September 15th, 2005

Complaint / Real Estate Appraiser

Filed against Norman Settles

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

Attn: Enforcement

Re: My file # 5007

This is a complaint filed against Norman P Settles, AL40011866
Subject Property: 10724 Grant Dr, Northglenn CO 80233
Appraisal date: 04/28/04

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

Comments:

On page #1 of the URAR, the reported seller concession is “0.00”. This is factually incorrect, because the seller concession is $13,140 per the sales contract (copy attached).

The appraisal report does not state the identity of the intended users, by name or type -- this is a violation of USPAP Std 2-2(b)(i) and SMT-9. Specifically, the following intended users should have been mentioned in the report: HUD.

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

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

Comp Photos: Comp #2 and #3 photos are lifted from MLS. There was no MLS photo available for comp #1 -- appraisal report photo of comp #1 is a picture of the wrong property. My conclusion – the appraiser did not personally inspect the exterior of the comps, and therefore, he lied on the certification.

Neighborhood values reported as $190 to $225 with $200 predominant. My CMA shows $136 to $218 with $181 predominant. Anyone familiar with this neighborhood knows that $190 is way too high as the low end of the range.

Neighborhood boundaries given in the report (136th, 120th, Holly, and Colo Blvd.) are off by a significant amount. The subject and all of the comps are not located within these boundaries.

Zoning: The report states subject is zoned “(R-1) Residential single family” with zoning compliance “legal”. The subject property has a second kitchen in the basement (see photo). The basement kitchen is referred to as an “eating space” in the report. Per my telephone conversation with Northglenn zoning, the subject property is zoned “R1C” and is specifically limited to one kitchen to be in compliance.

Report states the subject has double pane windows, the actual windows are single pane.

The report states on page 1 and 2 the subject has a 4 car garage. The sketch shows a 3 car garage 30’x 20’. The actual garage is oversized 1 car, measures 28x22, with a door big enough for only 1 car (see photo). Upward adjustment of $4,000 for the garage is not reasonable.

The map shows 6 comps, there are only 3 in the report.

Comp #1 seller concession of $7,150 not disclosed and not adjusted.
Comp #2 seller concession of $5,000 not disclosed and not adjusted.
Comp #3 seller concession of $6,200 not disclosed and not adjusted.

Pursuant to USPAP Std 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 Std 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 (Norm Settles) 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.

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.

Was the subject listed on MLS? No mention of this in the report.
Was the subject marketed as a FSBO? No mention of this in the report.
Is this an arms length transaction? No mention of this in the report.

As per the MLS listing history, it is readily apparent (with the benefit of hindsight) the appraised value was too high by about $60,000. Appraised at $219,000, actual market value was about $155,000.

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 (7 pages)
Sales Contract (3 pages)
HUD Printout Showing Sanction (1 page)
My CMA (1 page)
Subject MLS Listing / Listing History
My Subject Photos, dated 1/29/05 -- garage and 'basement kitchen'
Comp #1 MLS - 11435 Emerson St, MLS pg2
Comp #2 MLS
Comp #3 MLS
My photo of Comp #1

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