September 20th, 2005

Complaint / Real Estate Appraiser

Filed against Terry Ruth

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

Re: My File Number – Ruth02
Subject Property: 3180 S Halifax St, Aurora, CO 80013
Appraisal Date: 3/26/02

This is a complaint against Terry Ruth, License number AL40011228.

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

Comments:

The appraised value of the subject property is $176,000 on 3/26/02. We can see with the benefit of hindsight the correct market value on that date was more like $150,000 – because the subject subsequently sold for $155,000 (after 329 days on market) with a $4,700 concession. There was no hope of being able to pay off the $173,000 mortgage loan. The property went thru foreclosure, which cost the United States Taxpayer an estimated $40,000.

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.

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).

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 (Terry Ruth) 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.

On page #1 of the URAR, the sale price is shown as $176,015 and the seller concession is shown as $5,334. At the top of the addendum page, the report states:

“The seller agrees to pay $5,334.00 at closing. This has been considered in this appraisal report.”

This is inadequate and /or misleading. 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.

How could Terry Ruth conclude that the market value was $176,000 when it was obvious that you, I, or anyone else could have bought the property for $164,500? There is no answer in the report.

The report shows the sale price as $176,015 and the seller concession as $5,334. If we accept these figures at face value, it means the seller agreed to accept $170,681 and the buyer agreed to pay $170,681. Therefore, the “agreed price” (USPAP AO-1 terminology) is $170,681. How could Terry Ruth conclude the market value was $176,000 when it was obvious the agreed price was $170,681? There is no answer in the report.

USPAP AO-1 requires the appraiser to consider the pending sale of the subject. Typing the words.... “has been considered” does not (in and of itself) constitute compliance.

The plain meaning of USPAP 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.

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 contract, there is no mention of the asking price, and there is no mention of the days on market of the subject. There is no analysis of the subject listing or subject 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.

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

Attachments:

Appraisal Report (3 pages)
Subject MLS Listing Apr 2002 (1 page)
Subject MLS Listing Aug 2004 (1 page)
Subject MLS Listing History (1 page)
Subject Foreclosure Report (2 pages)
Subject County Records (1 page)

Navigate: home / site map / disclaimer