Floor Plans Could Be an Issue in Appraising
…concerns that appraisers could be sued for making floor plans of a home…
I’m an AI “member” (because I pay membership dues) even though I’m not supposed to say it that way. Technically, I am an Appraisal Institute Practicing Affiliate.
Regardless, an AI email earlier on 6/29/22 had this news:
Supreme Court Rejects Floor Plan Case; Appraisers Vulnerable
The Supreme Court on June 27 rejected a case involving the use of floor plans in marketing materials. Multiple real estate firms petitioned the court to review the case, contending the Eighth Circuit incorrectly ruled that using floor plans in marketing materials constituted a copyright violation. In April, the Appraisal Institute joined an Amicus Brief filed with the Supreme Court over concerns that appraisers could be sued for making floor plans of a home.
The ‘link’ they have in that posting goes to a different case.
If you want to see how the ‘floor plans’ issue wound its way through the Supreme Court, you can use this link.
What does this mean for our work, when a ‘Floor Plan‘ is required as an exhibit in our reports? I don’t know!
I suspect we’ll be hearing and seeing more about this in the coming days.
But, maybe a way to solve this issue is to call the exhibit a DIAGRAM of the structure. Label the report page “Structure Diagram”, which does not infringe on the words ‘Floor Plan’ which seemed to be a crux of the original lawsuit.
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I don’t think we have heard the end of this as a legal issue. It will be sent back to the Western District for trial at this point.
The architects already won the case, and that’s why all the real estate organizations are appealing this decision. We’ll see how this continues to unfold but I don’t see how FNMA can demand a floor plan. This needs to get cleared up.
The GSEs will need to revisit the floor plan requirement… especially for drivebys and hybrids.
This is an unnecessary article.
This is pretty relevant for appraisers that work for lenders that are now requiring floor plans. I think you might be confusing a floor plan with the typical appraisers sketch. A floor plan has you measure the interior walls and include them in the sketch.
Thanks for the education, James. I’ve been appraising 17 years for federally regulated transactions and yup, I know the difference between a sketch and a floor plan. Thing is, most lenders don’t give a shit about a floor plan, unless the appraisal product is a desktop and why would any self-loving appraiser do those?
I have always titled the page “Sketch”
If you look at the top of page of the linked list from the AI article you will read the Supreme Court’s denial of the petition 18 organizations submitted to have the case reviewed by the Supreme Court. This was the final step in the case’s journey and means the appeals court decision in favor of the architect stands.
How this applies to appraisers remains unknown.
USE YOUR OWN sketch & measurements like USPAP states to. then no issue
The Realtor used her own measurements. What part of USPAP requires appraisers to provide a sketch?
“like USPAP states to.” Please provide a USPAP reference.
Actually at the heart of this matter is the standing of copyrighted material. I’ve been reading a lot about this for online imagery, as they’re really cracking down on photo sharing alongside image generation, content, fair use, copyright violations which are only perceived but not factual and vice versa where violations go viral without a second thought. Every one of us actually violates copyright acts on a daily basis. Take a photo of darth vader while you’re watching star wars, that’s a violation. Say offhandledly luke I’m your father, whoops, you’ve done it again. Instant felonies. Which is why there is also a movement growing to abandon the notion of copywrighted material all together. Fair use is getting a little absurd lately but creative content still is an economic engine. Sadly the AI systems out there are changing an already changing landscape, their incredible artistic renderings put everything into question all over again. Who owns an AI generated work, the software creator, operator, owner, consumer, etc? Will the default 100 years or 80 years expiration of right approach hold up in the future, with our massive data troves of the modern age? That’s the public domain argument.
On the flip side, if you take a photo, it’s instantly yours, copywright and all. No application for copywright is necessary and this is considered a creative work. If you stand in the exact same spot as the last photographer and snap a photo in a likewise manner, you don’t share the previous right, while claiming your own, but it’s impossible to enforce any violation provision. Where as if you have unique works that emerging companies use automatic data programs to find on a global scale, you have indeed crossed the line and are subject to variety scales of legal and financial relief orders which range from acknowledgement, compensation as if one purchased usage rights at normal retail rates to actual applied harm penalties. It’s a very very common issue to source copyrighted imagery for commercial use from elsewhere on the globe and often impossible to track down later. One recent story of a man getting a tattoo of an artists popular locational rendering graphic challenged the emerging status quo all over again, because is that fanfare or a usage violation.
For sketches, or floorplans, these are impossible to enforce violation accusations. Because any minute difference results in image or presentation variance which then lends itself to the unique created works argument. This could theoretically be applied to scanning because there is required use via regulatory guideline to include this, so the appraiser is required to include something, and the imagery becomes unique in the process of data conversion and repackaging in proprietary limited use documentation packages. These arguments lend themselves to what I believe should be appraisers positions on the matter; overly detailed floor plans are not necessary and only basic sketches should be preferred and requested under a minimum standards sort of argument. Personally I chuckle when reviewing big deal sketches with actual floorplans, like talk about over achieving and I’d have appreciated more effort into home description or more photos.
Because at it’s heart, floorplan and functionality is a value in use consideration not necessarily a value in market issue which justifies much adjustment or analysis. Space is space, regardless of how it’s organized. And organization changes can be as simple as adding or removing partition walls and other minor alterations. I dealt with a large converted 2 bed for stock which normally supports 4 if not 5 beds. But the one debutant lady whom was stereotypical like silk gown all day in slippers with expensive purses and a lap dog, she took down some walls and created a master bed area which encompassed half of all agla space. I had to that point never seen an entire room devoted to shoe storage. But they’re out there, value in use alterations. Adjust it down, then adjust it back, and savvy well informed buyers recognize ppsf price value basis as much as anything else. It’s the stuffy analysts whom make too big a deal of exacting room count. Never search by bed or bath because they’re too random, and you don’t want to risk missing valid comparable data over such basically inconsequential items. Many a retiree combines those rooms while many a family unit does nutty things like cutting larger rooms in half or even encroaching into living rooms for additional bed spaces. We can’t always buy a new home when new life forms come and go from our lives.
So yeah, just keep the sketch simple and focus on other things. This movement for ANSI and detailed floorplans is like APEX is lobbying FNMA or something, it’s really not consequential to market value. The tech companies seek to create some sort of value in a space which does not require nor appreciate the specific detail. Digital home fingerprints via lidar scanning of interior spaces, give me a break with that nonsense. One can not successfully predict how a specific value in use consideration will effect the market because the coincidental buyer pool at the time is a random factor item. So one considers the general principal of substitution, complies with minimum report development standards, and spends their time on more important developmental items then sketches and floorplans. Space is fungible and that should be the end of it.
Back to the builders. Has anyone ever heard of a builder whom freely hands out floor plans to interested customers actually engaging in copyright violations? This perceived copyright violation also would extend to any and all companies pushing lidar technology to create 3d scanning of interior spaces too. So Clear Capitol and their global tech company partners alongside all their third party non licensed inspectors just put themselves on this hook too. Try to see the bright side of the issue because unlike individual appraisers whom push individual proprietary confidential reports, those avm amc and tech companies are pursuing lidar 3d scanning to cloud based spacial imaging for further monetization in the larger real property and consumer retail item consumption spaces. If anyone is going to take heat on this matter it’s them and we’ll see it coming far down the tracks, adequate time for a reasonable adjustment to process. If companies were to pursue financial relief they’d go where the money is first and that’s certainly not going to be individual appraisers.
I’ve been going through old appraisal file boxes and re using paper. So that’s nice, relieve myself of the next decade of paper consumption. Some of the oldest stuff had sketches included in reports which were actually pencil based on forms and worms pages (which alamode offered a grid page later to conveniently print and sketch on the go without any ewaste or advance tech.) We’d get the sketch done on site, we’d calculate space right there with simple math, verify size on the spot, and then scan that into the report later. Every supposed advancement in sketching tech which came after has been and will remain as an unnecessary labor and time consumption effort. The very last thing an appraiser needs is for people to confuse us with architects, because we’re not architects.
Think Lays is going to come get me for posting this meme? Is it fair use via artistic rendering or a violation? Is the fact I took this from the internet without written permission fair use or theft? Don’t read too much into copyright, it’s not quite as cut and dry as people may initially assume.
For Desk or hybrid appraisals, sketch required ?