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Los Angeles Home Appraisal


Advisory Opinion 24 - "Normal Course of Business"

This new Advisory Opinion addresses the concept of "Normal Course of Business" that is used in Standard Rules 1-5 and 7-5.

Standard Rules 1-5 and 7-5 require appraisers to analyze the subject property's sales history, and all current listing, options, and agreements of sale when the value opinion to be developed is market value, if such information is available to the appraiser in the normal course of business.

The words "normal course of business," were not intended to convey that extreme measures are required to obtain this information or that the appraiser can use their own work habits, or an appraisal firm's policies, as the defining criteria. Rather, the "normal course of business" is determined by the actions of an appraiser's peers (defined as other appraisers who have expertise and competency in the same or a similar type of assignment) and by the expectations of market participants (i.e., those entities that are commonly clients of appraisers and who regularly use appraisals). Furthermore, what is considered the "normal course of business" can vary depending on the scope of work for a given assignment. Notwithstanding, an appraiser must be certain that the gathering of factual information is conducted in a manner that is sufficiently diligent, given the scope of work, and does not result in a substantial error of omission or commission that significantly affects an appraisal. Appraisers who fail to obtain information that is readily available from sources such as the Internet, local municipalities, local media, or Multiple Listing Services, etc., may be in violation of USPAP.

Advisory Opinion 25 - "Clarification of the Client in a Federally Related Transaction"

This new Advisory Opinion discusses a topic formerly addressed in Advisory Opinion 10. The issue is whether an appraiser has an obligation to ensure that his or her services are directly engaged by a federally insured depository institution.

Federally insured depository institutions are required to ensure that appraisals prepared by fee appraisers are directly engaged by the regulated institution or its agent. However, there may be times when an appraiser is contacted by someone other than a federally regulated institution or its agent, such as a homeowner, with the intent to use the appraisal for a federally related loan transaction now or at some later date. In this instance, it is that appraiser's responsibility to disclose to the prospective client that the lender or its agent is required to directly engage the appraiser. The appraiser should also disclose to the prospective client that it is unethical for the appraiser to later "readdress" or otherwise change the report to indicate a federally insured depository institution was the client when the appraisal was performed for another party. Proper disclosure ensures the appraiser is not misleading in the marketing of his or her services. It would be prudent to recite the disclosures in the engagement letter and in the report.

Advisory Opinion 26 - "Readdressing (Transferring) a Report to Another Party"

This new Advisory Opinion addresses the practice of altering a report to indicate that a new recipient is the client when it was originally completed for another party.

In order to properly define the problem under study and to understand his or her responsibilities in an assignment, an appraiser must identify the client, any other intended users, as well as the intended use of his or her opinions and conclusions. These are key elements that drive the appraiser's scope of work decision and must be determined at the time of the assignment. (Bold added for emphasis). They cannot be modified after an assignment has been completed. Consequently, "readdressing" (transferring) a report by altering it to indicate a new recipient as the client or additional intended users when the original report was completed for another party is not allowed by USPAP. Note that the FDIC prohibits institutions from using "readdressed appraisals."

However, the appraiser can consider the subsequent client's request as a new assignment. In so doing, the appraiser may establish a new appraiser-client relationship with the subsequent client and appraise the property for this new client assuming confidential information is handled properly (i.e., in accordance with the Confidentiality section of the Ethics Rule). A written engagement letter or contract establishing the appraiser/client relationship would be prudent.

Advisory Opinion 27 - "Appraising the Same Property for a New Client"

This new Advisory Opinion addresses the practice of appraising a property for a party after appraising it for another party.

USPAP does not prohibit an appraiser from accepting a new assignment from a prospective client when the appraiser has previously completed an appraisal of the same property for another client as long as any existing confidential information is handled properly (see the Confidentiality section of the Ethics Rule) and it is not prohibited by a contractual agreement. A release from the prior client before accepting the new assignment is not required by USPAP. Additionally, disclosure of the second client to the first client is not required by USPAP and may in some cases violate the portion of the Confidentiality section of the ETHICS RULE, which states: An appraiser must protect the confidential nature of the appraiser-client relationship.

A client who believes that his or her legitimate business intent could be harmed by an appraiser subsequently appraising the same property for another client can stipulate in their service agreement with the appraiser the conditions under which the appraiser may or may not appraise the same subject property.

Source: Tips- Appraisal Frequently Asked Questions


Question: What is the function of OREA's Enforcement Unit?
Answer: OREA investigates the background of applicants and licensees with convictions for criminal violations of law or who have engaged in other conduct that calls into question their fitness for licensure. OREA also investigates complaints of unlawful or unethical activities filed against licensed appraisers, educational course providers and persons acting in a capacity that requires a license.

Please note that OREA cannot act as a court of law, order the refund of monies, award damages, enforce contractual agreements or give legal advice. If any of these are your goal, you may wish to contact an attorney or your local Better Business Bureau.

Question: When do I file a complaint?
Answer: A complaint may be filed any time you have a legitimate complaint against a licensed appraiser. Complaints should be filed as soon as possible after the event.
Question: How do I file a complaint?
Answer: You may obtain a complaint form by visiting the Forms page on this website, or by contacting OREA at the numbers listed below. Then simply complete the form and send it, along with all relevant documents, to OREA, Enforcement Unit.
Question: Who typically files complaints?
Answer: Approximately 20% of all complaints are filed by a borrower/homeowner. Another 45% percent come from Regulators or Lenders, including Federal Deposit Insurance Corporation, Office of Thrift Supervision, Office of Comptroller of Currency, mortgage brokers, loan officers and review appraisers for banks. Appraisers file approximately 20% of the complaints and the remaining 15% fall into the "Other" category.

The following table highlights some of the most frequent allegations found in complaints filed with OREA paired with the typical source for each category:

Type of Appraisal

Common Allegations by Category of Complainant

Single Family Residential

Complaints filed by Borrowers/Homeowners

  • Property description errors
  • Errors in Comparable Sales Information
  • Errors in valuation
  • Payment disputes
  • Non-delivery of pre-paid appraisal
  • Obnoxious behavior/rudeness

Narrative Reports

Complaints filed by Regulators, Lenders and other Appraisers

  • Highest and Best Use
  • Discounted Cash Flow Analysis
  • Failure to properly analyze bonds or market demand
  • Incompetence
  • Inappropriate comparable selection
  • Fraud
  • No support for adjustments
  • Failure to include license number with signature

Single Family Residential

Complaints filed by Mortgage Brokers

  • Untimely delivery or non delivery of report
  • Unwillingness to correct errors in report
  • Altered license
  • Failure to provide operating income statement
  • Failure to return phone calls

Single Family Residential

Complaints filed by other Appraisers

  • Failure to recognize professional assistance by others
  • Signing reports without reviewing them
  • Competency
  • Over valuation
  • Fraud

Other Issues

Complaints from various sources

  • Misrepresentation of Errors & Omissions Insurance
  • Litigation
  • Monetary disputes

Question: How are complaint investigations conducted?
Answer: OREA's Investigators include experienced, licensed appraisers. Interviews are conducted to gather information and clarify the complaint. If it appears the allegations may be true, the appraiser against whom the complaint was filed is contacted to provide an opportunity to respond. Desk and field reviews of appraisals are conducted whenever necessary to properly resolve the issues.
Question: What is OREA's complaint process?

Once a complaint is received, OREA will send you an acknowledgement letter. The Enforcement Unit will then review the complaint, the seriousness of the allegations and the potential harm to the public. The complaint will then be prioritized and assigned to an investigator.

The appraiser in question may be contacted for additional information and/or invited to attend an Office conference to explain his or her actions. OREA will then review all available information, determine if a violation has occurred and impose disciplinary sanctions, where appropriate.

If the appraiser wishes to contest OREA's determination or sanctions, a hearing will be held before an Administrative Law Judge of the Office of Administrative Hearings (OAH). If necessary, you may be subpoenaed to testify at this hearing.

Question: How long will it take to resolve my complaint?

OREA will make every effort to resolve your complaint as quickly as possible. Many factors impact the length of an investigation, including: the complexity of the case, the availability and cooperation of witnesses and whether or not a field review of the property is necessary.

Since OREA must investigate complaints in order of their priority based on the seriousness of the allegations, likelihood of continuing harm to the public and other factors, it is not possible to estimate how long it will take to resolve your complaint. For this reason, OREA encourages you not to wait for the resolution of your complaint before seeking legal advice or pursuing other appropriate remedies.

Question: Will the appraiser be told who filed the complaint?

OREA will make every effort to keep your identify confidential. However, OREA cannot guarantee your anonymity and will probably be required to reveal your identity if the matter is filed with OAH.

Question: What can I do to avoid having a complaint filed against me?
Answer: In addition to knowing and abiding by the Uniform Standards of Professional Appraisal Practice, a competent appraiser can protect himself or herself from complaints by avoiding misunderstandings and ensuring open, honest communication with the client and property owner. Appraisers should also consider:
  • Using a written contract which contains all terms, including the delivery date, appraisal fee, appraisal assignment clearly defined, and the property to be appraised.
  • If an appraisal assignment is curtailed prior to completion at the client's request, request or provide the client with a written statement that clearly states the reason for termination, the fee that was earned for appraisal services performed prior to terminating the assignment and any other conditions (i.e., no report is required for partial payment, the original assignment will be completed for the balance of the fee if it is requested within a certain period of time with specified notice).
  • If the client is a lender/mortgage broker, ensure the property owner understands that the lender/mortgage broker is responsible for providing a copy of the appraisal, not the appraiser. If you wish to provide a copy to the homeowner, do not tell the him/her you will do so unless (1) you obtain prior approval from your client (preferably in writing), and (2) you follow through with your promise in a timely manner.
  • Before starting an appraisal assignment, clarify with the property owner who is responsible for payment of the appraisal fee and when the payment is due, and obtain or provide it in writing, if possible.
  • Deliver appraisals in a timely manner.
  • If, upon inspection of the subject, you discover the appraisal assignment is not as negotiated in your contract, notify your client immediately and re negotiate the contract if appropriate and/or necessary.
  • Respond to telephone calls promptly.
  • Always be courteous and polite.
Question: How will I know the result of my complaint?

Once the case is concluded, OREA will notify you of the outcome of your complaint.

For additional information, contact OREA at:

Telephone (916) 552-9000
FAX (916) 552-9008

or write:

Office of Real Estate Appraisers
Enforcement Unit
1102 Q St., Suite 4100
Sacramento, CA 95814

Question: May a licensee voluntarily "suspend" his or her license to perform non-Uniform Standards of Professional Appraisal Practice (USPAP) appraisals?
Answer: OREA sometimes receives requests from licensees wishing to suspend or terminate their licenses. The most common reasons include the desire to produce non-USPAP appraisals for real estate brokers or for tax appeal purposes. There is currently no provision for permitting such a suspension of licensure prior to the license expiration.

OREA's regulations (California Code of Regulations Title 10, Chapter 6.5) require every holder of an OREA license to conform to and observe USPAP at all times. Major modifications to USPAP in recent years permit and guide the appraiser in the performance of limited appraisals and consulting assignments. Please refer to USPAP for guidance.

Question: Can a California licensed appraiser perform research for an appraisal of a property in another state, then write the report in California as a California licensee?
Answer: Unless otherwise permitted by the state in which the property is located, an appraiser licensed in California cannot complete an appraisal of a property in another state unless they are in that state. The appraiser should contact the licensing agency in that state for specific information regarding temporary permit procedures.



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