treac july 2014 minutes - tn.gov · 2019-05-23 · july 14th, 2014 page 1 july 14, 2014 minutes...

July14th,2014 Page1

July 14, 2014 Minutes

First Floor Conference Room (1-B) Davy Crockett Tower

The Tennessee Real Estate Appraiser Commission met on July 14th, 2014 in Nashville, Tennessee, at the Davy Crockett Tower in the first floor conference room. Chairman Green called the meeting to order at 10:10 a.m. and the following business was transacted. COMMISSION MEMBERS PRESENT COMMISSION MEMBERS ABSENT Michael Green Eric Collinsworth Mark Johnstone Norman Hall Nancy Point Rosemary Johnson Tim Walton Gary Standifer Dr. Warren F. Mackara STAFF MEMBERS PRESENT COURT REPORTER Nikole Avers, Keeling Baird Gamber, Dennis O’Brien Kathy Elmore Chairman Green read the public meeting statement into the record which indicated the agenda was posted to the Tennessee Real Estate Appraiser Commission website on June 20th, 2014. He also welcomed the new education commission member, Dr. Warren (Fred) Mackara. ADOPT AGENDA Mr. Johnstone made a motion to adopt the agenda. It was seconded by Ms. Johnson. The motion carried unopposed. MINUTES The May 12th, 2014 minutes were reviewed. Mr. Standifer made the motion to accept the minutes as written. It was seconded by Mr. Walton. The motion carried unopposed. FORMAL HEARING The formal hearing was continued as the judge was not able to attend for medical reasons.

STATE OF TENNESSEE

DEPARTMENT OF COMMERCE AND INSURANCE REAL ESTATE APPRAISER COMMISSION

500 JAMES ROBERTSON PARKWAY NASHVILLE, TENNESSEE 37243-1166

615-741-1831

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LEGAL REPORT (*Addendums from counsel included) 1. 2014000711 Thiscomplaintwasfiledbyaconsumerandallegedtheunder‐valuingofaresidentialpropertybyusinginappropriatecomparablesalesdata.ComplainantallegedthatthequalityofconstructionshouldbeQ1.Allhomesarealmosthalfthesizeofthesubject.Theadjustmentsmadewereinaccurate.Respondentsentaresponsetothiscomplaint,respondingtoeachoftheseallegations.Withregardtothequalityofconstruction,RespondentstatedthatthispropertyisnotconsideredaQ1ratedproperty.ThesubjectisahighqualityhomeasdescribedintheQ2definition,notexceptionallyhighqualityasnotedintheQ1definition.Justbecausethesubjectisa“oneofakind”customdesignedhomedoesnotmeanthishomecouldnotbefoundinahighqualitytractdevelopment.Thishomeisactuallyanover‐improvementfortheneighborhood.Withregardtoallhomesbeingalmosthalfthesizeofthesubject,Respondentstatedthatasstatedintheappraisal,therewerenootherreasonablesalesintheentiresubjectcountytoincludewithinthereport.Thesalesutilizedwithinthereportarethelargestandhighestclosedsaleswithintheentirecountyoverthepastyear.ToutilizethesalesprovidedbytheComplainantfromanothercountywouldbehighlymisleading.Withregardtoadjustments,Respondentstatedthatbathroomadjustmentsarenotstandardorcannedadjustments;rathertheyareextractedfromthemarket.Basedonthemarketandthefactthatthesubjecthasasuper‐adequacyofbathrooms,theadjustmentwasreasonable.RespondentstatedthattheactiontakenbyComplainantcouldbeathreattothegeneralpublicbecauseAppraiserIndependentSafeguardsarebroken.REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Themarketconditionsanalysisisdeficientincompliance.Theneighborhoodboundariesdescribeanareaofabout40squaremiles,withvaluesfrom$20,000to$1,800,000,andagesfrom0to100yearsold.Incontradiction,thereportstatesonpage11that,“Thereisgoodconformityinstylesandvalues.”Theneighborhoodasdescribedissomecombinationofneighborhood/marketarea.Inthiscase,theintendedusercannotevaluatethesubject’sneighborhoodproperly.Thereportcontainsa“recentdisaster”onpage11,butdoesnotdiscussthenatureofthedisasterortheconcernsitposesinthevaluationormortgageunderwriting.[SR1‐1(a)(Lines486‐488)]

Thehighestandbestuseisstatedonpage2ofthereport.However,thesupportandrationaleforthatopinionwasnotsummarized.Noanalysiswasfoundintheappraiser’sworkfile.Thisindicatesthatnoanalysiswasperformed.[SR2‐2(a)(x)(Lines743‐744;SR1‐3(b)(Lines578‐580)]

Landvalueisstated.However,theinformationanalyzed,theappraisalmethodsandtechniquesemployed,andthereasoningthatsupportstheanalysis,opinions,andconclusionswerenotsummarizedadequately.Alandanalysiswasfoundintheworkfile.However,theanalysisappearstobebasedononlysize,withnoreconciliation.Thereportstatesonpage11thatsiteadjustmentsshouldnotbemadeonsizealone;viewandlocationareimportant.[SR1‐1(a)(Lines487‐488;SR1‐2(e)(Lines532‐540)]

Physicaldepreciationissupportedbytheage‐lifemethod.Functionaldepreciationwasnotexplainedorsupportedinthereport.Noanalysiswasfoundintheworkfileindicatingthatnoanalysiswasperformed.WhileUSPAPdoesnotsetathreshold,anamountof$112,263simplymustbeexplainediftheappraisalandreportaretobeconsideredcredible.[SR1‐4(b)(iii)(Lines590‐591)]

Theappraiserstatedtheadjustmentamountsformostoftheline‐itemadjustments.However,theappraisergavenoexplanationorsupportforanyoftheadjustmentsexceptforthe“age”andgeothermalH/Aadjustments.Theappraiserprovidednosupport,rationale,orexplanationofadjustmentamounts.[SR2‐1(b)(Lines652‐653;SR2‐2(a)(viii)(Lines726‐734)]

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Thereportstatesandimpliesthatseveralanalyseswereperformedthatwerenotfoundinthereportorintheworkfile.TheappraiserstatesheperformedseveraltasksintheScopeofWorkwhichshouldbefoundinthereportorintheworkfile.(1“Marshall/SwiftResidentialCostHandbookisconsulted…andissupplementedbytheappraiser’sdatabase;2“Sitevaluesforallcomparablesalesarebasedonavacantlandanalysisforacomparablesales.Thesesiteadjustments…arewellsupportedbyvacantlandsales”;3.“Basedonmarketextractionandconsiderationofthesuperadequacyofsize…$75persquarefootisreasonableandwell‐supportedbythemarket.”)Eachofthesestatementsimpliesalevelofduediligencewhichwasnotsupportedbythereportorworkfile.[EthicsRule:Conduct(PageU‐7)(Line238);Record‐KeepingRule(U‐10)(Lines321‐323)]

*AddendumRespondent’sResponsetoReviewer’sConclusions:Respondentsentaresponsetothereviewer’sconclusions,statingthatheagreedwiththereviewerthattheneighborhoodboundarieswereinaccurate.Thiswasanerroronhispart.Respondentincludedalocationmapwithproperboundariesinhisresponse.Respondentalsoagreedthatthe“recentdisaster”commentshouldhavestatedthetypeofdisasterandtheconcernitposesinthevaluationormortgageunderwriting.Respondentstatedthehighestandbestuseanalysiswasperformed.Hepulledsitedataandactuallyperformedthereconciliationportionbasedonthesitevalue.Movingforward,hewillincludeastatementforsupportandrationaleforthehighestandbestuse.Respondentstatedthatthesiteadjustmentsinthereportwereaccurateandvacantlandsaledatawasanalyzedandincludedintheworkfile.Theseadjustmentswerenotbasedonsizeonly.Thisisdemonstratedinthereport,accordingtoRespondent.Respondentdidagreethattheanalysisandconclusionsshouldhavebeensummarizedmoreadequatelywithinthisreport.Respondentalsoagreesthatthefunctionaldepreciationadjustmentshouldhavebeenexplained.Inthissituationtheadjustmentwaswarrantedbasedonthelargedifferencebetweenactualcostandmarketvalue,duemainlytosuperadequacyofsizefortheneighborhood.However,Respondentstatedthatthereportisstillcrediblebecausetheappraisedvalueisbasedonthesalescomparisonapproach.Respondentstatedthatline‐itemadjustmentsareextractedfromthemarketbypairedsales,andRespondentadmitsthisshouldhavebeenexplainedinthereport.Notallinformationwasincludedintheworkfilebecauseapairedsaleanalysisisnotperformedforeverylineadjustmentforeveryappraisalreport.Apairedsalesanalysisisperformedatleastmonthlyforcommonadjustmentsinallmarketareaswhereheperformsappraisals.Inconclusion,RespondentasksthattheCommissiontakeintoconsiderationthatthisishisfirstcomplaint,andthereviewofhisappraisalwillhelphimtoimprovethequalityofhisreports.Alldeficienciesfromthereviewwillbecorrectedandimplementedinfutureappraisals.

LicenseHistory: RegisteredTrainee 9/15/1998‐12/03/2000 CertifiedResidential 12/4/2000‐PresentDisciplinaryHistory: None.ReasoningandRecommendation:ThereviewerfoundseveralsignificantdeficiencieswithinthereportpreparedbyRespondent,includinganEthicsRuleviolation.Assuch,CounselrecommendstheauthorizationofacivilpenaltyintheamountofFiveHundredDollars($500.00)tobesatisfiedwithinthirty(30)daysofexecutionoftheConsentOrder,aswellasafifteen(15)hourResidentialReportWritingCoursetobecompletedwithinone‐hundredeight(180)daysofexecutionoftheConsentOrder.SuchtermsaretobesettledbyConsentOrderorFormalHearing.Vote: Mr. Hall made the motion to close with a letter of warning and flag the file. This was seconded by Mr. Walton. The vote carried unanimously. 2. 2013024141 Thiscomplaintwasfiledbyaconsumerandallegedtheunder‐valuingofaresidentialpropertyby

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usinginappropriatecomparablesalesdata.Complainantstatedthatthesubjectpropertywaslocatedonariverandwasauniqueandhighlydesirablelocation.ComplainantallegedthatRespondent’sappraisalusedthree(3)otherrecentsalesascomparablesales,two(2)ofwhichwerenotlocatedontheriverandathirdwhichwasanearteardownandhadtobecompletelyguttedafterthesale.Respondentfiledaresponsetothecomplaintstatingthatthesubjectpropertyisauniquetypeofproperty,inthatisoflessthanaveragestick‐builtqualitybutaveragecabinqualityinthisneighborhood.Also,thepropertyitselfisverysmall,.16acre,listedonthe“River”;howeveritismorelikeawidecreekwithmostlyshallowwater3feetto10feetdeepoffandonandmostlyusedfortubingorkayaking.Therefore,itisnotcomparabletomanylakefrontpropertiesinthearea,whichhaveaccesstoboatdocksanddeepwaterboatingactivity.Thesubjectcabindoesnothaveapermanentfoundationorpermanentheatorairsourceandisalsobuiltinamassivefloodzone.Becauseofallofthesefactors,thesubjectwouldprobablynotqualifyforaloanonthesecondarymarket.RespondentstatedthatheprovidedinteriorphotosofallthecomparablesalesfromMLS,aswellasexteriorphotosplusMLSbriefsandthathewouldchallengeanyonetofindwhatComplainantverballystatestobeacomparableinsuchbadshapethatitneedstobegutted.Respondentstatedthereareverylimitedsimilarpropertiesinthisareaand“asisinthiscase”onlyaselectveryfewbuyerswhoarewillingtopaywellbeyondtopdollartopurchasethesespecialtydwellingsonthewater.Asanappraiser,Respondentstateditishisresponsibilitytoattainanestimatedvaluethatreflectsabroadercontingentofpotentialbuyersthatwouldpurchasesuchresidencesataproper“goingrate”price.REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Theappraisershouldhaveresearchedcomparablesales,zoning,andconcernsoverthesepticsystemmorediligently.Theriskfactorshouldbeconveyedtotheclient.Thesubjectpropertyhassomespecialriskassociatedwithhavingaprivatesepticsystemonalotthatisonly.16acres.Partofthesitemaybeunderwaterpartofthetimeandmostofitisinafloodzone.Accordingtothecountyzoningandcodesoffice,thepropertycouldbecomeunusableifthesepticstoppedworkingandcouldnotberepaired.[ScopeofWorkRule(U‐13)(Line368)]

Thepropertywasacurrentlistingandthepropertywasundercontractatthetimeoftheappraisal.Theappraisernotesboth,butreportsnoanalysisofeither.[SR2‐2(b)(viii)(Lines792‐794);SR1‐5(Lines605‐608)]

Thesupportandrationalefortheopinionofhighestandbestusewasnotsummarizedandnoanalysiswasfoundintheworkfile.[SR2‐2(b)(ix)(Lines799‐800);SR1‐3(b)(Lines556‐558)]

Landvalueisstated.However,theinformationanalyzed,theappraisalmethodsandtechniquesemployed,andthereasoningthatsupportstheanalysis,opinions,andconclusionswerenotsummarized.Thesectionsofthecostapproacharenotcompleteuntiltheopinionoflotvalueissupportedbytheappropriateanalysis.Evenwhencompletedtheapproachwouldnotberelevantbecauseofthedifficultyofestimatingthevariousformsofdepreciation.[SR1‐4(b)(i)(Line565)]

Twoofthesalesusedinthesalescomparisonapproachwerenotriverfrontproperties,althoughatleasttwoadditionalriverfrontsaleswereavailable.Theappraiserappearstohaveignoredtheimportanceofriverfrontageinthismarket.[SR2‐4(a)(Lines562‐563);SR1‐2(e)(Lines510&512)]

Theappraisergavenoexplanationorsupportforanyoftheadjustmentsinthesalescomparisonapproach.[SR2‐1(b)(Lines630‐631);SR2‐2(b)(viii)(Line783);SR2‐2(b)(viii)(Lines789‐790)]

Theappraiserdidnotstatetheexposuretimethatthevalueopinionisassociatedwithintheincomeapproach.Noanalysiswasfoundinthereportortheworkfile.[SR2‐2(b)(v)(Lines766‐767);SR1‐2(c)]

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Theappraiserdidnotreportthepreviousservicestatementinthecertification.[SR2‐3(Lines87‐88)]

Thezoningwasincorrectlymarkedasalegalusewhentheuseisgrandfathered.Offsiteimprovementsweremarkedasaprivategravelroad,butitisapublicpavedroad.Theneighborhoodboundarieswerestatedtobea4mileradius.Theseboundariesincludeanumberofseparateneighborhoods.TheseerrorstogethertriggeraUSPAPviolation.[SR1‐1(c)(Lines485‐490)]

TheonlythingfoundintheworkfileatthedateoftheappraisalwastheMLSsheetsforthethreesalesusedandtheappraisalreport.Nofieldnotes,taxcards,contract,analysis,etc.werefound.[Record‐KeepingRule(Lines299‐301);EthicsRule(Line228)]

Respondent’sResponsetoReviewer’sConclusionsRespondentsentaresponsetothereviewer’sconclusions,statingthathefeelsthatthisclaimisfromadisgruntledsellerbecausethepropertydidnotappraiseforwhattheywereasking.Respondentstatedheappraisedthepropertyinaconservativemanner,ashisclientrequestedsinceitwasanoldercabinandthebuyerswerenotgettingahomeinspection.Respondentstatedhewasalsoprotectingthebuyerssinceheknewthearea,andtheywerefromoutoftownanddidnotunderstandsuchuniqueproperties(i.e.cabinsonthestream)andtheirtruevalues.Respondentstatedthatthecomplaintwasunfoundedandthathisclientstandsbehindhimandiswillingtodefendhimandhisappraisal.Respondentalsosentaverylengthyresponsetoeachallegationmadebythereviewer.LicensingHistory: CertifiedResidential 12/31/1991‐PresentDisciplinaryHistory: None.ReasoningandRecommendation:ThereviewercitedmultipleviolationsofUSPAPwithinhisreview,whichshowedsignificantviolations.Assuch,CounselrecommendstheauthorizationofacivilpenaltyintheamountofFiveHundredDollars($500.00)tobesatisfiedwithinthirty(30)daysoftheexecutionoftheConsentOrder,aswellasafifteen(15)hourUSPAPCourseandafifteen(15)hourAdvancedResidentialCaseStudiesCoursetobecompletedwithinone‐hundredeighty(180)daysofexecutionoftheConsentOrder.SuchtermsaretobesettledbyConsentOrderorFormalHearing.Vote: Mr. Walton made the motion to accept counsel’s recommendation. This was seconded by Ms. Johnson. The vote carried unanimously. 3. 2013024401 ThiscomplaintwasfiledbyaconsumerandallegedbiasintheperformanceofaresidentialappraisalbecauseRespondenthadbeenpreviouslyinterviewedforajobanddeclinedbythehomeowner.ComplainantallegedthatRespondenthadanobviousconflictofinterestwithComplainantindoingthisappraisalanduseditasatooltoenactrevengeonComplainant.Respondentfiledaresponsetothecomplaint,denyingtheallegationsofconflictofinterestmadebyComplainant.RespondentdeniedthathewasinterviewedbyComplainantforanypositionatanytime.Respondentcertifiedwithinthereportthatatnotimeoftheappraisalprocesswasheawareand/orinfluencedtoevaluatethepropertyforaresultthatwouldsatisfythePMIremovalfortheborrowerand/orhomeowner.Respondentstatedthatinhisopinionofthemarketvalue,asdefined,isfairandvalidandnotinfluencedbyanybias.REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

ThesupportandrationalefortheopinionofhighestandbestusewasnotsummarizedasrequiredbyUSPAP.Noanalysiswasfoundintheappraiser’sworkfile.[SR2‐2(b)(ix)(Lines799‐800);SR1‐3(b)(Lines556‐558)]

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Landvalueisstated.However,theinformationanalyzed,theappraisalmethodsandtechniquesemployed,andthereasoningthatsupportstheanalysis,opinions,andconclusionswerenotsummarized.[SR1‐4(b)(i)(Line565)]

Thequantityandqualityofthedatawasnotdiscussedinthefinalreconciliation.Noanalysisdiscussingthequalityandquantitywasfoundintheworkfileindicatingthespecifiedanalysiswasnotperformed.[SR1‐6(a)(Lines615‐616)]

Theapplicabilityandrelevanceoftheapproacheswerenotdiscussedinthefinalreconciliation.[SR2(b)(viii)(Lines789‐791)].

Respondent’sResponsetoReviewer’sConclusions:Respondentaddressedeachofthereviewer’sconclusionsinhisresponse.Withregardtobulletnumberone,Respondentstatedthathighestandbestuseisaprocessofiteration.Therepetitiveprocessofrequiringthesamequestionstobeaskedtoformaconclusionofmaximumproductivityoflanduse.TheconclusionsofhighestandbestuseasreportedwithintheFNMA1004formwasbasedontheanalysisofrelevantphysicalcharacteristicswhichhadlegalconformitywiththezoninganddeedrestrictions(limitingthesubjectusetodetachedsinglefamilyresidentialimprovementwithspecificminimumandmaximumimprovementrequirements).Withregardtobulletnumbertwo,datawascollectedtosupportanopinionofsitevaluefrompublicrecordsandmultiplelistingservicesofsimilarpropertieswithinthesubject’smarketareathathavesimilarlotutility,view,andavailableutilities.Thereportedlandvaluewassignificantlyassistedbythelandvaluationofthecountytaxassessorandcomparablepropertiesutilizingthesalescomparisonapproach.Allsupportingdataisavailableintheworkfile.Withregardtobulletnumberthree,asstatedinthereport(salesanalysiscomments),“Thefinalestimatedindicatedvalueisdeterminedbyusingthegrossadjustmentofsalepriceforeachcomparableasameasureoftherelativequalityofthecomparable.Aloweradjustmentindicatesabettercomparable,andviceversa.Theratioofgrossdollaradjustmenttosalepriceforeachofthecomparablesalesisusedtocalculatetheweighteachcomparableshouldhaveinaweightedaveragecalculation.Thisweightedaverageisusedastheindicatedvalueofthesubjectandallcomparablesalesarelocatedwithinthesubject’smarketareaandareconsideredtobegoodindicatorsofthesubject’smarketvalueastheyarecompetingpropertiestoatypicalbuyer.Withregardtobulletfour,asstatedinthereport,“Thesalescomparisonapproachisgiventhegreatestconsiderationwithsupportfromthecostapproach.Theincomeapproachisgivenlittleconsiderationassinglefamilyresidencesinthisareaarenottypicallyincome‐producing.”

LicenseHistory: RegisteredTrainee 04/02/1998‐01/01/2002 CertifiedResidential 01/02/2002‐PresentDisciplinaryHistory: 200504311‐Closedwithnofurtheraction.ReasoningandRecommendation:Thereviewerfoundthereportaccuracytobeoverallacceptableandnotmisleading.Assuch,CounselrecommendsthatthismatterbeClosedwithaLetterofWarningregardingtheviolationsnotedbythereviewerabove.Vote: Mr. Hall made the motion to accept counsel’s recommendation. This was seconded by Mr. Walton. The vote carried unanimously. 4. 2013023181 ThiscomplaintwasfiledbyanAppraisalManagementCompanyandallegedthatRespondentmisreportedthenumberofunitsinthesubjectproperty.ComplainantallegedthattheRespondentprovidedareportshowingthesubjecthavingfour(4)unitsinsteadofthefive(5)unitsthatweretrulythereatthetimeoftheinspection.Respondentprovidedcommentarystating,“Forthepurposesofthisreport,thetwo1bedroomunitsatopthemainresidencehavebeenconsideredasone.”

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Respondentsentaresponsetothecomplaintstatingthatthesubjectpropertywasanatypicalproperty,whichincludedahistoricalresidencebuiltin1900andasinglelevelresidentialduplexbuiltin1963.Thehistoricalresidencealsohadthethirdlevel(atticlevel)finishedoutintotwosmallapartmentswhichwereaccessedfromanexteriorstaircase.Thereweretwoelectricmetersontheduplexandtwoelectricmetersonthehistoricalresidence.TheclientrequestedtheappraisedbecompletedonFannieMaeForm1025,asstatedinthereportbetweenbothstructurestherewerefiveunits,however,duetothelayouttheywereconsideredasfourtocomplywiththefourunitFannieMaeForm.Respondentstatedhewouldbegladtocompleteanarrativereport,ifneeded.REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Sales1and3,whicharelocatedwithintheneighborhood,adjustedtoanindicatedvaluerangeof$199,380to$215,440.Comparableno.2,whichwaslocatedoutsideoftheneighborhood,adjustedtoanindicatedvalueof$445,960.Theappraisalconclusion,basedonthesalescomparisonapproach,is$430,000.[SR1‐1(a),(b),&(c);ScopeofWorkRuleV‐13368,383,407,419]

Thepropertyconsistsofanolderthreelevelhomeandanadjacentold,butnewer,duplexproperty.Theolderresidence,coupledwiththeduplex,isreportedtohave5rentalunits.Theappraisal,however,treatsthepropertyas4unitsand,therefore,misrepresentsthepropertydescription.Theupperleveliscomposedof(2)onebedroomapartmentswithademisingwallandseparateentrances.Tostatethisareaasbeingoneapartmentunitisamisrepresentation.Inordertotreatthisareaasasingleapartmentunit,ahypotheticalconditionwouldhavebeenrequired,aswellasadjustmentstoallowconversionofthisareatoasingleapartment.Thiswouldhaveincludedaprospectivevalueestimateaswellasdeductionsfortherequiredremodelingandpossibleobsolescenceduetotherepetitioninkitchenareas,floorplan,etc.[ScopeofWorkV14‐407,V14‐419,V14‐428,SR1‐1(b)&(c)]

AreviewoftheimmediateneighborhoodusingCRSindicated30saleshadoccurredwithintheimmediateneighborhoodwithintheyearpriortothedateofthisappraisal.Itseemsreasonabletoanticipatethat,of30transactions,therewouldnotbeanadditionalsalethatwouldreasonablycomparewiththeoverallpropertyorwiththesubsetdemonstratedbythedifferentcharacteristicsoftheproperty,i.e.olderhome3units,andseparatenewerbuildingcomposedofaduplex.[SR1‐1(a),(b),&(c)]

Sitevaluewasestimatedat$70,000;however,nodatawaslocatedwithintheappraisalorworkfilesupportiveofalandvalueanalysis.[SR1‐1(a)&(b);ScopeofWorkV‐14407]

Commentsundercomparablerentaldatastate,“Theabovemarketrentalsrangefrom$6.19persquarefootto$7.38persquarefoot.Thesubjectiscurrentlyrentedfor$6.13persquarefootwhichisslightlybelowtheestimatedmarketrentalrange.Nochangesarewarrantedatthistime.”Thisstatementappearstobemisleadinginthattherentalusedistheactualcollectedrentalsreportedanddidnotincludetherentalallowancethatwasmadefortheowner/occupiedspace.Theunitrentestimatesforthecomparablesaleswerebasedonthegrossrentpotentialanddidnotallowforanynon‐collectedrental.Thisstatementimpliesthatthesubject’sestimatedrentislessthanthemarketwhiletheoppositeistrue.[SR1‐1(a),(b),&(c);SR2‐1(a)]

LicenseHistory: CertifiedResidential 10/31/1991‐Present DisciplinaryHistory: None.ReasoningandRecommendation:ThereviewerfoundmultipleviolationsofUSPAPwithinRespondent’sappraisalreport.Assuch,CounselrecommendstheauthorizationofacivilpenaltyintheamountofOneThousandDollars($1,000.00)tobesatisfiedwithinthirty(30)daysofexecutionoftheConsentOrder,aswellasathirty(30)hourBasicAppraisalProceduresCoursetobecompletedwithinone‐hundredeighty(180)daysofexecutionoftheConsentOrder.SuchtermsaretobesettledbyConsentOrderorFormalHearing.

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Vote: Mr. Walton made the motion to accept counsel’s recommendation. This was seconded by Mr. Hall. The vote carried unanimously. 5. 2014006531 ThiscomplaintwasfiledbyanappraiserandallegedthatRespondentusedanoldphotointhecoverpage,andthephotosforthecomparablesalesareincorrect.Inaddition,ComplainantallegedthatRespondentusedtheincorrectphotoonMLS.Complainantallegedtheappraisalreportisnotworththepaperit’swrittenon.Respondentsentalengthyresponsetothecomplaintstatingthathehasbeenalicensedappraiserforover25yearsandhasalwaysconductedhimselfwiththeutmostintegrityandprofessionalism.Respondentdoesadmitthatcomparable#1and#4dohavethesamephoto,ascomparable#1hasthewrongpicturepostedinthereport.Thiswasmostlikelycausedbyasoftwareglitch;however,Respondentadmittedheshouldhavenoticedthatduringhisreview,beforesendingthereporttotheclient.Respondentclaimsthattheotherphotoswithinthereportarecorrect,despiteComplainant’sallegations.WithregardtoComplainant’sallegationthatallphotosarefromMLS,RespondentstatedthatListing#1and#2andcomparable#5weretakenatthetimeofinspectionbytheappraiser.TheotherphotosweretakenfromMLS,butallcomparablesaleswerereviewedfromthestreetbytheappraiser.TheMLSphotoswereusedastheybestreflecttheconditionofthepropertiesatthetimeoftransfer.REVIEWERCONCLUSIONSConsideringcompleteness,adequacy,credibility,etc.,thereviewerfoundnosignificantnon‐complianceissueswithUSPAP.Subsequenttotheoriginalappraisal,theclientsubmittedacostestimatetocompletecertainrepairsandrequestedthattheappraiserreconsiderbasedonthisadditionalinformation.TheRespondentre‐inspectedthepropertyandsubmittedasecondreport,whichtookintoaccountheropinionofthecrediblerepairsrequiredtoplacethepropertyinsaleablecondition.Thesecondappraisalincludedanadditionalcomparablesaleandaportionofthesalephotosweremisidentifiedinthesecondappraisal,whichcouldbeaviolationofSR1‐1(c).However,theywerecorrectintheoriginalappraisal.Itisthereviewer’sopinionthatthereportsdonotfallshortoftherequirementsofUSPAP.Themisplacementofthephotosisnotconsideredtoaffecttheresultsoftheappraisal,andtheclientreceivedtheoriginalcorrectphotosintheearliersubmissionsothattherewasnoattempttomislead.Inthereviewer’sopinion,thiserrordoesnotmeetthetestofSR1‐1(c).LicensingHistory: CertifiedResidential 02/13/2004‐PresentDisciplinaryHistory: NoneReasoningandRecommendation:Basedonthereviewer’sconclusions/opinionsnotedabove,CounselrecommendsthatthismatterbeClosedwithnofurtheraction.Vote: Mr. Johnstone made the motion to accept counsel’s recommendation. This was seconded by Mr. Hall. The vote carried unanimously. 6. 2014009261 ThiscomplaintwasfiledbyaconsumerandallegedthatRespondentdidnotgivethereporttotheComplainantandfailedtoreplytohisemails/phonecalls,despitethefactthatComplainantpaidhimtheproperfeefortheappraisal.TheappraisalwasdoneonMarch12,2014.ThecomplaintwasfiledMay23,2014.Respondentsentaresponsetothecomplaintstatingthathelivesinanareawithintermittentcellphoneconnectionandpoorreception.Also,thesubjectpropertyisasixteen(16)sidedcustom

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builtDeltechouse,whichresultedinalengthydelayincompletingtheassignment.Respondentstatedhecontinuedtoresearchafourcountymarketareaformarketparticipationforahousesimilarindesigntothesubjectwhichfurtherdelayedtheturnaroundtimefortheappraisal.RespondentstatedhehasapologizedtoComplainantforthedelayandemailedthecompletedreporttoheronMay16,2014.RespondentstatedthatheisnotmakingexcusesforthelongturnaroundtimeandlackofcontactwithComplainant,butgiventheimpactoftheAMCbusinessandlowerappraiserfees,somethinghastochangeorthewholeindustrywillcollapsebecausetherewillbenonewappraisersenteringthebusiness.RespondentstatedthattheAMC’sgetpaidupfrontfromtheconsumer,butthenapparentlyunderthelawcanusetheconsumer’smoneyfortheappraisalforsixty(60)days,insteadofpayingtheappraiser.DuetolowfeesandexcessivereportingrequirementsbyAMC’stoconstantlyupdatethestatusoftheappraisal,theoverallturnaroundtimesforcompletingappraisalsresultsinalongerthanusualtimeperiodtocompleteareportonthistypeofproperty.LicensingHistory: CertifiedGeneral 11/09/1995‐PresentDisciplinaryHistory: NoneReasoningandRecommendation:CounselrecommendsthatthismatterbeClosedwithnofurtheraction.TurnaroundtimesareoutsidetheauthorityoftheCommission,unlesstheperiodcouldbeshowntohaveviolatedthepublictrust,whichisnotthecaseinthiscomplaint.Vote: Mr. Hall made the motion to accept counsel’s recommendation. This was seconded by Ms. Johnson. The vote carried unanimously. 7. 2014008921 ThiscomplaintwasfiledbyaconsumerandallegedthatRespondentprovidedanappraisalthatincludedinappropriateinformationthatthehouseisuncommonforthearea,whichcausedthepurchasenottogothrough.RespondentallegedthatRespondentwroteopinionatedinformationontheformthatcausedthelendertobackout.Respondentsentaresponsetothecomplaintstatingthattherequestfortheappraisalwasforaruraldevelopmentloaninwhichthehomeshouldmeetruraldevelopmenthousingstandards.Respondentstatedthataftertheinspectionofthehome,RespondentemailedtheAMCtoinformthemthehomehadonlyone(1)bedroom,andtherewerenosalesavailable.Asone(1)bedroomhomesarenotcommoninthemarketarea,thiswasnotedinthereport.NotdisclosingthiswouldbeaviolationofUSPAP,accordingtoRespondent.Thehomehadasunroomthathadductworktotheheatandairbutwasbuiltonaporchthatwason4x4piersanddidnotmeetthestandardstobecountedasaroomorfinishedarea.Fourdaysaftertheinitialinspection,Respondentstatedhewasaskedtomakesomechangestothereport,noneofwhichhadtodowithvalue,andtosearchformoresaleswiththegoaloffindingaone(1)bedroomhomesale.Heexpandedhissearchparametersandfoundasaleusedintherevisedreportassale7andincludedanother2bedroomsaleinasimilarruralarea.Respondentstatedhereceivednootherrequestsforanymoreinformationorcomparablesales.Respondentstatedthatheneverhadanyinterestinthesubjectproperty;therefore,Complainant’sallegationofbiasisludicrous.REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

SiteDescription:Thecheckboxshows“notinfloodzone”.However,inthesamesectiontheappraiserstatesthatthelowerpartofthelotappearstobeinthefloodzone.Thismayhaveaneffectonthesitevalueandthevalueoftheentireproperty.[SR1‐1(a)(Lines486‐488);SR2‐2(a)(iii)(Lines687‐689]

Subject’sContract,Option,andListing:Thecurrentcontractofthesubjectpropertyisanalyzedandreported.Thecurrentlistingofthesubjectpropertyisnotreported.No

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relatedanalysisisfoundintheworkfileindicatingthatnoanalysiswasperformed.[SR2‐2(b)(viii)(Lines735‐737);SR1‐5(a)(Lines627‐630)]

ExtraordinaryAssumptions:Anextraordinaryassumptionwasusedonpage8,butitdidnotincludethestatementthat,“Itsusemayhaveaffectedtheassignmentresults.”[SR2‐2(b)(xi)(Line747)]

CostApproach:Landvalueisstated.However,theinformationanalyzed,theappraisalmethodsandtechniquesemployed,andthereasoningthatsupportstheanalysis,opinions,andconclusionswerenotsummarizedadequately.Asinglelandcomp.wasfoundintheworkfile,butnoanalysis.[SR1‐4(b)(Line587)]

Physicaldepreciationissupportedbytheage‐lifemethod.Functionaldepreciationforthesubjectonlyhavingonebedroomwasnottaken,eventhoughanadjustmentwastakenforitinthesalescomparisongrid.Theappraiserindicatesthatthesubjectisnearcommercialproperties,butnoeconomicdepreciationistaken.Noanalysiswasfoundintheappraiser’sworkfileindicatingthatnoanalysiswasperformed.Thecostapproachindicatedavalueabout33%higherthanthedirectcomparisonapproach.Thisisrelatedtonotusingtheproperdepreciationrates.[SR1‐4(b)(iii)(Lines590‐591]

DirectComparisonApproach:Theappraiserstatedtheadjustmentamountsfortheline‐itemadjustments.However,noexplanationorsupportwasgivenforanyoftheadjustmentsexceptfortheoneversustwobedroomadjustmentandthesite.Providingnosupport,rationale,orexplanationofadjustmentamountsisaviolationofUSPAP.Havingnorationaleforadjustmentsinthecomparisonapproachisalsoaviolation.[SR2‐1(b)(Lines652‐653);SR2‐2(a)(viii)(Lines726‐731);SR1‐1(a)(Lines487‐488)]

Theappraiserstatesthedefinitionandneedforexposuretimeonpage8.However,heneverstatestheexposuretimeassociatedwiththevalueopinion.Norelatedanalysiswasfoundinthereportorworkfileindicatingthatnonewasperformed.[SR2‐2(a)(v)(Lines710‐711);SR1‐2(c)(iv)(Lines528‐530)]

Assistanceofatraineewasstatedanddescribedonpage8.However,thecertificationdoesnotidentifythepersonwhoprovidedprofessionalassistance.[SR2‐3(Lines841‐842;SR2‐3(Lines822‐824)]

Respondent’sResponsetoReviewer’sConclusions:Respondentfiledaresponsetothereviewer’sconclusions,addressingeachitemnotedbythereviewer.Withregardtositedescription,Respondentstatedaportionofthesiteappearedtobeinthefloodzone,alongthesmallcreekonthelowerendoftheproperty.Thehomesiteisabovethefloodzone,andthereportwascheckednotbeinginthefloodzoneasthehomesitewasnotinthezone.Withregardtothelistinginformation,RespondentstatedheperformedasearchofotherMLSservicesthatoverlapintheareaandfoundnootherlistinginformation.Thelistingwasanalyzedandconsideredmentally.Withregardtoextraordinaryassumptions,Respondentadmittedthecomment;“Itsusemayhaveaffectedtheassignmentresults”wasnotincludedandshouldhavebeen.Withregardtothecostapproach,Respondentstatedtheworkfilesubmittedshouldhaveincluded6landsales.Theareahasalimitednumberoflandsalesandthesesalesarefromthesameoverallmarketarea.Thesitewasanalyzedandthesaledatawasconsideredmentallybasedonexperienceandknowledgeofthemarket.Respondentadmitsthatthisinformationneedstobereportedmoreclearly.Withregardtodepreciation,theagelifemethodwasused.Thesubjectwasreportedasbeingnearsomecommercialproperty;however,thesepropertiesarelimitedandwouldhavenoeconomicdepreciation.Thesubjectisinaruralmarketarea,andthecommercialpropertywasgrandfatheredinwhenthecountywaszoned.ThesubjectandneighboringpropertyarezonedA‐1andanyfuturecommercialchangesinusewouldhavetobeapprovedbythecountyplanningcommission.Thesubjectbeinginaruralmarketmakesanyeconomicdepreciationdifficulttodeterminewithlimitedinformationavailable.Withregardtothedirectcomparisonapproach,Respondentstatedwiththereportbeingasummaryreport,hemayhaveneglectedtofullyreportthesourceofalladjustments,intheefforttomeetdeadlines.Withregardtoexposuretime,Respondentstateditisreportedonthefirstpageofthereportasbeing90‐180days.Thedefinitionisaddedinthecommentstoclarifyexposuretime.Respondentstated


hehasstartedcombiningthedateswiththedefinitiontomakethisclearer.Withregardtothetrainee,Respondentstatedthatthetraineeishiswife.Sheisalsoalicensedrealestateagentandwasemployedbythelocalassessor’soffice.Shemostlyhandlesofficedutiesincludingappointmentsandbook‐keeping.TheevaluationsandresearchisdonebyRespondent.Respondentstatedthatmayoftheproblemsaretheresultofaproblemsystemicwithintheindustrytofinishreportsinatimelyfashion.TherecentadventofAMC’sandclientduedatescausedpressuretocompletethereportsassoonaspossible.RespondentstatedhewillmakeeveryeffortinthefuturetobetterdevelophisreportsinamannercompliantwithUSPAP.LicensingHistory: RegisteredTrainee 3/1/1993‐8/3/1997 CertifiedResidential 8/4/1997‐PresentDisciplinaryHistory: NoneReasoningandRecommendation:ThereviewercitedmultipleviolationsofUSPAPwithinhisreview,whichshowedsignificantviolations.Assuch,CounselrecommendstheauthorizationofacivilpenaltyintheamountofFiveHundredDollars($500.00)tobesatisfiedwithinthirty(30)daysoftheexecutionoftheConsentOrder,aswellasafifteen(15)hourResidentialReportWritingCoursetobecompletedwithinone‐hundredeighty(180)daysofexecutionoftheConsentOrder.SuchtermsaretobesettledbyConsentOrderorFormalHearing.Vote: Mr. Hall made the motion to close with a letter of caution. This was seconded by Mr. Johnstone. The vote carried by majority with Mr. Walton opposed. 8. 2014009061 ThiscomplaintwasfiledbyaconsumerandincludedallegationsthatRespondentwastakingpicturesofherhousewithoutherpermission.ComplainantallegedthatRespondentgotherandherbrotherinthepictures,astheywerestandinginthedrivewayinfrontofthehouse.Complainantalsoallegedthattheircartagswerealsovisibleinthepictures.Respondentsentaresponsetothecomplaintstatingthatdaylightwasfading,andhewasinneedoftakingthelastofmanyphotosintheneighborhoodofcomparablesales.Respondentclaimedthatheidentifiedhimself,aswellasthepurposeofthepictures,totheComplainantandhadnointentionofmakingtheComplainantfeeluncomfortableorunsafe.Respondentstatedthathemaneuveredhisvehicleinsuchawaythatthephotothatheusedinthereportwasofthehouse,only,withnofacesorvisiblecartags.LicensingHistory: CertifiedResidential 12/27/1991‐PresentDisciplinaryHistory: (949563‐Dismissed;950293‐Dismissed;

201102801‐ClosedwithLetterofInstruction)ReasoningandRecommendation:ThismatterisoutsidethejurisdictionoftheCommission,and,assuch,CounselrecommendsClosureofthismatterwithnofurtheraction.Vote: Mr. Hall made the motion to accept counsel’s recommendation. This was seconded by Mr. Johnstone. The vote carried unanimously. 9. 2013018621,2013018622,2013018751,2013018752 ThiscomplaintwasfiledagainsttwoRespondents,atraineeandasupervisor,bytwoseparateComplainants,bothmortgagecompanies,andallegedamisleadingappraisalreportonthepartofRespondent.ComplainantallegedthatRespondentsupervisorsignedoffastheappraiserthatinspectedtheproperty;however,thepersonwhoactuallydidtheappraisalwasRespondent


trainee.Respondentsupervisorwasneveratthepropertybutyetsignedoffasthoughhewas.Thetrainee’snameisnowhereontheappraisal.Respondentsupervisorsentaresponsetothecomplaint,statingthatthefactsinthecomplaintarecorrectasnoted.Respondentsupervisorstatedhedidnotinspecttheproperty,yetthesignatureinthereportconflictswiththis.Respondentsupervisorstatedthiswasaclericalerroronhispartandwas,innoway,anattempttomisleadhisclient.Respondentsupervisorstatedhehadeveryintentionofhavingthetraineeinspectthepropertyalone,thattogethertheywouldgatheralldatatoputtogetheragoodreport.Respondentsupervisorwouldthenfinalizethereport,andtheywouldbothsignasappraiserandsupervisoryappraiser,allofwhichconformswithUSPAPguidelines.Allthetime,Respondentsupervisorthoughtthatthereportreflectedwhatreallyhappened.Itwasonlyaclericalerror,whichwasaproductofRespondentsupervisorsigningthousandsofappraisalsaloneandonlyrecentlyincorporatingthechangewheretherearetwosignatures.Respondenttraineeconcurswiththedetailsofthisresponse.REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Respondent’sletterdatedSeptember29,2013clearlystatesthathedidnotinspectthesubjectpropertyandthathistraineeconductedtheinspection.ThisisaviolationoftheEthicsRule.[EthicsRule‐ConductSection;Record‐KeepingRule;ScopeofWorkRule;SR1‐1(c);SR1‐2(f);SR2‐1(a);SR2‐1(c);SR2‐2(b)(vii);SR2‐3]

HighestandBestUse:Theappraisalreportreflectsthepresentuseisthesubject’shighestandbestusebutoffersnosupportforthisconclusion.Thisinformationwasnotlocatedintheappraisalreport,andifanalysiswasnotperformedbytheappraiserinthedevelopmentportionoftheappraisal,thenStandard1‐3(b)wouldalsonothavebeenadheredto.[SR2‐2(b)(ix)]

SalesComparisonApproach:Althoughsale#1mayhavebeenmarketedasoneeconomicunit,areviewoftheCRSreflectsthispropertyconsistsofthreedifferentparcelsandtwotransfers.Nodiscussionwasaddressedinthereport.[SR2‐2(b)(viii)]

Reconciliation:Thereconciliationdoesnotindicatehowthefinalvalueopinionwasdevelopedfromthewiderangeofadjustedsalesandlistpricesofthecomparablesalesusedinthesalescomparisonapproach.Adjustedsalepricesrangedfrom$216,700to$273,400.Noindicationwasincludedastowhichcomparablesalesweregiventhegreatestweightandwhy.Itisunclearifthelistingswereweightedinthevalueconclusionornot.Thereconciliationsectiondoesreflectthesalescomparisonapproachwasgivenmoreweight,but,again,thereisnorationalorrecognizedtechniqueindicatedinhowthefinalopinionwasarrivedviathesalescomparisonapproach.Itshouldbenotedalthoughtheclaimwasmoreweightgiventothesalescomparisonapproach;thefinalopinionwasidenticaltothesalescomparisonapproachvalueindication.Thisindicates100%weightwaslikelygiventothesalescomparisonapproach.[SR1‐6(a)(b);SR2‐2(b)(viii)]

SiteValue/CostApproach:Therewasnosupportforthelandvalueopinion.Therewasnoinformationofdataprovidedwithinthereporttosupportsitevalueopinion.TheURARFannieMaeform1004requirestheappraisertosubmit“asummaryofcomparablelandsalesorothermethodsforestimatingthesitevalue”.Simplystatingasourceisnotconsideredsufficientsummarizationofthemethodandtechniques.TherewerelandsalesintheworkfiledatawiththeexactsamedatestampedatthebottomastheRespondentletter.TherewasstillnoreconciliationofthisdataandonlyMLSdatasheets.Therewasalsonosupportforanallocationmethodobserved.[SR1‐1(a)(b);SR1‐2(e);SR1‐3(a);SR1‐4(b);SR1‐6(a);SR2‐2(a);SR2‐2(b)(viii)]

LicensingHistory: RespondentSupervisor RegisteredTrainee 4/2/1997‐12/3/1998 CertifiedResidential 12/4/1998‐PresentRespondentTrainee RegisteredTrainee 6/26/2012‐Present


DisciplinaryHistory:RespondentSupervisor: NoneRespondentTrainee: NoneReasoningandRecommendation:AsitpertainstoRespondentsupervisor,CounselrecommendstheauthorizationofacivilpenaltyintheamountofFiveHundredDollars($500.00)tobesatisfiedwithinthirty(30)daysoftheConsentOrder,aswellasaseven(7)hourSupervisingBeginningAppraisersCourseandafifteen(15)hourReportWritingCoursetobecompletedwithinone‐hundredeighty(180)daysofexecutionoftheConsentOrder.SuchtermsaretobesettledbyConsentOrderorFormalHearing.AsitpertainstoRespondenttrainee,CounselrecommendsthataLetterofWarningbeissuedinregardtotheabovementionedviolations.Vote: Mr. Johnstone made the motion to close with a letter of warning only to the supervisor. This was seconded by Mr. Hall. The vote carried unanimously. 10. 2014005361 Thiscomplaintwasfiledbyaconsumerandallegedtheover‐valuingofaresidentialpropertybyusinginappropriatecomparablesalesdata.Complainantallegedthatthecomparablesalesusedwereolderthansix(6)months.Ifthehousingtrendisincreasingastheappraisalreportstates,atrueopinionofvaluecannotbeestablishedusingoutdatedcomparablesales.Respondentfiledaresponsetothecomplaintstatingthathehasbeenacertifiedresidentialappraiserforover10years,andthisisthefirstcomplainthehaseverreceived.Respondentstatedthemostproximate,similar,andcurrentcomparablesalesavailableatthetimeofthisreportwereselectedandemployedwithinthereport.Asstatedwithinthereport,timeadjustmentswerenotmadeduetotheconflictingmarkettrendingindicatorsofferedbythedataatthetime.Alldata,includingmarkettrending,wasconsideredwithinthefinalreconciliationofthevalueopinion.REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Listing/SalesHistory:Thesubjectpropertylistinghistoryisnotcorrectlystated.TherewasanadditionallistinginMTRMLS#1418519thatwasoriginallylistedon1/10/2013for$75,900thenincreasedto$79,500on5/22/2013.Itwasreducedon7/26/2013to$78,500andexpiredafter201daysonthemarket.Thiswasaconcurrentlistingduringthe12monthperiodpriortotheappraisalinspection.[SR2‐2(a)(viii)]

Neighborhood:Undertheneighborhoodsectionone‐unithousingtrends,theappraisaldoesnotprovidesupportfortheopinionofpropertyvalues,demand/supplyandmarketingtime.Theappraisaldoesgiveinsighttoresearchofthemarketdata,statingintheaddendumthata29%increasetookplaceinthelastquarter.Butthenstated“stabletoincreasing”values,whichisinconsistentwitha29%increaseinthemarketandcontradictstheincreasingpropertyvaluesaswascheckedintheone‐unithousingtrends.Basedontheanalysisperformedbythereviewerusingsimilarneighborhoodboundaries,theresultsindicatedanadjustmentofpositive15%shouldhavebeenappliedtothecomparablesaleunderdateofsale/time.[SR1‐4(a)]

Site:Noanalysisorstatementswereprovidedregardingthesubjectbackinguptoamajorinterstateandtheassociatednoiseandeffect,ifany,onthemarketvalueorreactiontothisformofexternalobsolescence.Thereviewerconductedastudyofpropertiesthatbackuptothismajorinterstateandfoundthatbasedonthelimitedanalysis,areconciledadjustmentofnegative5%shouldhavebeenappliedtothecomparablesales.[SR1‐4(a)(f)]

SalesComparisonApproach:Theappraisaldoesnotreflectadateofsale/timeadjustmentwhenunderone‐unithousingtrendsstatedpropertyvalues‐increasing.Theappraisaldoesnotaddressthesubject’sexternalobsolescenceduetobackinguptoamajorinterstate,andasshownaboveunder“site”anadjustmentwaswarranted.Allthecomparablesaleswere


datedandover6monthsold,yetthe1004MCreportindicated7saleswithinthelast90days.Afterresearchingthe7sales,itisthereviewer’sopinionthattheywereassimilartothesubjectasthoseusedintheoriginalappraisal.Theoriginalsale1wasanupdatedREOproperty,buttheappraisaldidnotprovideananalysisoftheREOpropertiestodeterminehowmuchoriftherewasanyeffectonitsmarketvalue,ascomparedtonon‐REOproperties.SincedistresssalestypicallysellbelowmarketvalueadeterminationoftheamountofimpactshouldhavebeenaddressedinordertouseanREOsalesincedistressedsalesarenolongeramajorissueinthemarket.[SR1‐4(a)]

CostApproach:Theappraisalstatedthat“throughasurveyofrecentlandsaleswithinthesubject’simmediatemarketarea”thevalueofthesubjectwasdeterminedbutdidnotofferanysupportingcomparablesales.Theappraisallackedmarketsalesforsupportfortheland/lotvalueandtherewasnosummaryoftheinformationstated.[SR2‐2(a)(viii)]

Respondent’sResponsetoReviewer’sConclusions:Respondentsentaresponsetothereviewer’sconclusions,addressingeachofthebulletpointsallegedbythereviewer.Withregardtothelistinghistory,Respondentacknowledgedtherewasanadditionallisting,andthiswasishisOAworkfileprovidedtotheCommission.Thisactuallistingdatefelloutsideofsearchparameterssetforthinthe1004UADform.Thislistingfurthersupportsthefactthesubjecthadbeenrejectedatthelistprice.Respondentstatedthathedidhisduediligenceasthelistingwasinhisworkfile.Withregardtotheneighborhoodallegations,Respondentstatedhehassupportfortheopinionorpropertyvalues;demand/supply,andmarketingtimehavesupportinhisworkfilefortheone‐unithousingtrends.TheOAindicateda29%increaseinthepastquarter,however,Respondentalsoindicatedinthereportthenumberoflistingsandlistpriceshaveremainedstable,andthatalthoughthesubject’smarketnumbershaveappreciatedoverthepast12months,dataforthemostrecentthreemonthperiodforhousesmostsimilartothesubjectpropertyinitsimmediatemarkethasshownadecreaseinabsorptionrates/sales,anincreaseinlistings,andanincreaseinhousingsupply.Withregardtothesite,Respondentstatedheprovidedaphotoofthepropertybackinguptoamajorhighwayanddiscussedobservingaudibletrafficnoisewhileinspectingtheexteriorofthehome,aswellasnotrafficnoisewasnotedduringtheinteriorinspection.Respondentstatedhefurtherevaluatedtheinfluencesoftheproximitytothehighwayinhissalescomparisonanalysis.Respondentstatedthatthelackoftimeadjustmentwasaddressedintheneighborhoodsection.Respondentitemizedthethreelandsalesconsideredinthedevelopmentoftheopinionofsitevalue,andhisworkfileshowsatotalof20landsalesthathenarroweddowntothree.Withregardtothereconciliationnotbeingrestatedinthereconciliationsection,Respondentstatedthiswasanoversightinthereviewappraisal,asitisstatedintheOAunderreconciliation.Respondentstatedthecomplaintwasfiledbysomeonewhowasnothisclientandthatheusedrecognizedmethodsandtechniquestoemployacredibleappraisal.Respondentstatedthathisresponseindicatesthattherehasbeennoviolationofanyotherrulescitedintheconcernsraisedbythereviewer.

LicensingHistory: RegisteredTrainee 1/8/2002‐5/25/2004 CertifiedResidential 5/26/2004‐Present

DisciplinaryHistory: None.

ReasoningandRecommendation:ThereviewerfoundinconsistencieswithinRespondent’sreport.Respondenthasbeenacertifiedresidentialappraiserformorethan10yearswithnopriordisciplinaryaction.Assuch,CounselrecommendstheauthorizationofacivilpenaltyintheamountofFiveHundredDollars($500.00)tobesatisfiedwithinthirty(30)daysofexecutionoftheConsentOrder,aswellasafifteen(15)hourResidentialSiteandCostApproachCoursetobecompletedwithinone‐hundredeighty(180)daysofexecutionoftheOrder.SuchtermsaretobesettledbyConsentOrderorFormalHearing.

Vote: Ms. Point made the motion to close with a letter of warning. This was seconded by Mr. Hall. The vote carried unanimously.


11. 2014003191 ThiscomplaintwasfiledbyaconsumerandallegedthatRespondentunder‐valuedthesubjectpropertybyTwoHundredThousandDollars($200,000).Respondentsentaresponsetothecomplaintstatingthatthepropertyistaxedwayabovethemarketvalueasestablishedbytheappraisal.Respondentdoesnothaveanexplanationforthis.Thesitevaluehasadifferenceof$53,000withinRespondent’sreportascomparedtotheassessor’svalue.Respondentstatedhefeelsthatthevalueerrorismoreinthetaxbasethanthemarketvalue,ashehasreconciledwithinthereport.Respondentstatedthateventhoughtheleasewasnotprovided,heusedanestimatemarketincome/rentratetosupportComplainant’srentsasstatedintheinterviewthedayoftheirmeeting.RespondentstatedhehasknowntheComplainantforanumberofyearsandwouldhaveliketoappraisethebuildingmuchhigher,butbasedonthemarketdataandinformationitwasnotpossible.AsshownbythesalesandattachedphotosthesubjectisnotaswellmaintainedandRespondentfelthisadjustmentswerewarranted.Thesubjectisablockbuildingwithnowindowsthathaslimitedpartitions,andtheadjustmentswerebasedonRespondent’spersonalopinionssupportedbythesalesandphysicalinspection.Respondentfeelshisreconciledvalueasconcludedisreasonable,supported,andjustifiable.REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Adefinitionofmarketvalueanditssourcewasnotlocatedinthereport,eventhoughthesubjectappraisalreportindicatesthatthepurposeofthisappraisalis“estimatingthemarketvalueofthefeesimpleestate”.Itappearsthatasanassignmentconditiontheappraiserwasalsorequiredtoprovidealiquidationvalue.Adefinitionandsourceforthisvaluewasprovidedinthereport.[SR1‐2(c);SR2‐2(b)(v)]

Sale#3’ssalespricewasreportedas$232,000whenitshouldhavebeen$233,200.Thereportindicatesasalespriceof$232,200onpage37ofthereportand$232,000inthegridonpage40.Accordingtothedeedfoundintheworkfilethesalespricewas$233,200.Thesenumbersappeartobetransposed.Mathematicallythenumbersusedinthereportwouldprovideaslightlydifferenthigherpriceperfootnumber,ifthesalespriceonthedeedhadbeenused.$41.44wasshowninthereport,andafterusingtheamountonthedeed,itwouldbeapproximately$41.65persquarefoot.[SR1‐1(c)]

Thereportindicatescapitalizationraterangetobe10%to11%,bututilizes10%to10.5%.[SR1‐1(c)]

LicensingHistory: CertifiedGeneral 8/13/1992‐PresentDisciplinaryHistory: (941760&941863‐Closedwithnoaction)ReasoningandRecommendation:Thereviewerfoundthatthediscrepanciesnotedappeartobeanindicationthatmoreemphasisshouldbeplacedonproofreading.However,thereviewerfoundthatthereportcontainssufficientinformationtoenabletheclientandanyintendeduserstounderstanditproperly.Respondenthasbeenacertifiedgeneralappraiserforovertwenty‐one(21)yearswithnopriordisciplinaryactionagainsthim.Assuch,CounselrecommendsthatthismatterbeClosedwithaLetterofWarningpertainingtothesuggestionsforproofreadingmadebythereviewer.Vote: Mr. Hall made the motion to accept counsel’s recommendation. This was seconded by Ms. Point. The vote carried unanimously. 12. 2013004981 ThiscomplaintwasfiledbyaconsumerwhowasattemptingtorefinanceandallegedthatRespondentundervaluedaresidentialpropertybyusinginappropriatecomparablesalesdata.


Respondentsentaresponsetothecomplaintstatingthathedidsomeresearchintothecompetingsalesinthepricerangethattheborrower’spaidforthesubjectbyusingthesubject’szipcode,thetwelve‐monthperiodpriortothepurchaseofthesubjectandthepricepaidforthesubject.Thesubjectandtwocompetingpropertiesresultedfromthesearch.Respondentstateditisevidentthatthetwocompetingpropertiesarebothsuperiortothesubjectintermsofdesign,appeal,andconstruction.Itis,thus,theopinionoftheRespondentthattheborrowersoverpaidforthesubjectin2001,asaresultoftheirnotbeingfamiliarwiththerealestatepricesinTennessee,ascomparedtoCalifornia,wheretheyarefrom.Withthatbeingsaid,theborrowersfoundthisoutwhentheyarenowtryingtorefinancetheirloantakenoutin2008onapropertythatisnotworthwhattheypaidforit.REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Anopinionofexposuretimeof60dayswasnotedonpageoneoftheappraisalreport.Acontradictoryopinionofexposuretimeof3to6monthswasreportedonpagefourofthereport.Thereportfurtherreflectsexposuretimeforthesubjectpropertyisequaltotheindicatedmarketingtimeidentifiedintheneighborhoodsectiononpagetwenty‐fiveofthereport.[SR1‐1(a);SR1‐2(c),Comment;SR2‐1(a)(b);SR2‐2(b)(v)]

Theappraisalreportreflectsthepresentuseisthesubject’shighestandbestusebutoffersnosupportforthisconclusion.Astatementwasmadeonpagefour,butthisstatementdoesnotsummarizethesupportandrationaleforthatopinion.Thisinformationwasnotlocatedintheappraisalreportorworkfile,andifananalysiswasnotperformedbytheappraiserinthedevelopmentportionoftheappraisal,thenStandard1‐3(b)wouldalsonothavebeenadheredto.[SR2‐2(b)(ix)]

Onpagetwothereportreflectsa3cargarageanda2carcarport.Thefloorplan,aswellasfieldnotesfoundintheworkfile,reflectsa2‐carbuilt‐ingarage.Thereportinonesectionreflectsa3‐cargarageanda2‐carcarportandonpagethreeunderthesalescomparisonapproachreflectsthe3‐cargarageonly.[SR2‐2(b)(iii)]

Withtheindicationof“mainlyused”itisunclearhowtheadjustedsalespricedwerereconciledintheopinionofvaluestated.Clearlyequalweightwasnotutilizedwitheithergroupingofsales.[SR1‐6(a);SR2‐2(b)(viii)]

Thereconciliationdoesnotindicatehowthefinalvalueopinionwasdevelopedfromthewiderangeofadjustedsalesandlistpricesofthecomparablesalesusedinthesalescomparisonapproach.Adjustedsalepricesrangedfrom$130,650to$181,280intheRespondent’sreportand$138,455to$182,385intheComplainant’sreport.Thereconciliationsectiondoesnotreflectthesalescomparisonapproachwasgivenmoreweightbutagainthereisnorationalorrecognizedtechniqueindicatedinhowthefinalopinionwasarrived. [SR1‐6(b);SR2‐2(b)(viii)]

Therewasnosupportforthelandvalueopinion.Onpagefourofthereport,theComplainantissuedthelandvalueopinionisreflectedas$30,000.Respondentlistedthelandvalueas$38,000.Ineithercasenoreconciliationofinformationwasfoundtosupportsaidvalue(s).[SR1‐1(a)(b)(c);SR1‐2(e);SR1‐3(a);SR1‐4(b);SR1‐6(a);SR2‐1(a)(b);SR2‐2(b)(viii)]

Respondent’sResponsetoReviewer’sConclusions:Respondentsentaresponsetothereviewer’sconclusionsstatingthatheisawareofthepotentialUSPAPviolationsnotedbythereviewer,ashehadanothercomplaintfiledagainsthimaboutthesametime,justmonthsapart,andthatledtohimpayingacivilpenaltyandcompletingtwoeducationcourses,“ResidentialSiteValuationandCostApproach”and“ResidentialReportWriting”.Respondentstatedthatfromattendingthesecourses,heisawareofandunderstandshowtoavoidthesepotentialviolationsinfuturereports.RespondentaskedinhisresponsethattheCommissionnotfinehimagainnorrequirefurthereducationcourses,asheishavingadifficulttimefinanciallyduetoaveryslowstarttohisbusiness,whichhasputhimbehind.Inhisresponse,Respondentisreferringtocomplaint2013007511,whichwasfiledin2013anddealtwithanappraisalconductedbyhiminDecember2012.


LicensingHistory: RegisteredTrainee 4/25/2000‐9/15/2002 LicensedREAppraiser 9/16/2002‐10/4/2007 CertifiedResidential 10/5/2007‐PresentDisciplinaryHistory: 200705060‐ClosedwithConsentOrderimposinga15hourUSPAP

Courseanda30hourProceduresCourseReasoningandRecommendation:ThereviewerfoundthatthedataincludedinRespondent’sappraisalandworkfileisinconsistentandlacksUSPAPcomplianceinspecificareas.TheRespondenthashaddisciplinaryactiontakenagainsthiminthepast.Assuch,Counselrecommendsafifteen(15)hourResidentialReportWritingCoursetobecompletedwithinone‐hundredeighty(180)daysofexecutionoftheConsentOrder.SuchtermsaretobesettledbyConsentOrderorFormalHearing.Vote: Mr. Hall made the motion to close with a letter of caution. This was seconded by Ms. Johnson. The vote carried unanimously. 13. 2014008341 ThiscomplaintwasfiledbyanAppraisalManagementCompanyandallegedthatRespondentprovidedanappraisalwhichismisleadingtothereaderandlackingcredibility.Complainantallegedthesubjectpropertyiscurrentlya2unitmulti‐familydwelling;howeverRespondentindicatesthehighestandbestuswouldbeasasinglefamilyrenovateddwellingandappraisesthehomeasasinglefamilyhomeutilizingallsinglefamilypropertiesascomparablesales;thus,misleadingthereader.RespondentfiledaresponsetothecomplaintstatingthathefirmlydisagreeswithComplainant’saccusationsandassertionsthathehasnotsupportedthesubject’shighestandbestuse.Respondentstatedthatthesubjectareaisaveryhotrealestatemarket.Thelandvaluesinthismarkethaveincreasedtoapointthatmanyoldersmallerhomesarepurchasedatorabovetheirmarketvaluefortheland.ThosehomeswiththeRorRmzoningallowformultipledwellingsononesite.ThepropertieswithRS(singlefamilyonly)zoninginthemarkethaveamulti‐familyoverlay,whichifthelotsizeisbigenough,allowfortwounitsbuiltonsplitlot.Thesubjectisaperfectcandidateforremovalormajorrenovationwithaddition.Respondentstatedhehasaddressedallthequestionsandconcernsfromthelenderintheoriginalappraisal.REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Thereismuchinconsistencyinthewayinwhichthesubjectpropertyisdescribedandidentifiedintheappraisalreport.OnthefrontpageoftheURARform,thesubjectisdescribedasaone‐unitstructurewithanaccessoryunit;theappraisaliswrittenonasingle‐familyresidentialappraisalreportform.Theconditionofthepropertyissetforthas,“Thesubjectissetupaasaduplexandhastwoelectricalmeters.”Thehighestandbestuseisdescribedasaduplex/rentalhomewithtwoapartments.Thereportgoesontoindicatethatthecurrentuseisaninterimuseandthatthefuturehighestandbestuseisasalargersquarefootagesinglefamilyhome.Later,underthesameheading,thereportstatesthatthecurrentinterimuseisasasinglefamilyrentalpropertywithanaccessoryunit.

Page2oftheappraisalindicatesthatthepropertyisbeingappraisedinas‐iscondition.Assuchandforpurposesofthisassignment,therearenoplanstochangetheexistingfloorplan,convertthepropertytosingle‐familyuse,ortomodernizethepropertyfeaturesandamenities.Basedonthecurrentfloorplananduse,thesubjectisatwo‐unitincomeproducingpropertyandisnotbeingproperlydescribedwhenindicatedasaone‐unitstructurewithanaccessoryunit.Suchadescriptionisconsidered,bythereviewer,asmisleadingandnotmeaningfulfortheintendeduse.Bynotproperlydescribingthesubject,thecredibilityoftheentirereportisquestionable.


Thesubjectisrentedasofthedateoftheappraisal.Thereisnothinginthereport,norintheworkfile,thatdisclosesanyanalysisofcurrentleasesorrentalagreementsrelatedtothesubject.Theabsenceofthisinformationandanalysisismisleadingsincetheappraiserindicatesthatpropertyrightsbeingappraisedarefeesimplebutcurrentleasescouldsupporttheneedforaleasedfeeanalysis.

Noincomeapproachtovalueisperformedand,infact,thereportstatesthat,“duetoalackofsingle‐familysalesdata,theincomeapproachwasdeemedinappropriate.”Theassessmentthatthesubjectisasingle‐familypropertyismisleadingandhasledtotheomissionoftheincomeapproach.Theincomeapproachisnecessary,inthiscase,forcredibleassignmentresults.

Withregardtohighestandbestuse,thereportissubmittedasanas‐isvalueopinion,butthereportconclusionsarebasedona“subject‐toanalysis”thattheimprovementshavebeenconvertedtosinglefamilyuse.

Noplansorspecificationsarefoundintheappraiser’sworkfiletosuggestthatanyproposedimprovementsweretobeconsideredintheappraisalassignment.

Highestandbestuserequirestwoseparateanalyses:as‐improvedandas‐vacant.Theappraisalreportdidnotdistinguishbetweenthesetwoanalyses,butcombinedthemintooneconclusion.

Theappraisalreportprovidesasitevalueopinionbutdoesnothaveaspecifichighestandbestuseanalysisas‐vacant.Thisistheplacewhereproperdiscussionshouldbemaderegardingnewconstructionornewdevelopmentofthesite.

Respondent’sResponsetoReviewer’sConclusions:Respondentsentaverylengthyresponsetothereviewer’sconclusions,statingthathedidnotcompletethehighestandbestuseanalysisintheproperformat.Respondentstatedhisanalysisneedsimprovementinthesetupanddiscussion,andhehasalreadytakenstepstoimprovenotonlyhisprocedureandanalysisbutalsohisunderstandingoftheentireprocess.RespondentstatedhewillbesigningupfortheAppraisalInstitutecourseonreviewofthehighestandbestuseinAugust.Respondentalsostatedthathedisagreeswiththereviewer’sopinionofthepropertynotbeingproperlydescribed.Respondentstatedhedescribedtheaccesstotheupstairsfromboththeinteriorhallwayandoutsideporch.Thispropertywasdesignedtoaccommodateeitherasinglefamilyorasinglefamilywithanaccessory/rentalontheupperfloor.Thisispossibleduetotheaccess/designandisstatedunderAdditionalFeatures.RespondentstatedthattheincomeapproachisbasedonGRM,whentherearenorentalsales,youcannotdetermineorcompletetheincomeapproach.RespondentstatedhiswordingwasinappropriatebutaccurateasthehomesthatsoldhadnorentalinformationavailabletodetermineaGRM.Thereportwasbasedonthe“asis”valueduetothelimitedneedforanyconversion.Respondentstatedhedidmakeanerrorbynotdescribingthefunctionalutilityadjustment,whichwasappliedtocoverthecostorremovingoneelectricmeterandanyadditionalminorrepairsorchangesrequiredbyareviewer,i.e.cappingoffthe220electricplugforarange/oven,etc.Respondentstatedthattherevieweriscorrect,inthatRespondentfailedtoprovidetwoseparatehighestandbestuseanalyses.Theinformationwasthere,butnotbrokendownseparatelyshowing“AsVacant”and“AsImproved”.LicensingHistory: CertifiedResidential 1/10/1992‐PresentDisciplinaryHistory: (2008‐Dismissed;201200449‐Dismissed)ReasoningandRecommendation:Respondenthasbeenacertifiedresidentialappraiserforovertwenty‐two(22)yearswithnopriordisciplinaryactionagainsthim.Assuch,CounselrecommendstheauthorizationofacivilpenaltyintheamountofOne‐ThousandDollars($1,000)tobesatisfiedwithinthirty(30)daysofexecutionoftheConsentOrder.SuchtermsaretobesettledbyConsentOrderorFormalHearing.Vote: Mr. Hall made the motion to close with a letter of warning. This was seconded by Ms.


Johnson. The vote carried unanimously. 14. 2014001251 ThiscomplaintwasfiledbyanAppraisalManagementCompanyandallegedundueinfluence.AnemployeeofthelenderrequestedthatRespondentchangeanappraisalsubmittedtotheAMCfrom4bedroomsto3bedroomsbecauseoneoftheroomswasillegalfortheexistingsepticsystem.ComplainantAMCallegedthischangewasmisleadingtotheintendedusers,thelenderandtheAMC.Respondentdidnotfilearesponsetothecomplaintwiththisoffice.REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Giventhesubjectutilizesasubsurfacesewagedisposalsystem(septic)andtheappraiserwasobviouslyawareofthisasindicatedintheoriginalandrevisedreport,theappraisershouldhaveconfirmed,and/orattemptedto,withtheappropriatelocal/stateagenciesorofficesregardingthepermitteddensityofthesepticanddwelling.Ifconfirmationofthepermitwasnotavailable,ataminimum,disclosureofthelackofconfirmationanddiscussionregardingthenumberofbedroomsorpotentialbedroomsofthedwellinginrelationtothesepticsystemshouldhavebeenprovided.Anotheroptionwouldhavebeentoapplytheappropriateassignmentcondition(extraordinaryorhypothetical)regardingthesepticsysteminrelationtothenumberofbedrooms,andbasethereportonwhichmethodwaschosentoaccuratelyreportthepropertycharacteristics.[SR1‐1]

Neitherthesubject’sphysicalnorlegalcharacteristicsorattributeswereadequatelydescribedanddiscussedinregardtothenumberofbedroomsorroomsandtheiruse,marketingofthepropertyandnumberofbedrooms,approveddensityofthesepticsystemanditsimpactbasedonlocalandstatecriteria,legaluseandnumberofbedroomsbasedonpermitting,etc.[SR1‐2]

Theappraisalreport(bothversions)indicatesthesubjectconformstoasupplementalstandardoftheclientsregardingHUD/FHAminimumpropertystandardguidelines;thisstatementimpliesthesubjectmeetsallsepticsystemrequirementsforthepropertyasappraised.Thefirstversionindicatesthesubjectisafourbedroomdwellingandappearspermittedassuch,whenthatwaslaterdiscoveredtonotbetrue.Thesecondorrevisedversionindicatesthesubjectisathreebedroomdwellingwhenitwasconstructedwithfourbedrooms,appearstohavebeenmarketedassuchandthesepticsystempermitwasonlyforthreebedrooms.[SR2‐1]

Theappraisalreportindicatesanopinionofhighestandbestusewasdevelopedbytheappraiser;however,thediscussionofhighestandbestusedoesnotadequatelysummarizethesupportandrationalefortheopinion.Theverybrief,onesentencestatementthatisgiven,isinadequate.Nodetailisgivenregardingtheanalysis,supportorrationaleforthehighestandbestuseofthesiteasvacantorarrivingatthehighestandbestuseasimprovedopinion.[SR2‐2]

LicensingHistory: CertifiedResidential 10/14/1993‐Present

DisciplinaryHistory: None.

ReasoningandRecommendation:Overall,thereviewerfindsthisappraisaltobesatisfactoryandacceptablewithregardtogeneralappraisalpracticesandmethodology,andprocedureswerefollowedwithcredibility,butwithsomedeviation.Ingeneral,thereviewerfoundthereporttobeincompliancewiththeintentofUSPAP;however,thenoteddeficiencieswithregardtoUSPAPindicatethatallminimumstandardsofUSPAPhavenotbeenmet.Respondenthasbeenacertifiedresidentialappraiserforovertwenty(20)yearswithnopriordisciplinaryactionagainsther.Assuch,CounselrecommendsthatthismatterbeClosedwithaLetterofWarningregardingtheUSPAPdeficienciesnotedabove.


Vote: Mr. Johnstone made the motion to close with no further action. This was seconded by Mr. Walton. The vote carried unanimously. 15. 2014000771 ThiscomplaintwasfiledbyafellowpractitionerandallegedthatRespondentcommunicatedamisleadingreportandhandledtheadjustmentsincorrectly,basedondeterminationbytheRespondentofthefloorplanarrangement.

Respondentsentaresponsetothecomplaint,alongwiththecompleteworkfileasrequested.RespondentstatedthatthesubjectpropertyisasinglefamilyhomewithlivingquartersforextendedfamilyasnotedinthetwopriorMLSlistingsandthecourthouseretrievalsystem.Toensureuniformityinthesalescomparisonanalysis,thesubjecthomeisbestdescribedasatraditional2storywithabasement.

REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]: Identifyingandcomparingthesubjectdwellingasatwo‐storyisaviolationofStandards

Rule1‐1.[SR1‐1] Thesubject’sdesignandfloorplaninrelationtositegradewerenotproperlytreatednor

addressedanddiscussedintheoriginalsubmissionoftheappraisalreport.ThechosenmethodofidentifyingsquarefootagesaboveandbelowgradeleadstoamisleadingreportandviolatesStandardsRule2‐1.[SR2‐1]

ThereportformatisonethatmeetsthecriteriaofStandardsRule2‐2andmustprominentlystatethereportoption:AppraisalReport.Whileanappraisermayuseanotherlabelinadditiontothisone,nothingcanbeusedinplaceofit.TheappraisalislabeledSummaryReport,butdoesnotcontainthecorrectrequiredreportoption.[SR2‐2]

Theappraisalreportindicatesanopinionofhighestandbestusewasdevelopedbytheappraiser;however,thediscussionofhighestandbestusedoesnotadequatelysummarizethesupportandrationalefortheopinion.Thebrief,onesentencestatementthatisgiven,isinadequate.Nodetailisgivenregardingtheanalysis,supportorrationaleforthehighestandbestuseofthesiteasvacantorarrivingatthehighestandbestuseasimprovedopinion.[SR2‐2]

*AddendumRespondent’sResponsetoReviewer’sConclusions:Respondentsentaverybriefresponsetothereviewer’sconclusions,statingthatshereceivedthenoticeofviolationscontainingthereviewer’sconclusionsandthatsheistakingmeasurestoremedyanyviolations.LicensingHistory: LicensedREAppraiser 12/31/2000‐11/24/2002 CertifiedResidential 11/25/2002‐PresentDisciplinaryHistory: (200707661‐Dismissed;201000273‐Closedw/LetterofWarning)ReasoningandRecommendation:Overall,thereviewerfindstheappraisaltobedeemedsatisfactoryandacceptablewithregardtogeneralappraisalpracticesandmethodologyandprocedureswerefollowedwithcredibility,butwithsomedeviation,asnotedabove.Ingeneral,thereportappearstocomplywiththeintentofUSPAP.Assuch,CounselrecommendsthatthismatterbeClosedwithaLetterofWarningregardingthedeficienciesnotedbythereviewer.Vote: Mr. Johnstone Hall made the motion to accept counsel’s recommendation. This was seconded by Ms. Point. The vote carried unanimously. 16. 2014008301 ThiscomplaintwasfiledbyanAppraisalManagementCompanyandallegedthatRespondentprovidedanappraisalthatismisleadingtotheintendedusersofthereport.Complainantalleged


thatRespondentusedacombinedsaleforcomparablesale#3inthereport,whichisaclearviolationofcertification#8whichstatesRespondenthasnotusedcomparablesalesthatweretheresultofcombiningalandsalewiththecontractpurchasepriceofahomethathasbeenbuiltorwillbebuiltontheland.

Respondentsentaresponsetothecomplaintstatingthatafterfurtherresearch,itwasdeterminedthatcomparablesale3wasnotanarm’slengthtransaction.ThiswasshowninMLSasasaleofanewconstructionhomeandcourthouseretrievalsystemistypicallyslowinupdatingsaletransactions,especiallynewconstruction.Respondentstatedthatlookingback,heshouldhaverequestedacopyoftheHUDformtoverifybutagain,hemisunderstoodhisconversationwiththeagent.Respondentstateditwasneverhisintentiontomisleadanyreaderoruserofthisreport.Becauseofthissituation,Respondentstatedhehasaddednewproceduresoneveryreport.

REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]: SiteValue:Thesitevalueopinionisindicatedtobe$195,000.Landsalesfromthesubject

developmentandtwootherdevelopmentsarenotedintheworkfile.Thesalepriceandlistpricerangeforthesepropertiesis$137,250‐$319,900.Thereisnorationaleorstatementofreconciliationprovidedinthereporttosupporthowtheappraiserarrivedattheestimatedvalueof$195,000.[SR2‐2(a)(viii)]

Thesubjecthasasitesizeofapproximately0.60acres;sale3hasover1acre.Noadjustmentismadeforthiscomparablesalethoughthesiteisalmostdoubleinsizeofthesubject.A$100,000siteadjustmentismadetosales4and7,thoughtheyarebasicallythesamesizeasthesubject.Ageneralcommentismaderegardingthisadjustment,butnospecificdataisprovidedinthereporttosupporttheadjustment.Adjustmentsaremadetoeachoftheactivelistingsforwhatappearstobeasaletolistpriceratioadjustment;however,thisisnotexplainedorsupportedinthereport.Manyadjustmentsaremadeinthesalescomparisonapproach;noadjustmentsareexplainedorsupported.[SR2‐2(a)(viii)]

Reconciliation:Aninsufficientreconciliationisfoundinthesalescomparisonapproachtovalue.Thepropertyisappraisedfor$1.7million;thereisnosummaryofsupportorreconciliationfoundanywhereinthereport.[SR1‐6(a);SR2‐2(a)(viii)]

Marketanalysis:Sincethe1004MCformisonlypartiallycompleted,thereisinsufficientdataincludedintheanalysistosupporttrendconclusions.Noadditionalmarketanalysisisfoundinthereporttosupportthemarketanalysisstatements.[SR1‐3(a),line576‐577]

Sale3waslistedinthelocalMLSasaclosedsale,butinreality,itwasalandsalethatresultedinthebuyersbuildingtheirownhouseonthelot.TheMLSincorrectlyidentifiedthepropertyasanimprovedsale,andtheappraiseruseditassuchwithoutproperverification.[SR1‐1(c),Line511‐512]

Respondent’sResponsetoReviewer’sConclusions:Respondentsentaresponsetothereviewer’sconclusionsstatingthatitwasneverhisintentiontomisleadanyreaderoruserofthisreport,hesimplymisunderstoodhisconversationwiththeagentandthoughtthiswasanarm’slengthtransaction.ThedaysonmarketontheMLSalsoledhimtobelievethepropertywasexposedtotheopenmarket,whenitactuallywasnot.ThiswasshowninMLSasasaleofanewconstructionhomeandCRSistypicallyslowinupdatingsaletransactions,especiallynewconstruction.BasedonMLS,thispropertyhadadaysonmarketof405days.Onceitwasbroughttohisattention,heresearchedthesalefurtherandrealizedthatthiswasnotanarm’slengthtransactionandthathehadmisunderstoodtheconversationwiththeagent.Respondentstatedheregretstheconfusionandhaslearnedavaluablelessonintheverificationprocessthathebelieveswillonlybenefithiminthefuture.Becauseofthissituation,hehasaddednewproceduresoneveryreport.TheseproceduresincludenotonlyverifyingsalesonCRS,butlookingatthelocalpropertyassessor’swebsitesand/orothervariouswebsitesaswellascallingthelocalregisterofdeedsinanattempttoconfirmthesale.Respondentasksthathisclean


disciplinaryactionrecordbetakenintoconsideration,asitwasnothisintenttomisleadthereaderoruserofthisreport.LicensingHistory: CertifiedResidential 5/13/1993‐PresentDisciplinaryHistory: (200706975‐Dismissed)ReasoningandRecommendation:Thereviewerconcludedthatthequalityoftheappraiser’sworkunderreviewtobedeficientinitscompliancewithUSPAP.Theendresultisareportthatisnotmeaningfultotheintendeduseandthatlimitsthecredibilityoftheassignmentresults.Assuch,CounselrecommendstheauthorizationofacivilpenaltyintheamountofFiveHundredDollars($500)tobesatisfiedwithinthirty(30)daysofexecutionoftheConsentOrderandafifteen(15)hourResidentialReportWritingCoursetobecompletedwithinone‐hundredeighty(180)daysofexecutionoftheOrder.SuchtermsaretobesettledbyConsentOrderorFormalHearing.Vote: Mr. Walton made the motion to close with a letter of warning. This was seconded by Mr. Hall. The vote carried unanimously. 17. 2014006061 Thiscomplaintwasfiledbyaconsumerandallegedtheunder‐valuingofthesubjectresidentialpropertybynotincludingtheimprovementsthatweremadetotheproperty.Respondentsentaresponsestatingtheoriginalhousewasbuiltin2000,whichtodaywouldmakeitfourteen(14)yearsold.Thereportfrom2014showsaneffectiveageoften(10)years.Theten(10)yeareffectiveagewasusedinthecostapproachandinthesalescomparisongrid.Thetwoadditionshavemadethesubjectresidencelargerthanmostoftheotherresidencesinthesubdivision.REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Researchandanalysisofthedescribedmarketareasindicated“decliningvalues”fromtheneighborhoodboundariesstatedonpage1,insteadofstableasreported.Also,“demand/supply”and“marketingtimes”aremisstated,infact,theresearchindicatedshortageandunder3monthsbasedonthesameanalysis.Theappraisaldoesnotoffersupportfortheopinionofmarketconditions,orfortheone‐unithousingtrends.[SR1‐3(a);SR2‐2(viii)]

Thedescriptionlackeddetailandspecificsoftheamountandtypeofrenovations,remodelingandaddition/saddedtothesubjectproperty.Thisleadstheintendedusertoadifferentconclusion/sbasedonthelimiteddetailoftheownersstatedrenovations,i.e.:inthepasttwoyears,theowneraddeda20’x20’diningroomaddition,withanextendedrooflinetomakethenewcovereddeck;thekitchenwasremodeledwithgranitecountertops,newwoodflooringandadditionalmatchingcabinetsatacostof$38,000.[SR1‐2(e)(i);SR2‐2(a)(viii)]

Theappraisallacksanalysisandsupportonpage1formarketconditions,i.e.:propertytrends,supply/demandandmarketingtime,nodateofsale/timeadjustmentwasapplied.Noanalysisofcomparisonwasdoneoftheconditionofthecomparablesalesascomparedtothesubject’simprovements.Theappraiserincorrectlyreportedthenumberofdaysthatcomparablesaleswereonthemarket.[SR1‐1(a);SR1‐3(a);SR1‐4(a);SR1‐6(a)(b);SR2‐2(viii)]

Theappraisaldoesnotsupportan“opinionofsitevalue”.Theappraisaldoesnotofferanycomparableland/lotsalesoranalysisofland/lotsalessupportingtheopinionofvalue.[SR1‐1(a);SR1‐4(b)(1);SR1‐6(a)(b);SR2‐2(a)(viii)]

*AddendumRespondent’sResponsetoReviewer’sConclusions:


Respondentsentaresponsetothereviewer’sconclusions,addressingeachofthebulletpointsfoundbythereviewer.Withregardtobulletnumber1,inwhichthereviewerstatedtherewereindicated“decliningvalues”andashortagein“demand/supply”andamarketingtimeoflessthan3months,Respondentstateditseemsoddtohimtohavedecliningvaluesandashortageofsupplyatthesametime.Respondentstatedhewouldthinktheywouldmoveinoppositedirections.Respondentattachedtheactivityreportfor2013fromMLS;thesubjectcountyhassevenMLSzones,andthesubjectisinzone75.Theaveragedaysonthemarketwas101andthemedianis89.Respondentstatedthatinthereport,theaveragenumberisused.Withregardtobulletnumber2,thereportshowsbothbathandkitchenhasbeenreplaced.Respondentadmittedheshouldhavegoneintomoredetailabouttherecentaddition.Thishousehashadtwoadditionsmakingitlargerthanmostresidencesinitssubdivision.Withregardtobulletnumber3,Respondentstatedtheactualageoftheoriginalsubjectis14years,thereportloweredtheeffectiveageto10years;inreviewingthereport,Respondentstatedheshouldhaveusedaneffectiveageof5years.Hepreferstomakeanageadjustmentinsteadofaconditionadjustment.Sale#1is9yearsoldandSale#2is10yearsold,noageadjustmentsweremadetothesetwosales.Sale#3is3yearsoldandanageadjustmentwasmadeversusthe10yeareffectiveage.Thesaleswererecentintime,sonotimeadjustmentwasneeded.Withregardtobulletnumber4,Respondentstatedthesitevaluecamefromtaxrecordsandanyknowledgeandexperience.Respondentstatedhehasbeenintherealestatebusinessfor40years,andhethinkshislongevityinthismarketareashouldbegivensomemerit.LicensingHistory: CertifiedGeneral 11/27/1991‐PresentDisciplinaryHistory: (200317235‐ClosedwithLetterofWarning)ReasoningandRecommendation:ThereviewerfoundseveralUSPAPdeficiencieswithintheappraisalreportthatwarrantdisciplinaryaction.Assuch,CounselrecommendstheauthorizationofacivilpenaltyintheamountofFiveHundredDollars($500)tobesatisfiedwithinthirty(30)daysofexecutionoftheConsentOrderafifteen(15)hourResidentialReportWritingCoursetobecompletedwithinone‐hundredeighty(180)daysofexecutionoftheOrder.SuchtermsaretobesettledbyConsentOrderorFormalHearing.Vote: Mr. Hall made the motion to close with a letter of warning. This was seconded by Mr. Johnstone. The vote carried unanimously. 18. 2014007581 Tobepresentedlaterbycounsel’srequest.19. 2014008181,2014008182 ThiscomplaintwasfiledbytheadministrativestafffortheTennesseeRealEstateAppraiserCommission,toinvestigatethepossibilitythatthereportssubmittedbyaregisteredtraineeinanexperiencereviewwerenotcompliantwithUSPAP.ThesereportswereinitiallyreviewedbyMr.Waltonwhothenrequestedthereportsbereviewedbycontractedreviewsastheissuesidentifiedwiththereportsappearednumerousoninitialreviews.WhilereviewingRespondent’sappraisals,itwasnotedthatthereexistedreadilyidentifiabledeficiencieswithintwo(2)ofthethree(3)appraisals,somuchsothatitdidnotevenseemnecessarytoreviewthethirdappraisal.ResearchwasdonetoconfirmthatallofthephotosusedwereMLSphotos(notoneoriginalcomparablephotowasusedineitherreportreviewed).Numerousdeficiencieswerenotedinbothappraisals,andthereviewer’sconcernsweresuchthatadditionalinvestigationwaswarranted.Report#1REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Listinghistorywasnotproperlyanalyzed.Thereportindicatesthatthesubjectpropertywasnotcurrentlyofferedforsalenorhaditbeenforsaleinthetwelvemonthspriortothe


effectivedate.Thisisinconsistent,asthepropertywascurrentlyundercontract.Therewasnoexplanationprovidedastohowthepropertywasbeingsoldwithoutbeingexposedtothemarket.[SR1‐5(a)]

Salescomparisoninformationwasnotadequatelypresentedoranalyzed.Therewereunsupportedadjustmentsandnoclearanalysisorconclusionspresented.Thereisalsoanindicationthesigningappraiserhasnotcorrectlyemployedrecognizedmethodsandtechniques.[SR1‐1(a)(b);SR1‐4(a);SR2‐2(b)(viii)]

Sitevaluewasnotsupported.Nosupportinginformationwasfoundinthereportorworkfileinformationprovided,indicatingthattheopinionofsitevaluewasnotcompletedbyanappropriateappraisalmethodortechnique.[SR1‐4(b)(i)]

Costapproachwasnotsupported.Thereportlackstheinformationandanalysisnecessarytounderstandthereasoningbehindtheformulationofthedepreciationindication,thecostfiguresused,aswellasthefinalconclusion.ThereviewerfoundnosupportinginformationoranalysisinthereportsuppliedbyRespondentthatwouldallowthereviewertorecreatethecostapproachnordoesitappearthattherecognizedtechniquesormethodshavebeenemployed.[SR1‐1(a)(b)(c);SR1‐4(b)(ii)(iii);SR2‐2(b)(viii)].

Reconciliationdoesnotaddressthequalityorquantityofdatausedintheapproachestovalue.[SR1‐6(a);SR2‐2(b)viii)]

Thereportnotedinthefinalreconciliationthatatraineecontributedsignificantlytotheanalysisofthereport.Thispersonwasnotrecognizedinthesubjectreport’scertification.[SR2‐2(b)(vii);SR2‐3]

Report#2REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Theintendeduserswerenotproperlyidentified.ItisnotedthatthereisanFHAcasenumberprovidedandcommentarythatindicatesthereporthasbeencompletedinaccordancetoFHAguidelines.FHArequiresthattheybeidentifiedasanintendeduserofthereport.[SCOPEOFWORKRULE;SR1‐2(a);SR2‐2(a)(i)]

Subjectinformationwasnotcorrectlyreported.[SR1‐1(b);SR1‐2(e)(i);SR2‐1(b)] Neighborhoodboundariesarenotadequatelyorreasonablydefined.Thereisalackof

consistencyintheanalysisofthefactorsthataffectneighborhood/marketareamarketability.Themarketareatrendswerenotadequatelyorreasonablydiscussedoranalyzed.[SCOPEOFWORKRULE;SR1‐1(a)(b)(c);SR1‐2(e)(i);SR2‐1(b);SR2‐2(a)(iii)]

Thereportcontainsconflictinginformationaboutupgradesandupdates.Thereportstates,“Noupdatesintheprior15years,”andthennotes,“Thesubjectpropertyhashadsomeupgrades:granitecountertops,stainlesssteelsinkandfaucet,newlightfixtures,hardwoodfloors.”Thisisconflictinginformation.[SR1‐2(e)(i);SR2‐1(b);SR2‐2(a)(iii)]

Someofthemethodspresentedinthesalescomparisonapproachhavenotbeencorrectlyemployed.Thereisnoevidenceinthereportorworkfiletoindicatethesigningappraiserhasperformedthisassignmentincompliancewiththerequiredscopeofwork.[COMPETENCYRULE;SCOPEOFWORKRULE;SR1‐1(a)(b);SR1‐2(h);SR2‐1(a)(b);SR2‐2(a)(vii)]

Nosupportinginformationwasfoundinthereportorworkfileinformationprovided,indicatingthattheopinionofsitevaluewasnotcompletedbyanappropriateappraisalmethodortechnique.[SR1‐4(b)(i)]

Costapproachwasnotsupported.Thereportlackstheinformationandanalysisnecessarytounderstandthereasoningbehindtheformulationofthedepreciationindication,thecostfiguresused,aswellasthefinalconclusion.ThereviewerfoundnosupportinginformationoranalysisinthereportsuppliedbyRespondentthatwouldallowthereviewertorecreatethecostapproachnordoesitappearthattherecognizedtechniquesormethodshavebeenemployed.[SR1‐1(a)(b)(c);SR1‐4(b)(ii)(iii);SR2‐2(b)(viii)].

Thereconciliationdoesnotreconcilequalityandquantityofdatausedintheapproachestovalue.Thesalescomparisonapproachwasgiventhemostweightinthefinalopinionof


valuebutdoesnotprovidesufficientreportingandanalysistosupportopinionandconclusions.Theappraisalresultshavenotbeenconveyedinanappropriatemannerreducingthecredibilityofthereport.[SR1‐6(a);SR2‐2(a)(viii)]

Thereportnotedinthefinalreconciliationthatatraineecontributedsignificantlytotheanalysisofthereport.Thispersonwasnotrecognizedinthesubjectreport’scertification.[SR2‐2(b)(vii);SR2‐3]

Report#3REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Listinghistorywasnotadequatelyreported.[SR1‐5(a);SR2‐2(a)(viii)] Thecontractwasnotproperlyanalyzed.Thereportstates,“Non‐arm’slengthsale;theterms

appeartobetypicalwithnounusualorextraordinaryprovisions.”Thiscommentisinconsistent.Theworkfilerevealedacopyofthecontract,whichseemedtoindicatethistobeanormalsale.Thecontractinformationhasnotbeenpresentedoranalyzedinameaningfulmanner.[SR1‐5(a);SR2‐2(a)(viii)]

Marketareatrendswerenotadequatelydiscussedoranalyzed.[SCOPEOFWORKRULE;SR1‐2(e)(i);SR2‐1(b);SR2‐2(a)(iii)]

Relevantcharacteristicsabouttheimprovementshavenotbeenadequatelydiscussedoranalyzed.Thezoningclassificationnotedinthereportwas“RS”.BasedonthecityzoningmapthatclassificationshouldhavebeenR‐1,city/lowdensityresidentialdistrict.[SR1‐2(e)(i)]

Thesalescomparisoninformationhasnotbeenreasonablypresented.Thesalesunderreviewwerenotintheidentifiedneighborhood/marketareadescribedinthereport.Nodiscussionoranalysiswasprovidedaddressingthelocationofthesales.ThephotosutilizedlookedverysimilartothephotosinMLS.Thesigningappraiserdidnotcompletetheassignmentaccordingtotheagreedscopeofwork.[SCOPEOFWORKRULE;SR1‐1(a);SR1‐2(h);SR1‐4(a);SR2‐1(a)(b);SR2‐2(a)(viii)]

Asaresultofthedeficientappraisals,acomplaintwasopenedagainstRespondents,administratively,andtheRespondentsweregivenanopportunitytorespondtothecomplaint.TheRespondentsstatedthatwithregardstothethreereportsreviewed,therearesomeerrorsonpage1ofthereport,thetrainee’snameandinformationisnotinthecorrectlocationof2reportsandFHAwasnotincludedasanintendeduserontheFHAreport.Allofthecommentsandsuggestionsofthereviewappraiserhavebeenreadandaccepted,somehavebeenadoptedbyRespondent’sofficeaspartofdailypractice.Withregardtoconditionrating,Respondentstatedherviewdiffersfromthatofthereviewer.ItisRespondent’snormalpracticetousetheC4mainlywhenrepairsareneeded,andthisseemstobeacceptableinRespondent’sarea.Photosofallsubjectpropertiesareoriginalphotoswithinteriorphotosasoriginalsalso.RespondentstatedherMLSwillnotallowthecopyingofphotos.Sitevaluesaretakenfromrecentsaleswithinthesubject’sneighborhoodorbyuseoftheallocationandextractionmethod.Improvementsarebasedonrecognizedcostservices,contractstobuildandappraiser’sdatabase.ExternaldepreciationisbasedonasearchinMLS.Respondentsupervisorstatedthattheerrorsmadeinthesereportsareherresponsibilityandthosechangesintheanalysisandreportingoftheappraisalshasalreadybegun.Additionalcontinuingeducationclasseshavebeenregisteredfor.RespondentaskstheCommissiontoconsiderhergoodstandingwiththestatewhenmakingadecisionregardingtheUSPAPviolations.LicensingHistory: RespondentSupervisor RegisteredTrainee 6/6/2003‐4/17/2006 CertifiedResidential 4/18/2006‐PresentRespondentTrainee RegisteredTrainee 6/8/2003‐PresentDisciplinaryHistory:RespondentSupervisor: 201102521‐ClosedwithLetterofWarning


RespondentTrainee: NoneReasoningandRecommendation:Thetraineeandsupervisorwereregisteredwithindaysofeachotherbackin2006andatonetimewereunderthesamesupervisor.Thismayindicatethatthesupervisorandtraineehadincompletetrainingbackin2006.Staffandlegalcounselrecommendboththesupervisorandthetraineecompleteafifteen(15)hourResidentialReportWritingcoursewithin180days.Thetraineemustcompletethiscoursebefore3newreportscanbeselectedfromanupdatedexperiencelogforexperienceaudit.Athirty(30)hoursBasicAppraisalProcedurescourseand/orafifteenhourResidentialSiteValuationandCostApproachcoursemaybeadvisable.Vote: Mr. Hall made the motion to accept counsel’s recommendation and allow classes to be used as continuing education up to hours allowable. This was seconded by Ms. Johnson. Mr. Walton recused himself from the vote, which carried unanimously. 20. 2014012221 Tobepresentedlaterbycounsel’srequest.21. 2013009201 RE‐PRESENTATIONThismatterisbeingre‐presentedfromtheMay2014Commissionmeeting.Duringthismeeting,afterhearingthefacts,theCommissionvotedtoauthorizeaOneThousandDollar($1,000)civilpenalty,alongwithafifteen(15)hourUSPAPCourseandathirty(30)hourProceduresCourse.ThefactsofthematterrecentlypresentedattheMaymeetingareasfollows:ThiscomplaintwasfiledanonymouslyandallegedthatRespondent’sreportincludedthehighestandbestuseofthelandasaproposedassistedlivingfacility,andthelandcouldnotbelegallyusedforthatpurpose.Therewasnomentionofthecurrentzoningormentionthatthelandmustberezoned.TheincomeapproachdatawaspreparedbyCecilMcNatt’s,notmarketrates.TheComplainantallegedthatthefinanciallosstothecompanyexceeded$200,000.Respondentfiledaresponsetothecomplaint,statingthatComplainantindicatedthattheappraisalwascompletedin2010,whenactuallyitwascompletedin2008.Inaddition,Respondentstatedthatthevacantlandcomparablesalesinhisappraisalwerelocatedincloseproximitytothesubjectpropertyandarequitesimilar.RespondentalsostatedthatthesitevaluethatwasindicatedbyComplainantinthecomplaintwasanincorrectstatementofsitevalue.Respondent’sindicatedthesitevaleestimateinhisappraisalwasamuchlowernumber.REVEIWERCONCLUSIONS[allegedviolationsincludedwithinbrackets]:

Twoprospectivevalueswereprovided(realpropertyandgoingconcern),butnoproposedcompletiondatewasprovided.Themarketvalueatcompletionisaprospectivevalueasisthegoingconcernvalue.Theeffectivedatesofthosevaluesshouldbefuturedates,notthecurrentdate.

ThereportdoesnotincludeananalysisofthependingpurchasepricecomparedtotheconcludedvalueasrequiredbyUSPAPinthereconciliationportion.[SR1‐5(a)&(b)]

Thereportomitsanydiscussionand/orconclusionofexposuretime.[SR1‐5(a)&(b)] Thelegalityoftheplanneduseshouldhavebeenverifiedbytheappraiserwiththezoning

authority.Thenanextraordinaryassumptioncouldbeincludedifitwasdeterminedthecurrentzoningwouldnotpermittheproposedimprovements.

Averybriefdescriptionoftheproposedimprovementsisincludedinthereportthatincludesonlythesizeofthebuildingandnumberofunitswithsizesandsomeamenities.Theonlyotherdescriptionisafloorplanandelevation.Nodescriptionofthetypeofconstructionorotherbuildingphysicalconstructionisincluded.


Theareaormarketreviewislimitedtoafewpagesofpublisheddata.Thereisnoanalysisinthereport.

Thereportcontainsnoanalysisofhighestandbestuse. Thereportcontainsnoanalysisofthesales,otherthanpriceperacre.Thereisno

discussionregardingcomparabilityorplanneduses,zoning,topography,location,etc.Typically,thereisaninverserelationshipbetweensizeandunitprices.Thisshouldhavebeenaddressed.Thereportcontainsnosupportfortheconcludedvalueof$50,000peracre.

MarshallandSwiftwasthebasisforcalculatingreplacementcostforthesubject.Theindicatedcostpersquarefootbetweengood($96.08)andexcellent($118.14)wasutilized.Ifthesecostsareutilized,thecostforelevatorsmustbededucted.Theelevationincludedinthereportindicatesaone‐storybuilding.Theelevatoradjustmentwasnotincludedinthecalculation.Inaddition,anadjustmentforsizeisrequired,butomitted.Bothcostsincludeallcabinetryandkitchenequipment;readyforoccupancy.However,thecostforfixedkitchen,securityandfireequipmenthasbeenaddedat$75,000(noexplanationwherethesecostscamefrom),andthecostfor32kitchenetteshasbeenadded.Intheabsenceofexplanationsordiscussionstothecontrary,thesearenotappropriateadjustments.Thecostdevelopedinthisreportappearstobeinflatedsignificantly.Thevalueconclusiondoesnotappeartobecredible.

Theinformationregardingthetwopropertiesinthesalescomparisonapproach(improved)isverylimited.Twosales(onenineyearsold)isnotadequatesupportforthisapproachforthistypeproperty.Salesofthesetypefacilitiesarenotscarce.Greatereffortspentseekingsalesofotherfacilitiesfromotherpartieswouldhavebeenbeneficial.Withoutadditionalinformationoranalysis,thisapproachandtheconclusiondonotappeartobecredible.

Therentalincomeapproachmightbeapplicableifallunitswerethesame.Thereportcontainsnoinformationfromdevelopersandownersofothersimilarpropertiesasstated,andtherewasnosuchinformationorsupportincludedintheworkfileinformationprovided.Amarketsurveyshouldhavebeenincludedtolendsupportfortheconcluded“market”rents.

Thebasesforoccupancyratesassumptionsarenotprovided.Nomarketsurveyisindicatedtosupporttheassumptions.Thereportdoesnotprovideamarketanalysisofaprojectedabsorptionrate.Thereisnosupportfortheconcluded75%occupancythefirstyear.

Thereportandworkfilecontainnoinformationregardingexpensesthathavebeentakenfromtheappraisalofothersimilarfacilities.Sincepreviousappraisalswerereferenced,theyshouldbepartoftheworkfileiftheinformationisnottobeincludedinthereport.Thereportcontainsnoinformationregardingpropertytaxrates,taxsurveys,orprojectedvaluationbythecountytaxassessor.

Inthediscountedcashflowanalysis,thereisnoprovisionfordeferredorlostincomeduringtheconstructionperiod.ThisDCFdiscountstothepointofcompletion.Theresultingvalue(s)shouldbediscountedbacktothedateofappraisaloranotheradjustmentapplied.Thereportdoesnotincludeaprojectedconstructionperiod.TheDCFdoesnotprovideforsomeformofinflationofexpensesforyears2‐5.

Theappraisalstates,“UnderUSPAPGuidelinesthisisasummaryreport.”However,duetoalmostcompletelackofdescriptions,analyses,andotherinformationanddiscussions,itismorelikelythiswouldbeconsideredtobeaLimitedUseReport.

LicensingHistory: CertifiedGeneral 10/04/1991‐PresentDisciplinaryHistory: (241752‐Closedwithnoaction;200312206‐Dismissed)ReasoningandRecommendation:Duetothelackofinformation,errors,anddiscrepanciesinthisreport,CounselrecommendstheauthorizationofaFiveHundredDollar($500)civilpenaltytobesatisfiedwithinthirty(30)daysofexecutionoftheConsentOrder.SuchtermsaretobesettledbyConsentOrderorFormalHearing.


AftersendingtheConsentOrderouttoRespondent,herequestedaninformalconferencewithExecutiveDirectorAversandme,whichwasgrantedandheldonJuly1,2014.Duringtheconference,wediscussedthestipulatedfactsoftheConsentOrder.RespondentsuggestedthattheappraisalwasintendedtobeaSummaryReportbutsuggestedthereviewerwasincorrectlyreviewingitasanothertypeofreport.RespondentadmittedthathedidnotdoenoughinthewayofdisclosingandanalyzingcertaininformationwithinthereportbutalsodisputedseveralofthefactsandUSPAPsectionscitedbythereviewerwithintheConsentOrder.Asaresultoftheinformalconference,Respondent,legalcounsel,andtheExecutiveDirectorcametoanagreementastocertainlanguagewithintheOrderthatcouldbestricken.WealsocametoanagreementastocertainUSPAPsectionscitedbythereviewerthatcouldbestrickenfromtheallegedviolations.Suchlanguageconsistedoflanguageregardingtheareaormarketreviewbeinglimitedtoonlyafewpagesofpublisheddata.Respondenthadincludedabriefdescription,andthereviewerhadnotincludedanyUSPAPviolationsattachedtothis.WealsoagreedtodeletelanguagefromtheOrderstatingthatthecostdevelopedinthisreportappearedtobesignificantlyinflatedandthatthevalueconclusionsdidnotappeartobecredible.Thisappearedtobetheopinionofthereviewer,ratherthanbasedinfactualevidence.NewRecommendation:Inlieuofthepreviouslyauthorizeddiscipline,CounselrecommendstheauthorizationofaFiveHundredDollar($500)civilpenalty,alongwithafifteen(15)hourUSPAPCourse,basedonthelanguageandUSPAPviolationsthatcouldbestrickenfromtheConsentOrder.SuchtermsaretobesettledbyConsentOrderorFormalHearing. Vote: Mr. Johnstone made the motion for a civil penalty in the amount of five hundred dollars ($500) and a thirty hour (30hr) Procedures course. This was seconded by Ms. Point. Mr. Walton recused himself from the vote, which carried by majority with Mr. Hall in opposition. In addition to the legal report, counsel also read a letter from an appraiser/licensee, requesting that the commission grant more time to comply with the terms of a consent order because of poor health. Vote: Mr Hall made the motion to:

Grant a six (6) month period of time to complete the education after which the license could be reinstated, and

Grant six (6) more months after being reinstated to pay the order or revert to a suspended license.

This was seconded by Mr. Johnstone. The motion carried unanimously. REPORT OF EXPERIENCE INTERVIEWS Pamela G. Stanko made an application to upgrade from a registered trainee to a state licensed real estate appraiser. Ms. Point was the reviewer and recommended that her experience request be granted. Mr. Hall made a motion to approve the request. This was seconded by Mr. Walton. The motion carried unopposed. Andrew C. Langley made an application to upgrade from a registered trainee to a certified general real estate appraiser. Mr. Standifer was the reviewer and recommended that his experience request be granted. Ms. Point made a motion to approve the request. This was seconded by Ms. Johnson. The motion carried unopposed. Amanda K. Covington made an application to upgrade from a registered trainee to a certified residential real estate appraiser. Mr. Walton was the reviewer and recommended that her experience request be granted. Ms. Point made a motion to approve the request. This was seconded by Mr. Hall. The motion carried unopposed.


William T. Vandever made an application to upgrade from a registered trainee to a certified general real estate appraiser. Mr. Hall was the reviewer and recommended that his experience request be granted. Mr. Walton made a motion to approve the request. This was seconded by Ms. Johnson. The motion carried unopposed. Thern Newbell made an application to upgrade from a certified residential real estate appraiser to a certified general real estate appraiser. Mr. Johnstone was the reviewer and recommended that his experience request be granted. Mr. Hall made a motion to approve the request. This was seconded by Ms. Point. The motion carried unopposed. MAY 2014 - EDUCATION COMMITTEE REPORT Director Avers reviewed the course submissions and read her recommendations into the record as below:

Course Provider

Course Number

Course Name Instructor Hours Type Recommendation

Allterra Group 1759 On-Line Appraisal of Single Family Residential New Construction

D. Phillips 7 CE Approve

IRWA 1761 Eminent Domain Law Basics for Right of Way Professionals - 803

R. Schrieber 16 CE Approve

Appraisal Institute

1762 Review Case Studies - General S. Coleman 32 CE Approve

ASFMRA

1766 Timber Property Valuation M. Lewis 8 CE Approve

NBI, Inc. 1767 Practical Guide to Zoning and Land Use Law

G. A. Dean, J. B. Echols, S. H. Edwards

7 CE Approve

The Columbia Institute

1769 Appraisal Summit & Expo, No. 214 G. Harrison & guest speakers

14 CE Approve


1770 Appraisal Summit & Expo, No. 214A G. Harrison & guest speakers

14 CE Approve


1771

New Construction – A Residential Valuation, No. 152

D. Jacob, B. Boarnet T. Anderson, A. Brown, B. Reynolds

8 CE Approve


1596 Focus on the Workfile, No. 048 D. Jacob, B. Boarnet T. Anderson, A. Brown, B. Reynolds

5 CE Approve

Individual Course Approval

Licensee Course Provider Course Name Hours Type Recommendation

Clare B. Norris (CR 3075)

IAAO Income Approach to Valuation

33 CE Approve

Wesley L. Butler (TR 5004)

KY Real Estate Appraisers Board

15Hr USPAP course 15 QE Approve

Mr. Hall made a motion to accept the recommendations. This was seconded by Dr. Mackara. The motion carried unopposed. ELECTION OF OFFICERS Ms. Point made the motion to nominate Mr. Johnstone as Chairman and Mr. Walton as Vice Chairman. The motion was seconded by Ms. Johnson. The motion carried unopposed. DIRECTOR’S REPORT In the findings from the distance education survey, Director Avers shared that 176 appraisers responded to the survey relating to on-line qualifying and continuing education. The results were charted by the number of responses to each question and charted as a graph. While most


agreed that on-line continuing education was a desirable choice, qualifying education in a classroom setting got the majority response. Most appraisers agreed that on-line continuing education was sufficient for appraiser competency and professionalism. The primary consideration for taking on-line continuing education and qualifying education was the quality of content. The reviewer letter as requested at the last meeting had been completed and reviewed by Mr. Green. Rules from the January 2012 rulemaking hearing had been posted on the Secretary of State’s website and would become effective on August 21st, 2014, while the rulemaking hearing for 2015 would likely be held in September because of a delay in the Attorney General’s office review. Director Avers ended the report with the current budget information and licensing numbers. Before the meeting adjourned, Mr. Green thanked the commission members and staff for their support as he felt this could be his last meeting if he got notice from the Governor. Mr. Hall thanked Mr. Green for his service to the commission. ________________________________________________________ Having no further business, Chairman Johnstone adjourned the meeting at 3:00 p.m.

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