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AI Connect - August 5, 2014
G. HERBERT PRITCHETT, MAI, SRPA, CCIM
APPRAISER BOARD MEMBER, KENTUCKY REAL ESTATE APPRAISERS BOARD
A State Regulatory Board Member’s Perspective
AI Connect - August 5, 2014
Lobbying Strategies- Relationships Are All Important
Relationships many times determine the outcome of votes
Relationships are many times more important than the issues
Members from differing backgrounds vote based upon their background – not necessarily upon the issues in front of them
AI Connect - August 5, 2014
Lobbying Strategies - Cultivate the Relationships
With the Board staffWith individual Board membersWith the key members on the
legislative committees who will vote on changes to the law and regulations
With whomever appoints the members to the Appraiser Board.
AI Connect - August 5, 2014
Lobbying Strategies -Engaging in the Political Process
It is not an option –it is mandatoryRemember Edmund Burke’s admonition,
“All that is necessary for the triumph of evil is that good men do nothing.”
The political rule making and regulatory process is not what you learned in civics class – it is gritty, and to many, distasteful – but it is absolutely necessary
AI Connect - August 5, 2014
Lobbying Strategies - Engaging in the Political Process
It is based upon relationships, previous political legwork, and political contributions
If your state chapter does not have a political arm and PAC, you are at a tremendous disadvantage in influencing policy in your state
Each chapter should have a database showing what members have a relationship with key political figures and an active governmental affairs board.
AI Connect - August 5, 2014
Lobbying Strategies - Engaging in the Political Process
You cannot wait until an issues surfaces - the relationships and contributions have to be in place before the issue becomes “hot”
Do not make the assumption that people in politics will always do what is “right”
Instead assume as did Andrew Carnegie with much success, that people will almost always act in their own self-interest
AI Connect - August 5, 2014
Lobbying Strategies - Engaging in the Political Process
That includes politicians and regulatorsSo always approach political issues
keeping in mind everyone’s self interest The more coalitions you can build with
real estate related organizations, the more your numbers and the stronger and more influential your chapter.
AI Connect - August 5, 2014
Lobbying Strategies - Engaging in the Political Process
Realize that a Board member who is also an AI member cannot openly lobby AI’s position in Board meetings as to do so would be contrary to FIREEA and bring possible sanctions from the ASC
AI non-Board members have to provide the advocacy
AI Connect - August 5, 2014
Review Appraiser Issues
Some states mandate review appraisers be certified in the state where the property is located
Hearing some pushback on this requirementPros
If I appraise something in a state, I have to be certified in that state,
I have to have geographic competency, State Board has jurisdiction over me
Cons – it is expensive and burdensome for multi-state AMC’s and banks
AI Connect - August 5, 2014
Guilt, Innocence & Punishment
Does the appraiser know what he/she is doing?
Does the appraiser use words like “based upon my experience” or “based upon the market” when using significant unsupported adjustments?
Is the report language obvious boilerplate that does not relate to the appraisal problem?
Is the report consistent – for instance a depreciated RCN for building area of $75/sf and a building area adjustment in the sales comparison approach of $25/sf, with no explanation of the difference?
AI Connect - August 5, 2014
Guilt, Innocence & Punishment
Are there prior offenses?Are there careless factual errors in the
appraisal brought on probably by a low fee and the need to be hasty?
I am easier on appraisers who admit their mistakes than those who try and pull the wool over my eyes
I can tell by reading the report and 5minutes of a mediation interview, whether the appraiser knows his/her stuff or is trying to bluff his/her way through
AI Connect - August 5, 2014
Guilt, Innocence & Punishment
Those who admit they screwed up on that appraisal and tell me they know how to do things, I am much easier on because
“There but for the grace of God go I”Those who try and buffalo their way through get
harsher punishmentThose who really don’t know any better get a fine
and continuing ed (with successful test completion)
Judging your peers and meting out punishment is much harder than I ever thought it would be.
AI Connect - August 5, 2014
The Appraisal Subcommittee
The ASC is the most important Federal agency relating to appraisal regulation.
They are the “police” that monitor FIREEA, Title XI adherence by state regulatory bodies.
Every Board is audited by the ASC every 1 or 2 years for FIRREA Title XI compliance
The ASC’s role has recently been strengthened significantly by Dodd-Frank
This offers a new, significant role for state appraisers to influence Board enforcement
AI Connect - August 5, 2014
The Appraisal Subcommittee
Prior to Dodd-Frank, the ASC had only one option – decertification of a state Board
Since the 1989 passage of FIRREA, no Board has ever been decertified
Now it has many more options, including fines and other interim sanctions.
It has the authority to ascertain whether or not a Board is adequately funded
AI Connect - August 5, 2014
The Appraisal Subcommittee
Has now codified the standard for state reciprocity
ASC can now monitor regulatory agencies’ appraiser independence investigations
ASC can now make grants to state regulatory agencies
ASC regulations give the state regulatory agencies the mandate to review the operations and activities of AMCs.
AI Connect - August 5, 2014
ASC Policy Statements
There are 10 of them plus an appendixTemporary license must be granted
within 5 days.Allows denial of reciprocal certification
or license if granting state’s standards exceed the state’s standards being used for reciprocal application.
Person analyzing the complaint must be knowledgeable.
AI Connect - August 5, 2014
ASC Policy Statements
Enforcement punishments must be consistent.
Tightens the 1 year enforcement mandate by tightening the definition of special documented circumstance.
Appendix, introduces new grades for state regulatory agencies
If you believe your Board is lax and not enforcing the policy statements, complain to the ASC
AI Connect - August 5, 2014
Other Appraiser – Board Issues
If your Board is not made up of a majority of appraisers, it needs to be.
If your Board is not a separate Board with real power, having a separate staff, it needs to be.
If your Board investigators are not experienced appraisers, they need to be.
These may increase license fees, but it provides for a much better Board.
AI Connect - August 5, 2014
Other Appraiser – Board Issues
Have at least 1 AI member at each Board meeting to provide input and comment
Board minutes are generally not available until after they are approved at the next meeting
Within 72 hours of the meeting end publish a synopsis of the meeting and email it to all appraisers in the state, with your chapter’s “take” on the votes.
AI Connect - August 5, 2014
Other Appraiser- Board Issues
Communicate to all appraisers in the state, AI’s position on issues affecting appraisers
Communicate to all appraisers in the state your chapter’s efforts on behalf of appraisers and consumers
This is excellent chapter outreach to non AI affiliated appraisers
AI Connect - August 5, 2014
Chapter Outreach
Realize AI members are a minority of appraisers
Only 15 to 20% of appraisers are affiliated with a credible professional organization.
Before non-affiliated appraisers will join your chapter, they must perceive it is worth becoming an AI affiliated member
So become the most recognized advocate for appraisers in your state
AI Connect - August 5, 2014
Chapter Outreach
If your chapter does not have a periodic email newsletter going out to every appraiser in its jurisdiction, especially after every state regulatory Board meeting, it needs to do so.
AI Connect - August 5, 2014
Other Appraiser – Board Issues
Mandatory “bad” appraisal reporting as called for in Dodd- Frank is anything but mandatory
It applies ONLY to Single family residential appraisals in which There are “material and significant” mistakes
Hence it is not mandatory for a bank to report a “bad” appraisal on ANY non-residential property.
In SFR appraisals, banks can also claim mistakes are not “material and significant” and not turn them in
AI Connect - August 5, 2014
Anonymous Complaints
I have turned in appraisals/appraisers via signed complaints and have suffered a loss in business and a loss in friendships
I have also turned in people anonymously and not suffered
With these dual experiences I am very much in favor of anonymous complaints
AI Connect - August 5, 2014
Other Appraiser – Board Issues
AI Connect - August 5, 2014
Other Observations
Appraisal quality is worse than I thought but it is getting better due mainly to the AQB higher criteria
98% of the appraisal activity is residential