Department of Labor and Revenue

Title - South Dakota Appraiser Certification Program

News Articles - October 2012

Appraiser Certification Program Mission, Purpose and Intent

Appraiser Certification Program Advisory Council

Vacancy - Advisory Council

New Licensees - August/September/October 2012

Information Regarding Disciplinary Actions

Anonymous Complaints

Review of Cases - January 1, 2012 through November 5, 2012

Disclosure of Significant Professional Assistance in the Certification

 

Appraiser Certification Program Mission, Purpose and Intent

The Appraiser Certification Program was implemented July 1, 1990, pursuant to enactment of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) by Congress. The mission of the Program is to certify, license and register appraisers to perform real estate appraisals in the state of South Dakota pursuant to Title XI (FIRREA). The purpose of the Program is to examine candidates, issue certificates, investigate and administer disciplinary actions to persons in violation of the rules, statutes and uniform standards, and approve qualifying and continuing education courses. Title XI intends that States supervise all of the activities and practices of persons who are certified or licensed to perform real estate appraisals through effective regulation, supervision and discipline to assure their professional competence.

Effective July 1, 2011, pursuant to the Dodd-Frank Wall Street Reform Act, the Program was granted legislative authority to register and supervise the activities of Appraisal Management Companies doing business in South Dakota.

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Appraiser Certification Program Advisory Council


Council members provide recommendations to the Secretary of the Department of Labor and Regulation in the areas of program administration in order to sustain a program that is consistent with Title XI. The Council meets quarterly in public forum. See the Website for meeting information. http://dlr.sd.gov/appraisers 

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Vacancy - Advisory Council


The Department of Labor and Regulation, Appraiser Certification Program is seeking nominations for two positions on the Advisory Council. The positions to be filled are for a State-Certified General Appraiser from the eastern part of South Dakota and an Institutional Staff Appraiser (e.g., staff appraiser for a financial institution, Farm Credit Services of  America, federal agency, etc.).

The Advisory Council is responsible for advising the Department Secretary in matters of program administration, procedure, and policy in order to sustain a program that is consistent with Title XI, Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) of 1989 administered by the Appraisal Subcommittee and the uniform standards and qualifications criteria as set by the Appraisal Standards Board and the Appraiser Qualifications Board of the Appraisal Foundation. The council members do  not receive compensation for attending meetings or for any travel expenses incurred to serve on the council. Four meetings are held each year in Pierre.  The term is four years.

If you are interested in nominating yourself or another appraiser for appointment to the Advisory Council, please submit your nomination in writing to the Department of Labor and Regulation, Appraiser Certification Program, 445 East Capitol Avenue, Pierre, South Dakota 57501.

The nomination should include the appraiser's name, address, appraiser title, and the reason that you believe you or the person you have nominated should be appointed to the Advisory Council. Any person nominated for these positions should possess substantial knowledge regarding appraising, a reasonable understanding of Title XI, FIRREA and its impact on the appraiser profession, and be highly respected by other appraiser professionals.

Please submit nomination to the Department no later than November 30, 2012. If you have any questions, please feel free to contact Sherry Bren at 605.773.4608.

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New Licensees - August/September/October 2012

Anita E. Rimer, State-Certified Residential - Mobridge, SD
Philip Svartoien, State-Registered - Freeman, SD
Robert E. Dietrich, State-Certified General - Irvine, CA
Dennis L. Reyman, State-Certified General - Storm Lake, IA
Marcia L. Lalim, State-Registered - Watertown, SD
Jonathan J. Kvols, State-Certified General - Sioux City, IA
Scott G. Pothoff, State-Certified General - Carroll, IA
Scott A. Mertens, State-Registered - Spearfish, SD

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Information Regarding Disciplinary Actions

Public information regarding disciplinary action taken against an appraiser is available upon written request to:

Department of Labor and Regulation

Appraiser Certification Program

445 East Capitol Avenue

Pierre, SD 57501

or email Sherry.Bren@state.sd.us.

Include in the request for information the name of the appraiser and the appraiser's city and state of residence. (Disciplinary action may include denial, suspension, censure, reprimand, or revocation of a certificate by the department.) (Administrative Rule of South Dakota (ARSD) 20:14:11:03)

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Anonymous Complaints

ARSD 20:14:11:01.01. Anonymous complaints. Initiation of an investigation may be commenced upon receipt of an anonymous complaint if it meets the following criteria:

  1. The allegations of violations of any provision of this article are considered credible and based upon factual information which is independently verifiable; and,
  2. The complaint is accompanied by a copy of the appraisal report or other documents which contain clearly identifiable errors or violations of the provisions of this article.

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Review of Cases - January 1, 2012 through November 5, 2012

For the period January 1, 2012, through November 5, 2012, the Department has received ten upgrade applications and initiated thirteen complaint investigations.

Upgrades - Seven upgrades pending, one agreed disposition executed, and two upgrades issued.
Complaints - Ten cases pending, one case dismissed, and consent agreements executed in two cases.

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Disclosure of Significant Professional Assistance in the Certification

In accordance with the Uniform Standards of Professional Appraisal Practice a signed certification is required for all appraisals, appraisal reviews and appraisal consulting reports. An appraiser who signs any part of a report, including a letter of transmittal, must also sign the certification.

A signed certification provides important disclosures about the aspects of the assignment. It provides evidence that the appraiser is aware of the ethical obligations of acting as an appraiser. In single-discipline appraisals, the certification also attests that the analyses, opinions, and conclusions expressed are those of the signatory. The certification is also where significant appraisal assistance from others not signing the certification must be acknowledged. Any appraiser who provides significant appraisal, appraisal review, or appraisal consulting assistance to the assignment must sign the certification or be identified in the certification. (Uniform Standards of Professional Appraisal Practice, 2012-2013 Edition, Advisory Opinion 31, Page A105.)

Each appraisal report must contain a signed certification that is similar to the content found in Standards Rule 2-3. Pursuant to Standards Rule 2-3 the names of individuals providing significant real property appraisal assistance who do not sign the certification must be stated in the certification.

In the event an appraiser uses preprinted appraisal forms that the client or client group prohibits altering the form used in assignments performed for them, including the certification, the appraiser must include a signed certification disclosing the name of the individual(s) providing significant real property appraisal assistance. The disclosure may be added as an additional certification on a separate page. The additional certification must be signed and contain language that is similar in content to Standards Rule 2-3.

If you have any questions, please feel free to contact the Appraiser Certification Program.

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Steps that May Help Avoid a Complaint

(Article courtesy of the North Carolina Board Newsletter, Appraisereport, March 2012, Vol. 22, Number 1)

If you have been appraising for years, chances are good that someone will someday file a complaint against you. Here are a few tips to help you avoid a complaint.

1. Consider whether you should accept the assignment.

If this is a routine residential mortgage transaction, things may go fairly smoothly. If the assignment is for appraising a property in a divorce, estate, tax appeal, or anything that might end up in litigation, you should meet with your client to assess whether there could be trouble ahead. You should also consider whether you are comfortable with the assignment conditions before accepting this type of assignment. The client might expect a certain outcome from your appraisal to support their position, and if the client seems emotional about the outcome, you may want to consider whether you want to take the assignment.

Another time to be careful about accepting an assignment is if the client needs the report in a hurry, especially over a weekend. The client may tell you that another appraiser backed out and that they will pay you a rush fee. If you accept an assignment on this basis, make sure that you have adequate time and opportunity to verify the information you plan to use in your analysis.

Think about the assignment - are you competent to take it? If not, decline it, or figure out how you will attain competency. If the subject property is outside your usual market area, consider whether you are geographically competent to accept it. Ask yourself why a local appraiser has not taken the assignment.  There may be something going on in this market area that local appraisers are fully aware of but that you won't know about. Be sure to consult with local appraisers or real estate agents to talk about the subject, so that you don't miss anything.

If you have an uneasy feeling about the client or the assignment, it is better to walk away than to risk having a dissatisfied client.

2. Make sure you and your client understand the terms of the assignment.

Clients want quick turnaround times. Give yourself enough time to do the assignment. Have a clear agreement (preferably in writing) with your client as to when the appraisal will be sent. If you cannot meet this deadline, let your client know as soon as possible. When you agree on a later date, confirm it in writing.

You should also make sure that you understand your client's guidelines and that your client understands your scope of work. For example, do you only need to use three comps? Or, does your client expect six comps and three listings that are gridded? Interior photos? How many? May a trainee assist you on the assignment? What reporting format will you use? If you don't have these types of issues clarified before you begin the assignment, you may find yourself being asked for additional information or told to revise the report. If you refuse to do this work, a complaint may be filed.

3. Double check your measurements.

The Board often gets complaints from property owners and buyers stating that the sketch in the report and the square footage of the dwelling are incorrect. In some circumstances, staff finds that the field measurement was correct, but numbers were transposed or inaccurately recorded. When doing your sketch, you could, for example, end up with a sketch for a dwelling that looks square, while the property is clearly rectangular. Since this is one area of the report that gets a great deal of scrutiny, make sure your measurements are as accurate as possible.

4. Verify the information about your comparable sales.

Appraisers obtain comparable sales information from listing services, tax records, real estate agents, and others in performing appraisals. For the most part, that information is correct and reliable. Sometimes, however, the information is incorrect and relying upon it will result in a misleading appraisal. USPAP requires you to obtain, verify and analyze such information. For example, if you obtain comparable sales information from MLS, you then verify the information by calling the listing or sales agent, the tax office, or another source. If there is any discrepancy between these two sources, you must continue to research the sale until you are confident that the information you will use in your analysis is correct. This is especially important if you receive verbal information, especially from a home owner. Your data source and verification source needs to be noted in your report. Many times property owners are quite familiar with a home that has sold in their area, and, for example, are quick to point out the property does not have a pool or is in run-down condition.

5. Make sure the information in your report is consistent.

Staff often sees simple mistakes in entering information in a report. Often this happens as a "cloning error" when you use an earlier report as a template. For example, you might state on the first page of the URAR that the property has a two car garage, but in the sales comparison grid, you state that the subject has a one car garage and make adjustments accordingly. In a narrative report, you might have basic information about one county in a report when the subject is in another county. These types of mistakes make your report look careless and less than credible, even if your value is supported by the market. Careful proofreading should catch most of these errors.

6. Support your adjustments.

Your adjustments should be explained in the report. If the comparable sale is in an inferior neighborhood and a location adjustment is warranted, it should not be made in the site adjustment area. Readers of the report will assume that no adjustment was made for location, and will complain that the appraiser did not recognize the location difference. If you decide to combine adjustments, explain in an addendum what you did. Also, make sure to make your adjustments in the right direction (positive or negative). Before sending your report in, take another look at your photos for your subject and comparable sales. Sometimes there are clear and obvious differences between the subject and the comparable sales. If a reader of the report would expect an adjustment and one is not there, this could generate a complaint.

7. Accurately report sales history.

USPAP requires you to provide a complete sales history on the subject for three years. This means every transfer for the subject, not just those in MLS. Foreclosures must be reported. Some tax offices only report that last sale of a property, not all sales. If only the land sold, that sale must be reported and explained. Fannie Mae requires that appraisers report the 12 month sales history of comparable sales. Remember, the 12 months goes back from the date of the sale of the comparable sale, not the date of appraisal. Make sure that you perform an adequate search for the sales history.

8. Verify information or make your appraisal based on an extraordinary assumption.

Is the electricity off in the home? Say so in the report, and make your appraisal based on the extraordinary assumption that the utilities work. Using an extraordinary assumption informs your client that you don't know if the utilities work, but you will prepare the appraisal as though they do. This issue could also arise when an addition has been made to a property and you are not sure if proper permits have been obtained, or if the addition was performed in compliance with local building codes. If you don't know and can't find out, and the information could have some influence on your appraisal, consider an extraordinary assumption to alert your client to the issue.

9. Note any significant real property appraisal experience by others.

Property owners, real estate agents, and others remember who came out to inspect a property or who called them for information. If your trainee does the inspection, but only you sign the report, the reader will have serious questions about the credibility of the appraisal. Property owners will pour over the details of their property looking for items that were missed in the inspection and that could change the value. Signing a certification that you inspected the property when you did not is a violation of USPAP and the Appraiser's Act, and is taken very seriously by the Board.

10. Keep a complete work file.

This won't necessarily help you avoid a complaint, but will help you deal with it should one come along.  USPAP's Record Keeping Rule requires you to maintain a copy of the work file for every appraisal assignment for at least five years after preparation or two years after court testimony, whichever period expires last, thus it is important to keep copies of all information and verification in the file. You should have enough data, information and documentation in your file to support your opinions and conclusions, and to produce a summary report from it. USPAP does allow you to have a reference in the file as to where the information may be obtained, so some appraisers don't keep a copy of MLS sheets, tax cards and other data. The problem arises when a MLS system purges its system, or a new tax valuation occurs. The old information is no longer available, the appraiser cannot retrieve that information, and the work file is incomplete. A work file may be kept in an electronic format,a nd scanning in a tax card or MLS sheet does not take very long.

Interior photographs, even if not required by your client, could be very useful if a complaint is filed. If a property goes into foreclosure at some point after your appraisal, the lender often orders a retrospective review. In many cases the property has deteriorated since the effective date of your appraisal, which may influence the reviewer's opinion of value. Your photographs of the condition of the subject property at the time of your inspection could save you from disciplinary action.

Often appraisers are asked to make revisions or corrections to their reports. You must keep a copy of every version of the report that you send to a client, not just the last one. Staff often receives complaints that contain an original version of a report; being able to follow your work file through the revisions made after the original appraisal was sent will make the investigative process easier on you.

Conclusion

Above all else, be professional when dealing with property owners, clients, appraisal management companies and others. Dress appropriately, don't use profanity, and be polite. Your attitude and demeanor could make the difference if someone is on the fence about filing a complaint.

Even if you scrupulously follow every tip given here, chances are you may still have a complaint filed against you. If that happens, you may want to refer to the September 2011 edition of the Appraisereport for tips on how to handle that process. (North Carolina email address: www.ncappraisalboard.org)

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Marcia Hultman, Secretary
700 Governors Drive
Pierre, SD 57501-2291
Tel. 605.773.3101
Fax. 605.773.6184