home appraisal in los angeles

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:http://www.dfi.ca.gov/