Smoke Detectors & Appraiser Responsibilities
Smoke / CO detectors are not “market-measurable”
Dear Mr. Lunsford,
We have been asked to write to you by an appraiser that just received your most recent communication concerning your new requirements for fee panel appraisers to inspect, photograph and opine as to operability of Carbon Monoxide (CO) and smoke detectors.
The American Guild of Appraisers through its affiliated union sponsors represents our own appraiser members as well as the real estate appraisal interests of our combined fraternal families more than thirteen million union members, retirees and their families. We believe this to be an issue of concern for our membership.
Unless your new requirement is in direct response & compliance to a government sponsored entities (GSE) newest requirements, we respectfully submit that it is ill advised and creates increased liability to both you, your client and the appraiser.
The American Guild of Appraisers (AGA) supports sound management policies. Typically these are limited to assuring Uniform Standards of Professional Appraisal Practice (USPAP) compliance and prompt & reasonable payment to appraisers. We believe AMCs should distinguish between necessary client specific requirements, and those that they are offering solely to promote what they feel are more competitive services. We discourage micromanagement trends and or processes that result in unnecessary scope creep beyond the scope of work deemed necessary by the professional appraiser to perform, complete and deliver a report of a USPAP compliant appraisal. Ultimately USPAP holds the appraiser accountable for determining what is required under it and what is not.
As you should be aware, real estate appraisers deal with and analyze significant conditions that affect value and marketability. The presence (or absence) of a $35.00 combined CO/smoke detector-alarm has no measurable or demonstrably documental significant impact on either due to its comparatively low cost. It simply is not “market-measurable”.
The potential increased liability comes from an appraiser who is not an expert in varied communities jurisdictional code compliance requirements offering what ultimately is deemed to be a professional opinion about an element that they are not necessarily experts in. Knowingly relying on or hiring someone who is not an expert to confirm, verify or opine as to functional adequacy for such an item increases rather than reduces your firms potential liabilities if (God forbid) there should ever be a fire or death due to faulty hard wired installation, smoke inhalation or suffocation. One of the very first questions attorneys will ask an appraiser on the witness stand is to describe what it is that makes them an expert on such detectors. The second question would be to ask questions about the science of how such systems operate and a whole host of prosecutorial-style questions about mounting methods, locations and power sources that very few appraisers are qualified to answer. As the agent for the client, YOUR firm will be held accountable for who they hire to assume this unnecessary responsibility. If these items are a necessary client required reporting item then we recommend that you or your clients hire experts that are properly trained to deal with all aspects of them.
Different fire departments have offered differing opinions as to where combined units should be placed since the ‘gasses’ involved have different specific gravities and are subject to different optimal mounting requirements. Smoke is lighter than air, and carbon tends to be nominally heavier than smoke and possibly ambient air (I believe). My own research tends to suggest that a CO detector should be placed on a wall not more than about 4 to 5 feet above floor level. Conversely smoke detectors are most commonly mounted on ceilings at or near their highest accumulation point (peaks). For economy reasons many if not most units sold are the combined type.
Now the real issue is whether the local governmental agency (county or city) has adopted International Building Code (IBC) or whether some other code standard is applicable. Determining this requires time (and additional compensation) for an appraiser.
Are you now offering an appraisers hourly equivalent compensation for the additional scope of service your firm is requiring? We recommend an additional fee of from $100 to $150 for our members for this item alone to assure adequate time is spent verifying local code requirements that are in effect as of the effective dates of value in addition to the visual inspection of apparent condition.
We don’t encourage appraisers to voluntarily become involved in offering opinions outside their specific expertise but if that is a condition of doing business with or through your firm, then we will also be suggesting very strongly that they include additional language within their appraisals essentially to the following:
“The signing appraiser is not a property inspection expert nor a qualified code compliance officer. He/She has been required as a ‘special condition’ of acceptance of this appraisal assignment by the clients management agents to offer an opinion(s) as to the apparent operability of carbon monoxide/dioxide and smoke detectors. Unless there are exposed bare wires or other visual signs of damage to such detectors the appraiser is not qualified to determine proper operability or apparent defect. Similarly the fact that a ‘test alarm’ (if reachable) may function at the time of inspection is no assurance that the unit actually is capable of detecting dangerous levels of either carbon monoxide or dioxide or smoke. Further there is no assurance that the units alarm is adequate according to local code, or whether it may reasonably be expected to operate for an extended period of time, or during power outages. Few appraisers are qualified to offer opinions about locational mounting adequacy or methodology. Inspection of such units (features) are properly in the domain of qualified, licensed Home Inspectors or Local Code Compliance Inspectors. The appraiser strongly recommends that the services of such an inspector be separately contracted for if operability of carbon and or smoke alarms is/are a concern to any party having access to this appraisal, or any user relying upon it for decision making of any type. The appraiser offers no warranty or right of reliance to any party reading or relying on this appraisal report for either the adequacy or operation of any such detectors in the property involved”.
We will urge our members to adopt boilerplate language that leans toward indicating no apparent defect (unless otherwise noted) rather than to make statements that it/they “is/are” operable and whether or not (and how) it was actually tested by the home owner in their presence. We further are recommending that each of them contact their own E&O carriers and inquire about their potential liability for opining on the adequacy of emergency life and property protection equipment.
As an alternative we are also suggesting appraisers may want to ‘condition their value opinions’ by making their conclusions subject to proof from qualified building inspection contractors of Carbon / smoke detector code compliance and operability. This could result in borrowers having to pay for up to $400 or $500 (or more) for an American Society of Home Inspectors (ASHI) Certified Homes Inspector’s services. We distinguish between home inspection insurance (warranty) programs and those that are legitimate & competent home inspection services.
Mr. Lunsford, we have no doubt that you simply want to offer your clients the best service possible, however we respectfully urge you to reconsider this specific aspect of ‘scope creep’ and specific assignment requirement. If your lender clients or their regulators are now requiring this, you should make that clear to the appraisers. If it is simply a marketing tool for your firm, then again respectfully it is one that is misguided and abusive of appraisers’ time and professional expertise.
Lastly, Appraiser Independence Requirements do not permit anyone associated with a transaction to forbid or influence the use and type of language that an appraiser deems necessary to produce a credible report that is not misleading and that fully complies with USPAP.
Thank you for your time and consideration in this matter. We are submitting this open letter to our membership as well as various professional blogs and media contacts to generate specific appraiser response and to urge direct contact with you about those professional views.
Michael F. Ford, AGA, GAA, RAA, Realtor®, SCREA
Vice President Special Projects / Chairman NAPRC
The above is a response to the following email from Keith Lumsford, President of USamc, a Georgia based AMC:
SERVICE REQUIREMENT ANNOUNCEMENT:
Good morning Vendors,
Going forward all Smoke & Carbon Monoxide detectors need to be identified by photos and comments. Comment on the location and if they appear to be in working order.
Thank you for your cooperation on this matter. We appreciate our partnership with you!
Keith Lunsford, President