Complaint / Real Estate Appraiser

Filed against Santiago Silva a/k/a Jimmy

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

Attn: Enforcement

Re: My File Number -- 5013
Subject Property: 1750 W Burlington Pl, Denver, CO 80221

This is a complaint against Santiago Silva, License Number AL01316773.

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

Statement Section:

Santiago Silva 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:

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.

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

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.

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 Santiago Silva violated all of the above cited portions of the USPAP Ethics Rule. Santiago Silva is a competent appraiser. Santiago Silva 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 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 (Santiago Silva) reviewed a copy of the contract. If he did not review a copy of the contract, the required statement is not in the report.

My copy of the contract indicates a “contract price” of $136,000 with a 6% seller concession. (Note: I do not know if there is any connection between the Dream Maker concessionaire in this contract and the Dream Design used by Shawn Tieskotter). Appraisal report indicates a “Sales Price” of $140,000 with a $8,400 seller concession disclosed on page one of the URAR.

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.

There is a section of the report with the heading: “URAR: Analysis of Current Agreement”. In this section, the prior sale of the subject is disclosed with no analysis. In this same section, the report states:

“.....according to an MLS on-line search, it does not appear that the Subject has been listed for sale within the last year”

This statement is factually incorrect (see attached MLS listing).

How could Santiago Silva conclude that the market value was $148,000 when it was obvious that you, I, or anyone else could have bought the property for $135,900? The appraisal report does not answer this question.

The appraisal report shows the contract price as $140,000 with a seller concession of $8,400. If we accept those figures at face value, it means the buyer had offered to pay $131,600 and the seller had agreed to accept $131,600. How could Santiago Silva conclude that the market value was $16,400 higher than the “agreed amount”? The 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 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 Std 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.

What is the interrelationship of the ‘dollar amount the seller agreed to accept’ to the market value of the subject? The report does not examine this issue.

What is the interrelationship of the prior sale of the subject (16 months ago) to the current market value of the same property? The report does not examine this issue. The check box on Page 1 of the URAR says property values are increasing. In my opinion the market has been flat since mid 2002. I realize that not everyone agrees with my opinion, but the point is -- there is no analysis of this issue in the report.

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 Std 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)
Sales Contract (5 pages)
MLS Listing (1 page)
MLS Listing History (1 page)
County Records (1 page)
Deeds Report – Public Records (1 page)

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