September 19th, 2005

Complaint / Real Estate Appraiser

Filed against Sean K Maxey

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

Attn: Enforcement

Re: My File Number -- 5022
Subject Property: 6120 Porter Way, Commerce City, CO 80022

This is a complaint against Sean K Maxey, License Number AL40007544.

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

Statement Section:

Sean Maxey 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:

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:

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

It is readily apparent that Sean Maxey violated all of the above cited portions of the USPAP Ethics Rule. Sean Maxey is a competent appraiser. Sean Maxey 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. He 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).

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 (Sean Maxey) reviewed a copy of the contract. If he did not review a copy of the contract, the required statement is not in the report.

Page one of the URAR says seller concession is “None known”. The sales contract (copy attached) and the MLS listing both indicate a seller concession of $11,500.

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. If he did review the contract, he either missed the concession or he lied about it.

There is a section of the report with the heading: “Analysis of Current Agreement”. However, the only analysis is to say the contract in force appears to be an arms length transaction and is supported by the market analysis.

How could Sean Maxey conclude that the market value was $215,000 when it was obvious that you, I, or anyone else could have bought the property for $204,900? The appraisal report does not answer this question.

USPAP AO-1 requires the appraiser to consider the pending sale of the subject. 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.

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.

Per 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.

What is the interrelationship of the asking price to the market value of the subject property? The report does not examine this issue.

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 (17 pages)
Sales Contract (3 pages)
MLS Listing (1 page)
MLS Listing History (1 page)

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