I was shocked when I opened my most recent edition of Working RE and found the following advertisement. I urge my professional peers to consider the following BEFORE using these types of time saving "services".
- The USPAP requirement for protecting client confidentiality
- The form fields identified as being 'data fields' are also areas that the appraiser is required to analyze!
- The subject section is more than data. It is information that each and everyone of us are required to verify and consider in terms of its potential impact on the assignment we are undertaking. When the subject is located in an unincorporated area that shares the nearby large incorporated city's mailing address, is the appraiser even going to be aware of it? Will readers have the necessary explanations. There are far more issues in this section than I can cover here.
- Who is going to verify the exact nature of the actual ownership interest(s) that exist, versus an assumed fee interest?
- Will this 'service' be providing neighborhood boundaries? What training do they have in that area? Do they know the difference between physical neighborhood bounds, and competitive market areas? It is the appraisers job to analyze and report the neighborhood characteristics, NOT some "data recorders"!
- Appraisers themselves have some demonstrated difficulty in understanding the meaning of so called land use zones as reported in commercial reporting services that report as follows: LC A1 (which really simply A1) or LA RE-15 (which is Residential Estate 15,000 SF minimum sites size); or will we continue to see idiotic entries such as RBR3 rather than the correct MDR for City of Redondo Beach Medium Density Residential uses? Are these 'data fillers' going to explain the former is an unincorporated Los Angeles County zone, while the latter is a Los Angles City zone? Are they simply going to record the stated zone per the commercial "public records" source (NDC, RealQuest, DataQuick, FARES, etc.), or are they actually going to look it up in the County or City land use zoning maps and correct / update the 'source' data? That IS an appraisers responsibility.
That is NOT the same thing as transmitting your file to an outside service! If contract information is provided to such a service, the appraiser has specifically violated USPAP by disclosing non public information to third parties.
The very fact that a client or borrower is contemplating a transaction that requires an appraisal is no ones business other than that client or property owner!
I submit, that unless the appraiser has disclosed in advance that they transmit non public as well as public sourced borrowers personal information to third party service providers; AND obtained the clients & borrowers specific advance authorization to do so, that they are in violation of USPAP.
What guarantees do the appraisers, property owners and lender-clients have that the fact of a refinance or sale related appraisal, will not be sold as a lead-list to competitors? Will appraisals performed for divorce or other litigation purposes be used to develop lead-lists for attorneys?
Too ALL my peers, I remind you that YOU are held solely responsible for insuring the confidentiality of your privileged client and borrower information. You alone are responsible for report contents, including verification of all data reported.
I would be very nervous to have my name used as a reference within this ad, or on the providers website. You could advertise just as easily that you "are too lazy to perform the work you have been contracted to perform yourself, and that you further do not fully understand the requirements of USPAP "
With the original introduction of HVCC into the appraisal profession, and prevalence of appraisal management companies interceding as third party appraiser processors for clients, there is already a breakdown in the integrity of the appraisal process, and degradation in appraisal report quality and reliability.
The recent lawsuits by the Federal Housing Finance Agency (FHFA) that oversees Government Sponsored Enterprises (GSEs) such as FNMA and Freddie Mac, involved poor to egregiously poor appraisals for 75% to 97% of the appraisals they reviewed.
Both lawsuits involved high volume, appraisal management, and or discount service providers (Lenders Services and CoreLogic). The identified losses amounted to hundreds of millions of dollars.
Lenders Services subsidiary LSI has a nationwide reputation for low fees, and appraisers claiming to perform numerous appraisals each and every day. Some actually think and claim these are USPAP compliant appraisals. The only people that believe those claims are non appraisers, or rank amateurs!
Let me reiterate: Despite the periodic claims of USPAP-ignorant and or egotistical appraisers, it is not possible to routinely perform even two complete appraisals per eight hour day from start to finish. Claims of doing three to four a day are simply unintended admissions of grossly substandard work. Even allowing for separate day preparation and appointment setting, and separate day field inspection and report writing, the total time will almost always exceed six to eight hours. That is IF the appraiser has actually performed the required analyses; investigated market data and used it to derive adjustments and adjustment amounts, rather than using rote methods and amounts.
New appraisers: Your goal should be to become the best appraiser you can. It should never be to claim the ability to do two or three appraisals a day. THAT sets you up to become a failure, and advertises incompetence. Insist on adequate turn around times. Decline work that is required back in forty-eight hours. It is not enough time to reliably know that you are going to be able to provide a good product. Ignore the braggarts that routinely make unrealistic claims.
Experienced appraisers: For years we have largely ignored those who make unrealistic claims in our profession. We believed they would eventually be identified by the lenders, and weeded out. That used to be true, but with AMCs there is increased willingness to accept substandard quality across the board. Diminished quality is becoming the norm with substandard fees and too fast turn times.
It is time to start calling those out who make such false claims, as well as those 'services' that facilitate them!
Read the following carefully, then review what you know to be required for each section of an appraisal and report. Even assuming you could comply with USPAP doing this, is it time-effective, or is this adding yet another time consuming administrative step that takes longer than if you did did the work yourself?
" (End Quote)
I hold Working RE in very high regard. They do not necessarily analyze the impact of every ad they run, for compliance within that profession (though they are affiliated with errors and omissions insurance providers). My criticism is directed solely at the so called service provider offering to inject themselves into the appraisal process, where they have no business being involved. That providers website FAQs are copied below:
" Frequently Asked Questions
NOTE: No one named Trevor P. shows up in the California Office of Real Estate Appraisers online license search. "Real value Appraisals" does show up with a different persons (female) name but has a disconnected telephone number listed.