize time and fee over quality work. The definition of client is important for ethics, but this should not mean the clients interests supersede the primary goals of the appraisal industry, which is to protect the public trust. What is appraisal if not a careful application of checks and balances in the interest of the public trust?

  14. Lets no confuse Virginia Statutes with USPAP or even Dodd Frank with respect to appraisal independence please. For those of you in Virginia, perhaps there are subtle differences you need to become concerned with.

    I don’t need to know or understand Virginia statutes. They are irrelevant to me.

    It is NOT at all wrong under USPAP for an agent or anyone else to submit additional information along with a request for reconsideration. NOTHING!

    Every version I have seen (AIR) addresses improper influence during the development of the appraisal. Even that wording is “unfortunate”.

    There is a huge difference between improperly attempting to influence me and ordinary ‘in the normal course of business and professional responsibility’ PROPER influence efforts!

    As a professional real estate appraiser, I WANT the agent and or owner to attempt to properly influence me while I’m at the property. I WANT them to submit information that they think or honestly believe has a bearing on the value. i WANT them to submit such comparable sales data as they think or believe may support their views on value.

    When such data is submitted for my use I ALWAYS read it over. IF it appears credible and more relevant than my own data I may substitute something I was going to use; or at least asd theirs.

    If it is NOT relevant or supportive then I can at least address it in the original report and not have to deal with revisions down the road; or worry about an owner or agent thinking I am so arrogant that I wouldn’t even consider their data.

    Like I said, I WANT them to properly attempt to influence me. What I do NOT want, and won’t tolerate, is anyone attempting to improperly influence me.

    There is a day and night difference between the two. One is good. One is bad. ALL should understand the difference.

  15. Avatar J T Everette says:

    Directly from Virginia Statute § 54.1-2022.

    E. Nothing in this section shall be construed as prohibiting an appraisal management company from requesting that a real estate appraise:

    1. Consider additional appropriate property information

    2. Provide further detail, substantiation, or explanantion for the real estate appraiser’s value conclusion; or

    3. Correct errors in the real estate appraisal report.

    Words mean something. The key words in the statute are appropriate property information. For the most part, Virginia language mirrors Federal language, however the wording is more restrictive than the federal language. From 129E:
    “Consider additional appropriate property information, including the consideration of additional comparable properties to make or support an  appraisal.” Virginia excluded the inclusion of comparable  properties!

    Even the language in 129 E states “ to make or support an appraisal.” It does not state to support a contract price. The reviewer stated “my employer requires me to look for additional sales when the opinion of value is below contract price”

    The reviewer stated there were no errors and the opinion of value was supported. So how exactly is asking the appraiser to address a sale $21,000 higher in value that is dissimilar appropriate?

    If the reviewer has given an opinion on the quality of the appraiser’s work, which she has, is that not a standard 3 review?

    Words mean something and when people try to read into something that is just not there, problems occur. I am in agreement with John Dorie on this.

    • JT-based on the conversation content provided, you are correct

      “Reviewer: Your report is well written and your opinion of value is supported. I did not see any errors in your report. I am just following the instructions given to me by my employer”

      That does in fact constitute an opinion as to the quality of another appraisers work.

      Again, it is unfortunate that USPAP has become a basis for “Gotchas” rather than meaningful application of  standards based on common sense peer agreement and practice. Honest, non critical communication is apparently no longer permitted absent an SR3 written appraisal review. The word police are watching!

      USPAP and FIRREA long ago stopped protecting the public; Ya think that may be why it really has to change every two years? I mean aside from the TAF money issue.

      The real issue of whether or not the other sale was relevant (OR NOT) cannot be addressed without a Philadelphia Lawyer present. Whether it was a higher or a lower sale is not the issue.

      Now what the guy COULD have said was: “The buyer (seller) contests the value. The buyer (seller) has submitted the following comparable property for the appraisers consideration and says it is much more similar to the subject than the other comparables used in terms of location, size, quality and condition.”

      Given the latter, I may not like doing it, but Im certainly going to respond professionally. Why? Because specific reasons were given to me as to why the party believes it is more comparable. I would either refute them or concur.

  16. Good thing I dont have any licensed appraisers seeking to earn further experience credit; or asking mentoring advice. (Oh WAIT I DO!)

    Obviously I’ll have to stop mentoring tomorrow. If I am unable to communicate whether they have done a good job or not, whats the point of being a mentor?

    Clearly we wont be taking on any trainees, since we can not tell them that all or part of the work they did was acceptable or needs improvement, or there are specific changes necessary to produce an acceptable report…Not unless we accompany it with an SR3 compliant review appraisal, right?

    So by the instructional logic on display today/tonight, in order for me to mentor someone about an appraisal they are doing; I’ll have to prepare a separate SR3 compliant review appraisal and report in order to communicate opinions to them?

    I don’t think so gang. Stop looking at USPAP threw soda straws and view it in it’s entirety.

    It must be a very dark and dank place indeed where a lot of those heads seem to be stuffed.

    Anyone remember the part of USPAP that says your work’s compliance (or mine) is measured in the context of the client’s intended use???

    • Avatar J T Everette says:

      Mike, I get your point, but your analogy of a trainee /mentoring situation is flawed. If you are the supervisor for a trainee you will be signing the report. In essence you are merely proofing your report before it is signed and delivered to the client. Mentoring another appraiser to upgrade licensure is also different. Depending on the level of assistance, your mentoring may have to be disclosed in the report. There is a huge difference in proofing / editing a report before delivering it to the client and when a licensed appraiser reviewer working for your client reviews your report after it is delivered. Development verses delivery.

      Unfortunately, the laws in our country are based on words, and one simple word, such as “not” can change the entire meaning.  Attorneys get paid big bucks to debate those words every day.

      • Hi JT (Great discussion by the way)

        I didn’t say I was only mentoring unlicensed trainees where I would also be signing the report. 95% of my mentoring is for licensed and certified appraisers. Sometimes it is simply casual, to in depth peer review (in a host of forms).

        Aside from which, even if I were (dealing with trainees), then I am STILL rendering an opinion which in the black and white, right or wrong, no middle ground analysis of the original article would necessarily dictate that MY opinion of another appraisers work requires an SR3 compliant review appraisal to be formed.

        (Let me recheck USPAP to see if appraiser trainees are an excluded class that do not qualify as “another” or “other appraiser” somehow).

        You & I don’t get to selectively parse when one ‘review’ is euphemistically called ‘proof reading or editing.’ Its a review. As a matter of fact, a review for training purposes is about as critical a review as one can undergo.

        Whether USPAP is deficient in this regard, or your analysis of its requirements are,  we need to refocus on the intent of USPAP.

        It is not and never was intended to cripple the process with a threat of prosecutorial-potential type extremes..To hear a USPAP Instructor advises his students to NOT perform SR3 reviews anymore due to perceptions of liability is proof the system has fallen apart; or at a minimum has lost all focus.

        I cannot help thinking about a phrase that became a legal issue for a president once.”It depends on what your meaning of ‘is’ is.

        Clearly it is time for every single advisor that assists in the development of USPAP, or its interpretation to go back and read Catch-22. In fact, maybe Catch-22 needs to be formalized within SR3.

  17. Baggins Baggins says:

    The central theme in these well informed comments is;  Advocacy.

    To specifically define the problem is important. For many amc companies they do not understand their position is to provide insulation from biased interests. Rather, in the process of acquiring and retaining clients, they bow to the natural pressures of a commission based industry, they sell the advocacy and integrate that into everything they do.  From fees, to tats, performance stats, to reviews, to customer handling, management companies are better described as advocates of the lender whom also distribute requests and review reports. And they get feelings hurt and all upset when you don’t play the role, that’s because they truly are advocates. Entire management companies out there top to bottom are doing it as they copy the perceived business models of others. There was a blip on the radar where the amc industry adopted this position that all employees had to take the ethics class at least once. Not surprisingly that did not last long as a staple of employee training. It’s important to detail the spirit of the ethic mostly, advocacy vs non advocacy. The devil may be in the details but the spirit of the rules remain constant. We were supposed to have a management rule regarding not providing a thing of value to be the preferred selectee….  So my new tag line is that client definition is important for ethic, but the clients wishes and goals do not superseded the appraisers primary goal of protecting the public trust. We do that by being the astute professional who can call and define advocacy vs non advocacy in a heartbeat. You’d probably have a tough time understanding this is your entire career was spent as an employee.


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Knowledge is Everything

by VaCAP Board time to read: 5 min