The Issue Should the Florida Real Estate Appraisal Board (the Board) take action against Respondent, a certified residential appraiser (appraiser) for violations under Chapter 475, Part II, Florida Statutes (2005).
Findings Of Fact Respondent holds certificate no. RD-3933, as a certified residential appraiser issued by the Department of Business and Professional Regulation in accordance with Chapter 475, Part II, Florida Statutes (2005). Respondent's certificate is in an active status. His business address is 2302 Mitchell Place, Jacksonville, Florida, according to Petitioner's records. Kadrina E. Jackson owned property at 4409 Moncrief Road, Jacksonville, Florida, in Washington Heights Estates. A town home was located on the property. James F. Love attempted to purchase the property from Ms. Jackson. As part of the transaction Respondent performed a residential appraisal in relation to the property and rendered a Uniform Residential Appraisal Report (report) for which he charged $300. On July 19, 2005, the report was signed. The sales price for the property was $27,000. The appraised value was $27,000. Mr. Love believed that the appraisal was incorrect and filed a complaint with Petitioner. James Pierce is Petitioner's investigator assigned to the case. He has worked with the agency for over 12 years. His background includes several instructional courses sponsored by the Division of Real Estate. He has taken the approved AB-1 appraisal course and successfully completed the program. The AB-1 appraisal course is for persons who wish to become licensed trainee appraisers. He has conducted approximately 50 appraisal investigations. As part of the investigation of the complaint by Mr. Love, Investigator Pierce interviewed Respondent and others. Mr. Pierce conducted a physical inspection of the property in question from the outside and did research concerning the underlying information within the report. Investigator Pierce requested Respondent to provide a true and complete copy of the report under consideration, in addition to a complete copy of the work file of the work done in completing that report. Mr. Pierce also requested Respondent to provide the investigator a complete copy of previous reports that have been conducted by River City Appraiser Services, Inc. (River City) where Respondent worked. As requested, Respondent provided information for the Moncrief property associated with the July 9, 2005 report but not previous reports as completed by River City. In relation to the section of the report dealing with the cost approach, it was commented: Due to the age of the subject improvements, development of reproduction costs (an exact replica) or replacement costs (new construction) could be misleading because the building codes have changed and building labor and material costs fluctuate. This section was used to determine land value only. Estimated remaining economic life: 40 years. The cost approach did not lead to a determination of the appraised value as $27,000. It referred to site value at $5,000 and the "as is" value of site improvements as $5,000. When Mr. Pierce reviewed materials submitted by Respondent, he did not find separate calculations that would support the land value and site improvement estimates listed in the cost approach section found in the report. Three comparable sales are listed in the report. Comparable sale one dates from February 2005. Comparable sale two dates from January 2005. Comparable sale three dates from May 2005. All comparable properties in the report were in the same subdivision where the Subject Property is found. The sale prices ranged from $23,000 to $27,000, with the median sales price being $24,500. Investigator Pierce did not find documentation designed to support a $500 negative adjustment for the screen porch in comparable sale three within the sales comparison section to the report. The report indicates that predominate occupancy in the neighborhood is owner-occupancy with 0 to 5% vacancy. Respondent told Mr. Price that no research had been done in relation to that determination and no supporting documentation was found in the work file that would indicate the predominant occupancy as being owner occupancy. The report indicates information about single-family housing sales and a price range from $12,000 to $216,000, whereas Respondent's work file provided information on several properties that were available and had been sold recently as being a range between $12,000 and $69,000, excluding the $216,000 reference. The report under general description indicated that the house is attached. From his most recent observation Mr. Pierce considered the townhouse to be detached. Investigator Pierce's prior knowledge of the neighborhood is that individual housing units have exterior walls, which when originally built were approximately one inch in separation from the next unit. He is not sure whether that condition (one inch separation) exists today. He cannot attest to it with certainty. The report refers to four window a/c units in the townhouse. Mr. Pierce in his physical inspection of the property from the outside of the property and based upon photos of the property found within the report, believes that there are only three window air-conditioning units. The neighborhood where the subject home is found has several types of property: two-story town home properties with two to four bedrooms; single-story units that have two bedrooms and one bath; and properties that are designed as duplexes with common walls. With the exception of the duplexes, the lots are zero lot line properties. The reference to zero lot line in this case refers to the lot line beginning and ending at the exterior walls of an individual unit. Respondent's reason for describing the property as an attached unit is based upon his observation that the unit exterior wall touches the next door property wall. He observed that when you stand in front of the property you cannot see between those two buildings. In deciding that the property was a townhouse, Respondent used the Marshall and Swift Residential Cost Handbook. The definition within that reference source considers townhouses to be single-family attached residences. Respondent determined that the predominant occupancy in the neighborhood was owner-occupancy based upon by driving through the neighborhood. The determination of predominant occupancy involved looking at some public records and the Multiple Listing Service (MLS). When someone let Respondent in the home that is at issue, he asked the question "Hey are there a lot of renters in here or people own." That person believed that most people in the neighborhood owned the homes. He arrived at an occupancy rate by that same process of driving around the neighborhood. Following the inspection of the Subject Property, Respondent looked into comparables through information pulled from the MLS. The Subject Property had not been renovated. It had not be updated. It had no central heating or air. In trying to locate comparables, Respondent looked for properties that were similar in their condition. The first comparable was half a mile from the Subject Property. In comparing comparable two with the Subject Property, Respondent recognized that each had two bedrooms and a single bath. The reference to the minus $500 within the report for comparable three and the screen porch, was to reflect the fact that the Subject Property did not have a screen porch. It is inferred that Respondent was attempting to reflect similarities for comparison purposes by deleting a feature that is found in the comparable, not found in the Subject Property. The value of the screen porch was determined on the basis of Respondent's experience and use of the Marshall and Swift Handbook. Concerning the lack of documentation in Respondent's work file, Respondent did not believe that it was necessary to do anything other than utilize the reference book to arrive at his determination. As he explained, Respondent determined the $12,000 to $216,000 range of prices in his report by resort to the MLS. The reference source reflected a $216,000 amount at the extreme. The range of prices for sales in neighborhoods like the Washington Heights subdivision were from $12,500 through the $216,000 according to the MLS. The next highest was $69,000. The reference to $216,000 for a sale in the MLS seemed "odd" to Respondent. He did not double check to verify that the sale of the home was $216,000 through a review of public records, not believing that this was necessary in the conduct of his business. The basis for indicating that four a/c units were located at the townhouse, was Respondent's observation that there were two in the front and two in the back. Whether three or four units were found at the home would not affect the appraisal from Respondent's perspective. The a/c units were not part of his determination of $27,000 appraised value. In preparing the report Respondent did not utilize the cost approach. The only reason for referring to the cost approach in the report was that the lender had requested an opinion of the land value for insurance purposes. There was an earlier version of the report on the Subject Property that did not reflect the site value or land value which had been requested to be included later on. The earlier version without the indication of the site value with improvements was not provided to Investigator Pierce. With the change requested by the lender, to include the site value with improvements, Respondent did not maintain the earlier report that did not reflect the site value. The determination of the appraised value did not utilize the income approach either. The basis for determination was the sales comparison approach. Given that there was no determination utilizing the cost approach or income approach, Respondent had no documentation available to explain those approaches. In the addendum to the report under the final reconciliation Respondent did comment, "Investors are active in the area with possible unrecorded sales."
Recommendation Based upon the facts found and the conclusions of law reached, it is RECOMMENDED: That a final order be entered dismissing the Administrative Complaint against Respondent. DONE AND ENTERED this 3rd day of May, 2007, in Tallahassee, Leon County, Florida. S CHARLES C. ADAMS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of May, 2007.
