To Convert or Not to Convert! Is That a Real Question?
Appraisal Scoop reported previously (click here) on the May 22, 2008 Virginia State Board for Real Estate Appraiser's (VREAB) meeting to discuss among other things, a petition submitted by George Dodd, SRA. Click Here to: Download Virginia_Appraisal_Board_Petition_052208.pdf
The petition was written to prevent online sites, or web-portals from changing or otherwise altering reports that appraisers prepare. Web-portals would include such companies as: AppraisalPort, RELS, and other AI ready required companies. It also seeks to limit the illegal PDF stripping down, and programs that erroneously copy information from reports such as Lighthouse.
Woody Fincham has developed this series to chronicle his first hand account of the 7/23/2008 Virginia Real Estate Appraiser’s Board meeting. These are the author's own opinions. They are not intended as an attack on FNC, INC or any one listed in the article. The article is intended to inform the general appraisal public of the landmark Virginia State Appraiser's Board policy process.
Virginia Real Estate Appraisers Board
July 23 2008
Special Meeting Regarding Web Portals
Today marked the second and final special committee meeting by the board. The meeting was called in order to allow all the interested parties to make a case for their respective points of view. George Dodd, the petitioner was there and gave a presentation. Neil Olson from FNC, INC was also present to speak to the board and the gathered attendees. Rob Fraiser, an appraiser from Core Logic gave a presentation regarding the data standard MISMO. Strangely absent was anyone for ACI regarding their conversion software or and lenders who utilize conversion capable platforms.
Mr. Dodd started off the meeting with a short presentation supporting his stance on why conversion software should not be allowed. (See below for downloads) He had prepared a power point presentation that included some interesting information. The highest ideal Mr. Dodd referred to was the Board’s job to protect the public trust, the very same being a part of the Commonwealth’s regulations.
He very clearly stated that the single most significant act an appraiser does is to place the appraiser’s signature on the report. This is easy to concur with in that when one thinks about it, an appraiser states upon signing the report that all conclusions, statements and work are true and accurate. It is the glue that makes the report stick.
He also states that the appraiser has to have complete control to attach, control or affix the signature. This is affirmed by the State Regulation that states “The signing of an appraisal report or the transmittal of a report electronically shall indicate that the licensee has exercised complete direction and control over the appraisal“in accordance with §54.1-2011 C of the Code of Virginia.
Following up with this Mr. Dodd asked some questions:
- How can the Appraiser retain necessary control of their signature when sending a report electronically to a client?
- What minimum preventive measures should the Appraiser take to secure their signature?
- Can the Appraiser’s signature be attached as a separate file to the report without it being applied directly to the Appraiser’s Certification, Limiting Conditions, and Value Conclusion?
- How can the Appraiser exercise complete direction and control over the appraisal when using conversion software?
Mr. Dodd then moved on to summarize the use of conversion software. He further stated that many appraisers are being given the condition upon accepting an assignment to use a conversion interface or program to basically change the format and content of the appraiser’s report. His argument being that these converted reports are replacing the appraisers true report, or a copy there of, with an alternative report.
Editorial: “I use Lighthouse and AI Ready converters occasionally. These programs do not allow all elements of my reports to transfer across due to the limitations of the converters. One example would be a 65% line adjustment that just happened to appear in a lighthouse converted format. I missed that one and got a call back from the underwriter. Thank goodness I was able to send a PDF copy of my report. I have also created Already conversions that would not support typical trend charts, aerial images, and other forms that my software vendor supports. I will be following this up with an article about working with these types of programs”.
Here is a little history on what Mr. Dodd is trying to change in Virginia. Since the appraiser is initiating the stripped down conversion, the Web Portals/Conversion software leaves whatever is altered in the report as 100% liability to the appraiser. These reports are anything but True Copies of the report as shown in the appraiser’s software package. This means that when you use one of the conversion programs, it is very likely that the report you send out and the report you have in your own software are not 100% the same. Imagine going before the state with two versions of the same valuation assignment. Which one do you want to hang your hat on? If you put a lot of extra work in your reports using addenda and additional pages that just don’t work with the conversion programs, the resulting report could exclude very important omissions.
Mr. Dodd is simply trying to allow the appraiser to send a true copy of the report as it was prepared by the appraiser in the appraiser’s native software, submitted either in PDF or as a hard paper copy. In most cases conversion software cannot allow 100% of all forms to convert. In many cases this can lead to communication problems.
USPAP does state:
Standards Rule 2-1
Each written or oral real property appraisal report must:
It may be misleading in certain instances when reports are altered. In cases where the appraiser is relying on visual aids like charts, images and other addenda; there is a possibility of the report not containing sufficient information.
Mr. Dodd did move on to define several things. The first being proprietary software and original copy: before something can be labeled a “true copy” there has to be an original report on which the copy is based. The “original report” is traditionally defined as the “hardcopy” or the paper report created by the Appraiser on which a traditional ink signature can be applied. A “true copy” therefore would be an accurate reproduction of the “original report” as created and produced by the Appraiser. This includes all information and addenda the Appraiser deems necessary to comply with the scope of work and the USPAP. This includes the sequence and presentation of the information as developed by the Appraiser.
Next, Mr. Dodd reviewed his understanding of the appraiser client relationship. The term “Client” has many different connotations for different professions implying a wide range of obligations and/or advocacy. Generally the term is defined as: Somebody using professional services: a person or organization taking advice from an attorney, accountant, or other professional person. Customer: a person or organization to whom goods or services are provided and sold. He sums up the real meaning as: To the Appraiser the term “client” means customer.
The comparison was made between the PDF file, preferred by most appraisers and universally acceptable, and the formats that various conversion software use. That PDF’s are basically a print driven digital format is understood. That they allow for almost anyone to access and read the file in the same exact presentation style as chosen by the appraiser, is a fact. Writing this article I have to ask you the reader: Since the appraiser is responsible for the research, the development and the reporting of the appraisal, is it not right then that the appraiser submit a true copy of the report?
From all of these things Mr. Dodd presented a well thought out session. His points were simple and the face value of the points was the same as the underling meaning. He concluded with the idea that this is not an issue regarding what the client does with the report after receiving it. Rather, it is an issue of the limitations that are placed on the appraiser, that there is the possibility to create a misleading report.
This is the first of of 3 articles that will be submitted regarding the meeting. The second article will include Mr. Rob Fraiser’s presentation about MISMO. The following article will include Mr. Neil Olson’s comments about FNC, INC, and some of the audience’s comments and questions.
I look forward to all of your comments and questions regarding this article. Thanks for the time and see you next time.
Author: Woody Fincham - http://www.fmava.com/ - Woody is one of the founders and managing appraiser for FM & Associates. He has recently become an instructor with a local real estate school, teaching broker pre-licensing and real estate agent pre-licensing. Woody is a Certified Residential Appraiser in Virginia, as well as North Carolina. Woody is also a Member of the a la mode labs project