SRPA CCIM Appraiser Board Member Kentucky Real Estate Appraisers Board A State Regulatory Board Members Perspective AI Connect August 5 2014 Lobbying Strategies Relationships Are All Important ID: 684132
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G. Herbert Pritchett, MAI, SRPA, CCIMAppraiser Board Member, Kentucky Real Estate Appraisers Board
A State Regulatory Board Member’s Perspective
AI Connect - August 5, 2014Slide2
Lobbying Strategies- Relationships Are All ImportantRelationships many times determine the outcome of votesRelationships are many times more important than the issuesMembers from differing backgrounds vote based upon their background – not necessarily upon the issues in front of them
AI Connect - August 5, 2014Slide3
Lobbying Strategies - Cultivate the RelationshipsWith the Board staffWith individual Board membersWith the key members on the legislative committees who will vote on changes to the law and regulations
With whomever appoints the members to the Appraiser Board.
AI Connect - August 5, 2014Slide4
Lobbying Strategies -Engaging in the Political ProcessIt is not an option –it is mandatoryRemember Edmund Burke’s admonition, “All
that is necessary for the triumph of evil is that good men do nothing
.”
The political rule making and regulatory process is not what you learned in civics class – it is gritty, and to many, distasteful – but it is absolutely necessary
AI Connect - August 5, 2014Slide5
Lobbying Strategies - Engaging in the Political ProcessIt is based upon relationships, previous political legwork, and political contributions If your state chapter does not have a political arm and PAC, you are at a tremendous disadvantage in influencing policy in your state
Each chapter should have a database showing what members have a relationship with key political figures and an active governmental affairs board.
AI Connect - August 5, 2014Slide6
Lobbying Strategies - Engaging in the Political ProcessAI Connect - August 5, 2014You cannot wait until an issues surfaces
- the relationships and contributions have to be in place before the issue becomes “hot” Do not make the assumption that people in politics will always do what is “right”Instead assume as did Andrew Carnegie with much success, that people will almost always act in their own self-interest Slide7
Lobbying Strategies - Engaging in the Political ProcessThat includes politicians and regulatorsSo always approach political issues keeping in mind everyone’s self interest The more coalitions you can build with real estate related organizations, the more your numbers and the
stronger and more influential your chapter. AI Connect - August 5, 2014Slide8
Lobbying Strategies - Engaging in the Political ProcessAI Connect - August 5, 2014Realize that a Board member who is also an AI member cannot openly lobby AI’s position in Board meetings as to do so would be contrary to FIREEA and bring possible sanctions from the
ASCAI non-Board members have to provide the advocacy Slide9
Review Appraiser IssuesAI Connect - August 5, 2014Some states mandate review appraisers be certified in the state where the property is locatedHearing some pushback on this requirementPros
If I appraise something in a state, I have to be certified in that state, I have to have geographic competency,
State Board has jurisdiction over me
Cons – it is expensive and burdensome for multi-state AMC’s and banks Slide10
Guilt, Innocence & PunishmentDoes the appraiser know what he/she is doing?Does the appraiser use words like “based upon my experience” or “based upon the market” when using significant unsupported adjustments?Is the report language obvious boilerplate that does not relate to the appraisal problem?
Is the report consistent – for instance a depreciated RCN for building area of $75/sf and a building area adjustment in the sales comparison approach of $25/sf, with no explanation of the difference?
AI Connect - August 5, 2014Slide11
Guilt, Innocence & PunishmentAre there prior offenses?Are there careless factual errors in the appraisal brought on probably by a low fee and the need to be hasty?I am easier on appraisers who admit their mistakes than those who try and pull the wool over my eyesI can tell by reading the report and 5minutes of a mediation interview, whether the appraiser knows his/her stuff or is trying to bluff his/her way through
AI Connect - August 5, 2014Slide12
Guilt, Innocence & PunishmentThose who admit they screwed up on that appraisal and tell me they know how to do things, I am much easier on because “There but for the grace of God go I”Those who try and buffalo their way through get harsher punishmentThose who really don’t know any better get a fine and continuing
ed (with successful test completion)Judging your peers and meting out punishment is much harder than I ever thought it would be.
AI Connect - August 5, 2014Slide13
The Appraisal SubcommitteeThe ASC is the most important Federal agency relating to appraisal regulation. They are the “police” that monitor FIREEA, Title XI adherence by state regulatory bodies.Every Board is audited by the ASC every 1 or 2 years for FIRREA Title XI compliance
The ASC’s role has recently been strengthened significantly by Dodd-Frank This offers a new, significant role for state appraisers to influence Board enforcement
AI Connect - August 5, 2014Slide14
The Appraisal SubcommitteePrior to Dodd-Frank, the ASC had only one option – decertification of a state BoardSince the 1989 passage of FIRREA, no Board has ever been decertifiedNow it has many more options, including fines and other interim sanctions.
It has the authority to ascertain whether or not a Board is adequately fundedAI Connect - August 5, 2014Slide15
The Appraisal SubcommitteeHas now codified the standard for state reciprocityASC can now monitor regulatory
agencies’ appraiser independence investigationsASC can now make grants to state regulatory agencies
ASC regulations give the state regulatory agencies the mandate to review the operations and activities of AMCs.
AI Connect - August 5, 2014Slide16
ASC Policy StatementsThere are 10 of them plus an appendixTemporary license must be granted within 5 days.Allows denial of reciprocal certification or license if granting
state’s standards exceed the state’s standards being used for reciprocal application.Person analyzing the complaint must be knowledgeable.
AI Connect - August 5, 2014Slide17
ASC Policy StatementsEnforcement punishments must be consistent.Tightens the 1 year enforcement mandate by tightening the definition of special documented circumstance. Appendix, introduces new grades for state regulatory
agenciesIf you believe your Board is lax and not enforcing the policy statements, complain to the ASC
AI Connect - August 5, 2014Slide18
Other Appraiser – Board IssuesIf your Board is not made up of a majority of appraisers, it needs to be.If your Board is not a separate Board with real power, having a separate staff, it needs to be.If your Board investigators are not experienced appraisers, they need to be.
These may increase license fees, but it provides for a much better Board.AI Connect - August 5, 2014Slide19
Other Appraiser – Board IssuesHave at least 1 AI member at each Board meeting to provide input and commentBoard minutes are generally not available until after they are approved at the next meeting Within 72 hours of the meeting end publish a synopsis of the meeting and email it to all appraisers in the state, with your chapter’s “take” on the votes.
AI Connect - August 5, 2014Slide20
Other Appraiser- Board IssuesCommunicate to all appraisers in the state, AI’s position on issues affecting appraisersCommunicate to all appraisers in the state your chapter’s efforts on behalf of appraisers and consumersThis is excellent chapter outreach to non AI affiliated appraisers
AI Connect - August 5, 2014Slide21
Chapter OutreachRealize AI members are a minority of appraisersOnly 15 to 20% of appraisers are affiliated with a credible professional organization.
Before non-affiliated appraisers will join your chapter, they must perceive it is worth becoming an AI affiliated memberSo become the most recognized advocate for appraisers in your state
AI Connect - August 5, 2014Slide22
Chapter OutreachIf your chapter does not have a periodic email newsletter going out to every appraiser in its jurisdiction, especially after every state regulatory Board meeting, it needs to do so.
AI Connect - August 5, 2014Slide23
Other Appraiser – Board IssuesMandatory “bad” appraisal reporting as called for in Dodd- Frank is anything but mandatoryIt applies ONLY toSingle family residential appraisals in which
There are “material and significant” mistakesHence it is not mandatory for a bank to report a “bad” appraisal on ANY non-residential property. In SFR appraisals, banks can also claim mistakes are not “material and significant” and not turn them in
AI Connect - August 5, 2014Slide24
Anonymous ComplaintsI have turned in appraisals/appraisers via signed complaints and have suffered a loss in business and a loss in friendshipsI have also turned in people anonymously and not sufferedWith these dual experiences I am very much in favor of anonymous complaints
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Other Appraiser – Board Issues
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Other ObservationsAppraisal quality is worse than I thought but it is getting better due mainly to the AQB higher criteria98% of the appraisal activity is residential
AI Connect - August 5, 2014