July 31, 2004
Complaint / Real Estate Appraiser
Filed against Teresa M Cota
Colorado Board of Real Estate Appraisers
In support of the complaint, I state as follows:
Subject property was listed for sale 9/30/03 asking price $179,900. The property closed on 11/03/03 for $184,000. MLS reports a seller concession of $12,500 for the subject property.
The effective date of the appraisal is 10/20/03, and the signature date is 10/24/03. Page number 1 of the appraisal report states that loan charges/concessions to be paid by seller are NA. Page number 4 of the appraisal report states No known concessions were made that affect the comparables sales price.
The appraisal report states that the contract price is $182,000. The appraised value is $184,000. Presumably when the buyer and seller found out that the appraised value was $2,000 above contract (between 10/24/03 and 11/03/03), they modified the contract for the purpose of increasing the loan amount.
Under USPAP Standards Rule 1-5(a) the Appraiser has a duty to analyze the contract and listing, and as stated in the comment section of USPAP Standards Rule 2-2(a)(ix), the Appraiser has a duty to disclose the summary of the results of this analysis. In this case, the analysis was inadequate, and the disclosure was either inadequate or just plain wrong (misleading).
Comp #2 MLS reported a seller concession of $10,000 it sold for $3,000 above asking price. Not disclosed, and not adjusted in the sales grid.
Comp #4 MLS reported a seller concession of $9,500. Not disclosed and not adjusted in the sales grid.
Comp #5 MLS reported a seller concession of $2,945 it sold for $2,100 above asking price. Not disclosed and not adjusted in the sales grid.
Comp #6 MLS reported a seller concession of $8,993. Not disclosed and not adjusted in the sales grid.
The appraisal says no seller concession for the subject property, which is contradicted by the MLS listing which reports a $12,500 seller concession.
The sold information does not get input into MLS until after the sale closes, so it was not available to the appraiser. However, at a minimum, the appraisal report should have disclosed that the contract price was $2,100 (or $4,100) above asking price. Did the appraiser review a copy of the sales contract? The report does not say. In any event, the listing info was available to the appraiser, should have been analyzed and should have been disclosed. The most likely scenario is that the appraisal report failed to disclose a $12,500 seller concession for the subject property.
Philip G Rice
Appraisal Report 23 pages