Signed or Unsigned that is the Question

There is an interesting discussion taking place on some of the forums over the last 9 days with regard to USPAP 2012-2013. Whether or not the additional certifications require a signature. Before weighing in on an esoteric discussion, I would like to remind everyone that the first and foremost intent of USPAP is clarity. To provide an opinion in a manner that is clear, easy to understand, and professionally derived. Therefore, as long as you pay attention to the particulars of USPAP and provide your reports in a manner that is clear, easy to understand, and professionally derived you should be able to withstand the scrutiny of a peer review and or the state board.

Often times it seems as though or reaction to situations are driven by an inane desire to avoid litigation which is easily understood given the very nature of this litigious society; nonetheless, I maintain that our basic responsibility as objective professionals is to provide an opinion of value that is shaped by the foundational concepts of real estate appraisal. Over time the provision of this opinion has evolved from index cards with a Polaroid on the back to computerize forms with maps that are automatically generated with digital photos, and aerial views. Still the appraisal report of today is less clear, in many ways, that the reports of old. Why is that?

Back in the early 1980’s my father announced to me that the appraisal industry was “going to hell” because the industry was filling up with women and children. Of course that was tongue-in-cheek, because my mom and I both worked as a appraisers in his office at that time. The longer I stay in this business I understand the sentiment, of my playful father. I do believe the the ruination of the appraisal industry was allowing clients, specifically lenders, to control the content and form that an appraisal report must take. What I mean to say is that allow, USPAP has grown to provide a basic definition and structure, the revelations of USPAP were not new or earth shaking in any manner. Any old school appraiser who was “worth their salt” already provided appraisal reports that exceeded the expectations and requirements of USPAP. The foundational idea of provide a report that is clear, concise, and supported by sound reasoning was hardly a new way to think of the appraisal report.

So what was the catalyst  began the fiasco that now know and “love” to be form appraising? I personally believe it was a phenomenon that occurred during the decades that followed WWII. No one reading this blog will likely remember those days except for the stories our families told us, or what we have read. But at that point in our history America was at its strongest financially. We had a very large majority of our population returning home and rebuilding their lives. Demand and expectations of profits began to rise and escalate with each passing generation. Very soon the generations that did not work to create anything, began to wonder why can’t we make more than “the old man”. Respect for the elderly diminished, the “youngsters” of the sixties, seventies, and eighties raised their children through proxy because most of them were working and creating “bigger and better ways” to become wealthy. This hunger for more, eventually created the circumstances that lead to our biggest real estates booms and busts. The mortgage industry was born out of these times; however, due to the demands by consumers there was very little training or education required for this newly formed “experts” and rules and regulations were developed as the need arose.

We have not changed very much, we still react to issues that we have created. While it is of course most important to take evasive actions during a crisis, there really needs to be more and more understanding by those who dictate our futures with the piles and piles of “stuff” that is created in response to epic portions of greed, corruption, abuse and mistakes.

Due to the melt down of our financial sectors, many of us are looking around, doing a lot of soul searching and trying to figure out “what the hell happened?”.

My suggestion? I say it is time for each and every professional who is objective, to stay focused on providing the services we have spent our lives learning to provide. Breathe and remember that many of those in power today, believe that the 1980’s was a life time ago. There is absolutely nothing wrong with youth, and age alone does not create wisdom. But we all should develop a sense of respect and appreciation for each and every individual with whom we interact. The process of real estate appraisal is not complicated. The reporting of an appraisal should also be “easy”, but in the process of communicating we often find ourselves in the role of consultant or teacher. Because the majority of our clients are checking boxes and filling out forms and if everything fits in the box you must be a good appraiser. If everything does not, you must be bad.

We really need to “preach” the basics and provide reports that take the time to explain why we have taken the approach, why we have used the comparables we choose, or why we excluded a particular data set. I know I can already hear, I do not have time to teach. I do not make enough money to educate my clients. But my response to this I also “steal” from my father (who I am sure borrowed it from someone else). “Education always costs… but ignorance costs more.”

Back to the original question, Do additional certifications within a residential appraisal require a signature? There is case to be made on both sides of the debate, to reconcile this and move on to the next assignment. Simply make room for the certifications on page 3 of the form (above the cost approach). All the information on this six page form is covered by the signature.

See you around the water cooler.

UncleZev

Simplicity is Genius

As the title states, simplicity is genius. Every once in a while I read reports where the appraiser wishes to blazon their diction; demonstrating their professional expertise and industry knowledge to such a degree that absolutely no one can understand their findings or opinions of value.

It is at those times that I remember a very simple, humble man who taught me to appraise and to live and enjoy my life. He would say to me,  “Never look too sharp, or speak too wise.”  Also what he said was “Simplicity is Genius”. In other words, never speak in a way that cannot be understood, or write in a way that will leave the reader confused. What he was conveying to me was the following message. The typical end user of our appraisal reports are not Harvard Graduates or PhDs. They are educated mortgage and real estate professionals who look at hundreds of files in a month’s time.

They are not english teachers nor professors, and they are not looking to be impressed with our ability to spin a tale or write a report. What they do need is for us to take situations and appraisal problems that are often complex and “boil it down” so that the presentation is simple and easy to understand.

If you must use the word fenestration to impress the reader that you took an Appraisal Institute class, fine, but take the time to explain that “the fenestration, or placement and number of windows and doors, enhances the market appeal of this property”.

As this same man taught me, if we strive to be bigger (or smarter) than the people we serve, then we will soon find ourselves replaced by others who can make those same people feel bigger and smarter. No one appreciates a boor. Although it can be fun on occasion to put a hostile client in their place, the reality is that our clients are best served when we stay humble and keep our communications simple, concise, and to the point.

In previous posts I have stated that real estate appraisal is as much of an art as it is a science. I believe this is true, although many would have us remove the artist from the equation thinking that with pure science the client will not be mislead. But the truth of the matter is that so long as we are measuring people’s reactions to a piece of property, people will need to be conducting some part of the analysis. Computers are incredible tools that allow us to create, store, analyze and send vast quantities of information, but without the artist behind the keyboard, the results, findings or conclusions lack the very “reason” that is behind a reasonable estimate.

I do not personally miss the days of IBM Selectric typewriters or Polaroid Cameras or Fox Photo to develop the film, but there was a sense of satisfaction in those days that when an appraisal was completed it was considered a document that could stand on its own. Today, with an appraisal software package and a digital camera almost anyone can create the appearance of an appraisal; however, as a professional reviewer, who conducts forensic reviews, I can tell you that the artisans are a dying breed.

See you around the water cooler!

UncleZev