Complaint / Real Estate Appraiser

Filed against Elizabeth Butler

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

Attn: Enforcement

Re: My File Number -- 5042
Subject Property: 1657 Sedalia St, Aurora, CO 80017

This is a complaint against Elizabeth Butler, License Number CR00001772.

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

Statement Section:

Elizabeth Butler 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.

Executive Summary:

The subject property was never listed on MLS. There is only one real estate agent involved in this transaction – Narzell Partee. The client (mortgage broker) is Partee Funding – i.e., the lender is also the real estate agent – same person (or related party). In violation of HUD policy (supplemental standard), the appraiser is “not given” a copy of the contract. It is unclear if the appraiser ever asked for a copy of the contract, or made any effort to obtain a copy. The appraised value agrees exactly with the requested amount. The $12,200 seller concession for the subject property is not disclosed in the report. Seller concessions for the 5 comps are not disclosed and not adjusted on the sales grid. The loan value is about $9,000 more than the amount paid to the seller.

Comments:

Seller concession for comps #1, #2, #4, and #5 not disclosed.

Seller concession for comps #1, #2, #4, and #5 not adjusted.

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. Specifically, the following intended users should have been mentioned in the report: HUD.

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. Exposure time is presumed to precede the effective date of the appraisal. Exposure time is not the same thing as reasonable marketing period, which is the amount of time it might take to sell the subject property at the concluded market value during the period immediately after the effective date of this appraisal.

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 Elizabeth Butler violated all of the above cited portions of the USPAP Ethics Rule. Elizabeth Butler is a competent appraiser. Elizabeth Butler is also an unethical appraiser. She set out to produce a report that allowed the loan to close. She began the process with a requested minimum value, and worked backwards to support that figure. She did so in a manner that was as competent and as unethical as necessary to accomplish the primary objective – allow the loan to close.

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).

The sales contract is dated 5/21/04, about 2 weeks before the appraisal. The sales contract (copy attached) shows a seller concession of $6,700 to Nehemiah plus an additional $5,500 for a total concession of $12,200. Page one of the URAR says seller concession is “Unknown”. If Elizabeth did review a copy of the contract, she lied about the concession.

The report would have us believe that even though the sales price was “not given” to the appraiser, the appraised value agreed exactly to the contract price. If the appraiser didn’t review the contract, the required statement about the “efforts undertaken” is not in the report (USPAP Standards Rule 1-5(a) and 2-2(b)(ix)).

Was this an arms length transaction? The report does not say. Was this a related party transaction? The report does not say. If the contract is irrelevant, the required statement acknowledging the existence of the information and citing its lack of relevance is not in the report.

What about market exposure? Was the property listed on MLS? The report says:

“According to Denver Multiple Listing Service the subject property is currently offered for sale for $Not given.”

Does the above statement mean the subject was FSBO? It is not clear to me.

Is a FSBO listing common in this market? Is a FSBO listing given less weight or the same weight as a MLS listing? Was the property exposed to the open market at all? Is the asking price a secret? Is it unusual for the asking price to be kept secret? There is no mention of any of this in the report.

HUD regulations require the mortgage broker (i.e., the client, who in this case is also the real estate agent) to provide a copy of the contract to the appraiser (see attached HUD 2005-02). Why is the contract not available? Even if the contract is not available and the asking price is a secret, what (if anything) does the secrecy mean to the appraiser? According to AO-1, the appraiser is required to “consider” the pending sale of the subject. There is nothing in the report to suggest compliance with AO-1.

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.

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.

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

Attachments:

MLS :

Comp #1 - MLS and Listing History
Comp #2 - MLS and Listing History
Comp #3 - MLS and Listing History
Comp #4 - MLS and Listing History
Comp #5 - MLS and Listing History

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