Complaint / Real Estate Appraiser

Filed against Ron Hauser

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

Re: My File Number – Hauser01
Subject Property: 5302 S Rome St, Aurora, CO 80015
Appraisal Date: 06/02/05

This is a complaint against Ron Hauser, License number CR40013985.

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

Comments:

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

The subject property market exposure is not disclosed in the report. Was the subject listed on MLS? FSBO? The report does not say.

The asking price is not disclosed in the report. The subject days on market is not disclosed in the report.

Subject property condition: Per my telephone conversation with Jim Holzer (listing agent), the subject property was vacant and sub-standard condition on the contract date. He described the property as not trashed out, but close. The homeowners had left the property on bad terms with the lender, and refused to clean up. The report says the subject “has been maintained in good overall condition.....similar to its neighborhood in......market appeal.”

For example, no one mowed or watered the lawn. Jim Holzer described the lawn as “dead”. The appraisal was done in August, and the utilities (water and electric) were shut off. In the appraisal report, the landscape is described as “mature”. The overall condition of the subject is rated “good”, with no adjustment on the sales grid.

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, 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 report shows the sale price as $235,000 and the seller concession as $4,700. If we accept these figures at face value, it means the seller agreed to accept $230,300 and the buyer agreed to pay $230,300. Therefore, the “agreed price” (USPAP AO-1 terminology) is $230,300. How could Ron Hauser conclude the market value was $266,000 when it was obvious the agreed price was $230,300? There is no answer in the report.

The report states:

“Per County, the subject property sold on 2/13/03 for $248,570. Per sales contract, the subject property is under contract for $235,000.”

USPAP Standards Rule 1-5(b) and 2-2(b)(ix) require the appraiser to analyze all sales of the subject that occurred within three years prior to the effective date of the appraisal. How does the appraisal report reconcile the prior sale of the subject - $248,570 (27 months ago), to the current appraised value of $266,000? Any increase in value would be the result of a change in the property and/or change in the market. In this case, the overall market has been flat and the condition of the property has gotten worse. How is this addressed in the report? It is ignored. There is no reconciliation and no explanation.

How could anyone look at the listing history and see this property on the market for 269 days, and then conclude the market value is $31,000 higher than the publicly stated asking price? How could Ron Hauser conclude that the market value was $266,000 when it was obvious (after 269 days on market) that you, I, or anyone else could have bought the property for $235,000? There is no answer in the report.

USPAP AO-1 requires the appraiser to consider the pending sale of the subject. There is nothing in the report to indicate compliance.

The plain meaning of USPAP Standards Rule 2-2(b)(ix) requires that the report 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. Common sense dictates that there needs to be some stated reason, and the reason must be plausible.

My dictionary defines “Analysis” as an examination of the parts to find out their nature, proportion, interrelationship, etc. A detailed examination. A statement of the results of this process.

There is no mention of the appraisal procedures followed – this is a violation of USPAP Standards Rule 1-5(a) and 2-2(b)(ix). There is no analysis of the sales contract. There is no analysis of the subject listing or market exposure. 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 (5 pages)
Subject MLS Listing (1 page)
Subject MLS Listing History (1 page)
Subject Deeds Report (1 page)
Subject County Records (1 page)

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