Complaint / Real Estate Appraiser

Filed against Matthew George, SRA

Colorado Board of Real Estate Appraisers
1900 Grant St, #600
Denver, CO 80203
Attn: Enforcement

Re: My File Number – George01
Subject Property: 1365 Florence St, Aurora, CO 80010

This is a complaint against Matthew E George, SRA - License number AL01317099.

I have not contacted the appraiser. This matter is not under litigation.

Statement Section:

Matthew George has/is:

Violated the USPAP ethics rule.

Violated a standard(s) for the development or communication of a real estate appraisal, specifically standards 1 and 2.

Guilty of breech of trust in a business transaction.

Comments:

The appraisal report does not state the identity of the intended users, by name or type -- this is a violation of USPAP Standards Rule 2-2(b)(i) and SMT-9.

The appraisal report does not state the intended use of the appraisal -- this is a violation of USPAP Standards Rule 2-2(b)(ii) and SMT-9.

There is no scope of work statement – this is a violation of USPAP Standards Rule 2-2(b)(vii)

The report does not address “reasonable exposure time” – this is a violation of USPAP Standards Rule 1-2(c) comment, SMT-6, AO-7, AO-8, and item (3) in the definition of market value.

Comp Selection: I cannot see any justification for not using 1301 Florence as a comp. See MLS listing attached.

USPAP Ethics Rule: An appraiser must perform assignments ethically. An appraiser must perform assignments with impartiality, objectivity, and independence, without accommodation of personal interests.

An appraiser must not accept an assignment that includes the reporting of predetermined opinions and conclusions.

An appraiser must not communicate assignment results in a misleading or fraudulent manner. [Note: Fraud = Intentional deception to cause a person to give up money. Something said or done to deceive.]

It is unethical for an appraiser to accept compensation for performing an assignment when it is contingent upon:

the reporting of a predetermined result (e.g., opinion of value);
a direction in assignment results that favor the cause of the client;
the amount of a value opinion;
the attainment of a stipulated result; or
the occurrence of a subsequent event (i.e., loan approval)

It is readily apparent that Matthew George violated all of the above cited portions of the USPAP Ethics Rule. Matthew George is a competent appraiser. Matthew George is also an unethical appraiser. He set out to produce a report that allowed the loan to close.

He began the process with a requested minimum value, and worked backwards to support that figure. For a perfect illustration of how this works, take a close look at the sale of 1301 Florence. This sale was excluded from the report because the price was not in accordance with the desired end result – i.e., allow the loan to close.

Matthew George prepared this report in a manner that was as competent and as unethical as necessary to accomplish the primary objective – i.e., allow the loan to close.

Pending Sale: Pursuant to USPAP Standards Rule 1-5(a) and 2-2(b)(ix), the appraiser is required to review and analyze the contract and the listing (market exposure) and to “summarize the information analyzed, the appraisal procedures followed, and the reasoning that supports the analyses, opinions and conclusions.”

Pursuant to USPAP AO-1, the appraiser must take into account the listing [market exposure], the agreed price, and the pending sale of the subject. The appraiser’s failure to analyze these facts may exclude important information....(See AO-1, lines 32-39).

Pursuant to USPAP Standards Rule 1-5(a) and 2-2(b)(ix), if a copy of the contract was unobtainable, a statement on the efforts undertaken by the appraiser to obtain a copy of the contract is required. If the contract is irrelevant, a statement acknowledging the existence of the information and citing its lack of relevance is required. It is unclear if the appraiser (Matthew George) reviewed a copy of the contract. If he did not review a copy of the contract, the required statement is not in the report.

If he did review a copy of the contract, the report violates the USPAP requirement to “summarize the information analyzed and appraisal procedures followed”, i.e., clearly state that he did review a copy of the contract.

In the analysis section (URAR page 2), the report says:

“The seller is paying $9,350; this has been taken into consideration.”

This is not analysis. According to my dictionary: Analysis = An examination of the parts to find out their nature, proportion, interrelationship, etc. A detailed examination. A statement of the results of this process.

The asking price is not disclosed. Quoting USPAP AO-1: “.....the appraiser’s failure to analyze and report these facts may exclude important information.....”. How could Matthew George conclude that the market value was $155,000 when it was obvious that you, I, or anyone else could have bought the property for $149,900? There is no answer in the report.

The report says the selling price is $155,000 and the seller concession is $9,350. If we accept these figures at face value, it means the buyer agreed to pay $145,650. It means the seller agreed to accept $145,650. It means that the “agreed price” (USPAP AO-1 terminology) is $145,650. How could Matthew George conclude that market value was $155,000 when it was obvious the agreed price was $145,650? USPAP AO-1 requires the appraiser to consider the agreed price. Typing the words “has been taken into consideration” does not constitute compliance. There is nothing in the report to suggest compliance with AO-1.

The plain meaning of USPAP Standards Rule 2-2(b)(ix) requires the report to provide sufficient detail for the intended user(s) to understand the reasoning and the rationale for how the market value could be higher than the publicly stated asking price and/or agreed price.

In the appraisal report, there is no mention of the appraisal procedures followed with regard to analysis of the sales contract, market exposure, the agreed price, and the pending sale of the subject – this is a violation of USPAP Standards Rule 1-5(a) and 2-2(b)(ix), and AO-1.

USPAP dictates the report must include a reconciliation of the difference between the asking price and the appraised value, i.e., a stated and plausible reason. There is no reasoning and there is no rationale – this is a violation of USPAP Standards Rule 1-5(a) and 2-2(b)(ix).

Certification:

I certify that the statements and information supplied by me in this complaint including the attachments are true and correct to the best of my knowledge and belief.

Signed

Philip G Rice
11268 E Linvale Dr
Aurora, CO 80014
720-282-3376

Attachments:

Appraisal Report
- URAR Pg 1
- URAR Pg 2
- Scanned image - Appraisal Report 6 pages
Real Estate Sales Contract
- Contract Pg 1
- Contract Pg 2 (seller concession)
- Scanned image - Sales Contract (8 pages)
Subject Property Foreclosure Details (1 page)
1300 Block of Florence Foreclosure (1 page)
Subject Deeds Report (1 page)
Subject County Records (1 page)
MLS:
- Subject MLS Listing Dec 2002
- Subject Listing History
- Subject MLS Listing Sep 2005
- Comp #1 MLS, Listing History
- Comp #2 MLS, Listing History
- Comp #3 MLS, Listing History
- Better Comp -- MLS, Listing History

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