The Issue The issues in this case are whether Respondent violated sections 475.622(1), 475.622(2), 475.624(2), and 475.624(15), Florida Statutes (2007),1/ and Florida Administrative Code Rule 61J1-7.001(2), and, if so, what discipline should be imposed.
Findings Of Fact Mr. Hormes has been a state-certified general real estate appraiser since March 30, 1992. He was disciplined by the Department in 1995. On or about September 4, 2007, Mr. Hormes prepared an appraisal report (Original Appraisal)2/ for real property located at 754 West 4th Street, Cape Coral, Florida (Subject Property). The file number assigned by Mr. Hormes was 0708-248. Mr. Hormes signed the Original Appraisal on September 7, 2007. On the morning of September 7, 2007, he communicated the Original Appraisal to Cirrus Mortgage, which was the intended user of the appraisal. The Original Appraisal appraised the value of the Subject Property at $240,000, using a sales comparison approach. On the signature page of the Original Appraisal, Mr. Hormes stated that his state certification was "State Cert. Gen. Res. REA 1337." On the cover letter transmitting the Original Appraisal, Mr. Hormes put the following designation underneath his name: "State Cert. Gen. REA RZ #1337." The Original Appraisal had numerous errors. Mr. Hormes stated that the Subject Property was zoned as residential, but the Subject Property was zoned corridor district. The Original Appraisal stated the Subject Property was a two-story ranch, when it was a one-story ranch. The actual age of the Subject Property as of September 4, 2007, the effective date of the Original Appraisal, was 26 years. Mr. Hormes used three comparable sales to compare to the Subject Property. Two of the three comparable sales were listed as four years old. Mr. Hormes listed the age of the third comparable sale as nine years, but the house was built in 2003, making it four years old at the time of the appraisal. The Original Appraisal states that there were comparable sales in the Subject Property neighborhood that ranged from $180,000 to $265,000. There was nothing in the work file to support Mr. Hormes's statement that there had been a $265,000 sale. The Original Appraisal states that there were listings available for $175,000 to $260,000 in the Subject Property neighborhood, meaning that potential buyers could chose a less expensive alternative to the Subject Property. There was no explanation in the Original Appraisal why a potential buyer would choose the higher priced Subject Property over the less expensive listing. Mr. Hormes testified that the listing for $175,000 was undesirable because of impact fees, but there is no mention in the work file to support this assertion. Mr. Hormes incorrectly listed the view of the Subject Property as residential. The Subject Property was located across the street from a Carrabas restaurant and a strip mall. Although Mr. Hormes did note in the Original Appraisal that there were some external inadequacies due to the Subject Property being located directly behind a restaurant, strip mall, and commercial stores, he did not adjust or analyze for external obsolescence of the Subject Property. Mr. Hormes stated in the Original Appraisal that the cost of the three comparables was weighted equally in determining the $240,000 value of the Subject Property. However, Mr. Hormes determined that the adjusted sale prices of the three comparables were $241,500; $239,200; and $249,000. Based on these adjusted sale prices, the value of the Subject Property would have been $243,233. Mr. Hormes made a positive adjustment to Comparable Sale 1 of $21,500 for location, but no adjustments were made for Comparable Sales 2 and 3 for location. The Original Appraisal did not state why the positive adjustment was made for Comparable Sale 1, why no positive adjustments were made for Comparable Sales 2 and 3, and why a positive rather negative adjustment was made. At the final hearing, Mr. Hormes stated that he used a paired sales analysis for his locational adjustments; however, there was nothing in the work file to indicate that he used a paired sales analysis. Mr. Hormes stated in the Original Appraisal that property values in the neighborhood of the Subject Property were stable. However, based on documentation in Mr. Hormes's work file, the property values were declining. There were also inconsistencies within the Original Appraisal. On page 1 of the Original Appraisal, Mr. Hormes stated that the marketing time for one-unit housing was over six months. In the addendum to the Original Appraisal, Mr. Hormes stated that the marketing time was typically from three to six months. Cirrus Mortgage is a correspondent lender; thus, it was no surprise to Mr. Hormes that he received a letter from Chase Home Lending (Chase) dated January 29, 2009, concerning the Original Appraisal. Chase advised Mr. Hormes that a field review of the Original Appraisal had been done and that, based on the review, Mr. Hormes's "appraiser status has been changed to Ineligible for Chase Home Lending and we will not accept appraisal reports performed in whole or in part by you effective immediately." A copy of the appraisal field review report was enclosed with the letter. Chase advised Mr. Hormes that it would consider a written response to the appraisal field review report. By letter dated January 7, 2009, Mr. Hormes responded to Chase concerning the appraisal field review report. He pointed out errors that he felt were in the appraisal field review report. Mr. Hormes stated that, at the time the appraisal was done, the appraisal was $234,000. By letter dated January 29, 2009, Chase filed a complaint with the Department concerning the Original Appraisal. Martin Straw (Mr. Straw), an investigator with the Department, notified Mr. Hormes by letter dated March 3, 2009, that a complaint had been filed against him concerning the Original Appraisal. By a separate letter dated March 3, 2009, Mr. Straw requested that Mr. Hormes provide "a true and accurate copy of the appraisal as delivered to the client" and "a complete copy of your entire working file and supporting data for this appraisal." By March 19, 2009, the investigation had been reassigned to Mike McKinley (Mr. McKinley), an investigator for the Department, and Mr. McKinley wrote Mr. Hormes, advising of the transfer. By June 5, 2009, Mr. McKinley had not received a copy of the appraisal sent to the client and a copy of Mr. Hormes's entire working file, and Mr. McKinley wrote Mr. Hormes and again requested that the documentation be provided to the Department. By letter dated March 10, 2009, Mr. James R. Mitchell of Baker & Hostetler LLP wrote Mr. Straw, advising that the law firm would be representing Mr. Hormes. By letter dated June 26, 2009, Mr. Jacob R. Stump of Baker & Hostetler LLP sent a response to the Department concerning the complaint filed by Chase and enclosed what purported to be Mr. Hormes's work file and "a copy of the Original Appraisal as sent to Mr. Hormes' client." Mr. Hormes claims that he signed and sent the Original Appraisal to the client on the morning of September 7, 2007. He testified that he was looking over the Original Appraisal in the afternoon and discovered some errors that his computer software review program did not catch. He further testified that on the afternoon of September 7, 2007, he corrected the errors, prepared an Amended Appraisal, signed the Amended Appraisal, and sent the Amended Appraisal to the client. Mr. Hormes's testimony concerning the preparation of an Amended Appraisal on September 7, 2007, is not credible for many reasons. In the Amended Appraisal, Mr. Hormes added three additional comparable sales and a short sale. He states that the source of the data for Comparable Sales 5 and 6 came from public records and that the effective date of the sources is September 17, 2007, which is ten days after he claims that he prepared, signed, and communicated the Amended Appraisal. The work file of Mr. Hormes contains a list of properties that he looked at to determine comparables for the Original and Amended Appraisals. Some of the sales are dated a week to two weeks after the Amended Appraisal supposedly was signed and communicated. The work file contains supporting data for the comparable sales that are dated January 7, 2009, which is the date that Mr. Hormes responded to Chase's letter declaring him ineligible to prepare appraisals for Chase. Mr. Hormes claims that he just consulted the public records and multiple listings for the information at the time that he prepared the Original and Amended Appraisals and did not place them in the work file. There is supporting data for the information concerning the Subject Property dated September 4, 2007; therefore, it is not logical that Mr. Hormes did not place in the work file data concerning the comparable sales used in the Original and Amended Appraisals that was obtained contemporaneously with the preparations of the two appraisals on September 4 and 7, 2007. There were numerous corrections to the Original Appraisal in the Amended Appraisal, including zoning, ages of the comparable sales, additional comparable sales, the correct average of the comparable sales, adjustments made to the comparable sales, and changing the view to residential/busy. It is difficult to understand how Mr. Hormes could have sent out the Original Appraisal with so many errors which he did not recognize while preparing the Original Appraisal, particularly with his many years of experience as an appraiser. The error concerning the zoning is an error that even an inexperienced appraiser likely would not make. Mr. Hormes's explanation is that the computer software that he used to check his appraisals was not working properly. His explanation is not credited. It is just as difficult to understand how Mr. Hormes could go through the Original Appraisal in the short span of an afternoon, make all the corrections, and communicate the Amended Appraisal to his client. The inevitable conclusion is that Mr. Hormes did not prepare an Amended Appraisal on the afternoon of September 7, 2007, and that the Amended Appraisal was prepared sometime after Chase notified Mr. Hormes that Chase would no longer consider Mr. Hormes eligible to do appraisals for Chase. Mr. Hormes did not provide the Department with a copy of the Amended Appraisal when the Department requested the entire working file concerning the appraisal at issue. When Mr. Hormes's attorney responded to the Department, he did not mention the Amended Appraisal and did not send the Amended Appraisal to the Department. Mr. Hormes testified that he gave the work file to his assistant and asked the assistant to copy the work file and send it to the Department. He testified that his assistant must have failed to send the Amended Appraisal. Mr. Hormes's testimony is not credited. When Chase made its complaint to the Department, no mention was made of an Amended Appraisal, and no Amended Appraisal was sent to the Department. It is inferred that Chase did not have a copy of the Amended Appraisal. There is a letter dated October 6, 2008, from Mr. Hormes to Mr. Straw concerning the appraisal at issue in the work file, which was provided to the Department by Mr. Hormes's attorney. The letter was not in the Department's files prior to its receipt from Mr. Hormes's attorney. The letter predates the complaint filed by Chase against Mr. Hormes and predates the assignment of the case to Mr. Straw. Assuming, arguendo, that the date was incorrect and the year should have been 2009, the letter rings false because Mr. Straw was no longer investigating the case and Mr. McKinley had been in contact with Mr. Hormes concerning the complaint. It is concluded that Mr. Hormes was doctoring his file to make it appear that he had notified the Department early on that an Amended Appraisal had been prepared. In the Original Appraisal, Mr. Hormes stated that the neighborhood boundary that he used was Nicholas Parkway to the east, Chiquita Boulevard to the west, Embers Parkway to the north, and Southwest 10th Street to the south. The Department claimed that one of the properties used as a comparable sale, 636 Southwest 10th Street, was not located within the neighborhood boundary. The evidence establishes that the property is on the boundary line and is considered to be within the neighborhood boundary lines. Mr. Hormes stated in the Original Appraisal: This appraisal report complies with the Uniform Standards of Professional Appraisal Practice that were adopted and promulgated by the Appraisal Standards Board of The Appraisal Foundation and that were in place at the time this appraisal report was prepared. The Uniform Standards of Professional Appraisal Practice (USPAP) contains the governing standards for appraisers throughout the United States. The following portions of the 2006 USPAP are applicable to the instant case: Ethics Rule-Conduct An appraiser must perform assignments ethically and competently, in accordance with USPAP and any supplemental standards agreed to by the appraiser in accepting the assignment. An appraiser must not engage in criminal conduct. An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests. * * * An appraiser must not communicate assignment results in a misleading or fraudulent manner. An appraiser must not use or communicate a misleading or fraudulent report or knowingly permit an employee or other person to communicate a misleading or fraudulent report. Ethics Rule-Recordkeeping An appraiser must prepare a workfile for each appraisal, appraisal review, or appraisal consulting assignment. The workfile must include: the name of the client and the identity, by name or type, of any other intended users; true copies of any written reports, documented on any type of media; summaries of any oral reports or testimony, or a transcript of testimony, including the appraiser's signed and dated certification; and all other data, information, and documentation necessary to support the appraiser's opinions and conclusions and to show compliance with this Rule and all other applicable Standards, or references to the location(s) of such documentation.[3/] An appraiser must retain the workfile for a period of a least five (5) years after preparation or at least two (2) years after final disposition of any judicial proceeding in which the appraiser provided testimony related to the assignment, whichever period expires last. An appraiser must have custody of his or her workfile, or make appropriate workfile retention, access, and retrieval arrangements with the party having custody of the workfile. Standards Rule 1-1 In developing a real property appraisal, an appraiser must: be aware of, understand, and correctly employ those recognized methods and techniques that are necessary to produce a credible report. not commit a substantial error or omission or commission that significantly affects an appraisal; and not render appraisal services in a careless or negligent manner, such as by making a series of errors, that although individually might not significantly affect the results of an appraisal, in the aggregate affects the credibility of those results. Standards Rule 1-4(a) In developing a real property appraisal, an appraiser must collect, verify, and analyze all information necessary for credible assignment results. (a) When a sales comparison approach is necessary for credible assignment results, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion. Standards Rule 2-1 Each written or oral property appraisal report must: clearly and accurately set forth the appraisal in a manner that will not be misleading; contain sufficient information to enable the intended users of the appraisal to understand the report properly; Standards Rule 2-4(b)(viii) (b) The content of a Summary Appraisal Report must be consistent with the intended use of the appraisal and, at a minimum: (viii) summarize the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the sales comparison approach, cost approach, or income approach must be explained. The appraisal attached to the Administrative Complaint is designated as 0708-248 org. Dennis Black, who testified as the Department's expert, reviewed Mr. Hormes's appraisal which has a designation of 0708-248. Both appraisals are identical except for the designation and both appraisals constitute the Original Appraisal, which is at issue.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Mr. Hormes violated sections 475.622(1) and 475.624(15) and rule 61J1-7.001(2); finding that Mr. Hormes did not violate sections 475.622(2) and 475.624(2); suspending his license for six years followed by two years of probation; and imposing an administrative fine of $5,000. DONE AND ENTERED this 19th day of May, 2011, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of May, 2011.
The Issue The issue is whether either Respondent committed the violations alleged in Counts I through VIII of their respective Administrative Complaints.
Findings Of Fact The Florida Real Estate Appraisal Board is the state agency charged with regulating real estate appraisers who are, or want to become, licensed to render appraisal services in the State of Florida. At all times pertinent, Ms. Green was licensed as a certified residential real estate appraiser. Ms. Green held license number 3236 in accordance with Chapter 475, Part II, Florida Statutes. Ms. Moody was licensed as a registered trainee appraiser. Ms Moody held license number 16667 in accordance with Chapter 475, Part II, Florida Statutes. In October 2008, Ms. Moody received a license as a certified residential appraiser, license number RD 7444. On March 8, 2007, Ms. Moody signed an appraisal of real property located at 11735 Chanticleer Drive, Lot 16, Block B Grand Lagoon, in Pensacola, Florida. She signed as appraiser. Ms. Green signed the report as supervisory appraiser. The listed borrower was James W. Cobb, and the lender was Premier Mortgage Capital. Respondents developed, signed, and communicated this report. Subsequently, the borrower, Mr. Cobb, who was also the buyer, complained to the Division with regard to the appraisal on the property, and the Division investigated the matter. The investigation resulted in an investigative report dated December 21, 2007. According to the appraisal, the property was listed for $1,030,000 in the multiple listing service, and the contract price was $790,000. The appraisal report valued the property using both the sales comparison approach and the cost approach. Both approaches resulted in a value of $1,030,000. These facts were reported in a six-page Uniform Residential Appraisal Report, Fannie Mae Form 1004 March 2005. At the time of the hearing, the property was the subject of a foreclosure action. The USPAP provides guidance to those involved in the business of conducting real estate appraisals. Real estate appraisers typically use both a "sales comparison approach" and a "cost approach" in attempting to arrive at a value. A "sales comparison approach" uses data obtained from sales of similar properties and adjusts for differences. A "cost approach" starts with the cost of an empty building site and adds to that the cost of building an identical structure and adjusts for enhancements and depreciation. Both approaches were used by Respondents and were reported on the Form 1004. The Division's expert witness, Sylvia G. Storm, reviewed the Form 1004 and all of the available supporting data. She did not make an appraisal herself and did not visit the property in question. Ms. Storm was accepted as an expert as provided by Section 90.702, Florida Statutes, because she had "specialized knowledge" regarding real estate appraisals. This was the first time that Ms. Storm testified as an expert witness in a case involving appraisals. The same was true in the case of the expert witness presented by Respondents, Victor Harrison. It is noted that these experts were only minimally qualified, and their testimony is given little weight. Ms. Storm commented on the fact that the property was called "new" in the improvements section yet on the following sales comparison approach it was listed under actual age, "27/E New-2." This suggests the property with improvements is 27 years old, but has an effective age of new to two years. In fact, in the improvements section it was noted that the property has been completely reconstructed. It is clear from the Form 1004, and the hearing record, that the property was essentially destroyed during Hurricane Ivan and was rebuilt above the surviving foundation. It is found that the house was essentially new at the time of the appraisal. Ms. Storm believes some of the deficiencies she noted in the Form 1004, discussed in more detail below, and the supporting documentation contained in the work file, affect the credibility of the report. She believes that some of these deficiencies amounted to a violation of USPAP. Ms. Storm stated that an appraiser should do a complete analysis of the contract and that if it is not done the appraiser is not being reasonably diligent. She also testified that an appraiser, who failed to discuss the large difference between the contract price and appraised value, and who failed to document the analysis, is not being reasonably diligent. Mr. Harrison, on the other hand, testified that after his analysis of the report he found no indication at all of a lack of reasonable diligence. Ms. Storm opined that two or more appraisers, appraising the same property may arrive at two or more numbers and that there is nothing unusual when that occurs. Ms. Moody testified under oath that the supporting information contained in the work file was adequate and that references to other documents, such as public records, were plentiful and complied with the requirements of USPAP. This testimony was adopted by Ms. Green. In order to provide clarity, actual allegations contained in the Administrative Complaints will be discussed in seriatim. As will be addressed more fully in the Conclusions of Law, the Division must prove its factual allegations by clear and convincing evidence. In evaluating the evidence presented, that standard will be used below. The factual allegations will be presented in bold face type, and the discussion of the proof will be in regular type: Respondent made the following errors and omission in the Report:"Failure to discuss or explain why the Subject Property was listed for sale for $1,030,000 and the contract price was $790,000." Ms. Storm opined that the discussion of the contract price did not go into the details as to the history of the property, or list price history, or who the contracting parties were or any fees to be paid by either party. She believes the Form 1004 should have reported when the property was listed and how many days it had been on the market. She believes that USPAP requires the appraiser to analyze the contract completely. She believes the Form 1004 should have commented on the large difference between the sales price and the appraised price. The Form 1004 states, "I did analyze the contract for sale for the subject purchase transaction." Ms. Moody testified under oath that they analyzed the difference between the appraisal price and the selling price. She stated that there was no requirement to discuss it in the Form 1004. Ms. Green adopted this testimony. Ms. Moody also stated that the contract price of a piece of property does not affect the value of the property as reported in the Form 1004. This factual allegation was not proven. "Use of an outdated FEMA map for the Subject Property." Respondents used a FEMA flood map that was outdated. This occurred because the computer program Respondents were using, InterFlood.com, presented an out-of-date map. The map used in the appraisal was dated February 23, 2000, but the most current edition of the map available at the time of the appraisal was dated September 26, 2006. The later map was no different from the map Respondents used. The Form 1004 notes, with regard to the flood status, "It appears to be located in FEMA Flood Zones X and AE. A survey would be needed to confirm flood zones." In sum, there is nothing incorrect or misleading with regard to flooding potential. The Division's expert witness, Ms. Storm, concluded that Respondents did not err with regard to the FEMA flood map. This factual allegation was not proven. "Misstatement of PUD Homeowner's Association Fees for the Subject Property." Respondents asserted the homeowner's association fee to be $100 annually. The by-laws of the Grande Lagoon Community Association, Inc., in effect during all times pertinent, state unequivocally that annual dues of the Association are $100. The Division's investigator stated that he learned through a telephone call with a "Mr. Broome," who was possibly an officer in the homeowner's association, that at the time of the appraisal there was an annual assessment by the homeowner's association of $250 for canal maintenance, and that this amount was to increase to $500 annually in 2008. Information about this assessment was not readily available to Respondents. An assessment is different from a homeowner's fee. The Division's expert witness stated that if there is a homeowner's fee it should be stated on the Form 1004, but that it is not a USPAP requirement. This factual allegation was not proven. "Failure to differentiate view of Subject Property and comparable sale 2, when the Subject Property is located on a canal and the comparable had an open water location." Comparable Sale 2 is located on Star Lake, a small, lagoon- like body of water with access to Pensacola Bay, similar to the location of the appraised property, which is on a canal with access to open water on Big Lagoon. The views on these properties are sufficiently similar that no adjustment is required. This factual allegation was not proven. "Failure to note financial assistance in the sales contract, where seller was to pay all closing costs." The agreement whereby seller would pay $20,000 in closing costs was not made until March 28, 2007, 20 days after the appraisal was completed. This factual allegation was not proven. "Failure to note consulting fee to Investor's Rehab in the sales contract." This allegation is true in that the consulting fee was not mentioned. Ms. Storm opined that it should be analyzed in the appraisal report. She asserted that persons who were not privy to the contract might make decisions in reliance upon the appraisal report and, therefore, the Form 1004 should mention the consulting fee. However, Ms. Moody pointed out that the consulting fee had no effect on the value of the property and stated that it was intentionally omitted. This factual allegation was proven to the extent that the consulting fee was not mentioned, but this omission did not affect the accuracy or credibility of the appraisal report. "Failure to explain range of effective age dates for the Subject Property and comparable sale 1." As discussed in Finding of Fact 8, the subject property was essentially new at the time it was appraised. As pointed out by Mr. Harrison, the effective age was new. Effective age is an estimate of the physical condition of a building. The actual age of the building may be shorter or longer than the effective age. The determination of effective age is largely a matter of judgment. In the case of Comparable Sale 1, it was built in 1980 and last sold in August 2005. Respondents reported the age in 2007 as 26 years with an effective age of 1-5 years. The Form 1004, therefore, presented a one year error as to actual age, which is insignificant. The allegation is that Respondents failed to explain the range of effective age dates. However, it is found that the Form 1004 adequately informs anyone reading it. Accordingly, this factual allegation is not proven. "Failure to make an adjustment or provide an explanation for no adjustment on comparable sale 1 for its effective age difference." No evidence supporting this allegation was presented. The unrebutted testimony of Ms. Moody, adopted by Ms. Green, was that there was no market data suggesting that there was a need for adjustment. There was no evidence that an explanation for no adjustment was required. Accordingly, this factual allegation is not proven. "Incorrect site size adjustment for comparable sale 1; the $17,000 should be in the positive direction." The site size adjustment for Comparable Sale 1 is in the amount of $40,000. It appears that the intentions of the Administrative Complaints were to allege an error in gross living area. The result is that the record provides no proof of this allegation. "Adjustment for both the room count and square footage, without explanation of its necessity or market support of its accuracy, for comparable sale 1." The Division's expert found this to be inconsequential. There was no proof adduced indicating that this was a violation of any standard. "Incorrect actual age for comparable sale 1." In the case of Comparable Sale 1, it was built in 1980 and last sold in August 2005. Respondents reported the age in 2007 as 26 years with an effective age of 1-5. The Form 1004 therefore presented a one-year error. This error is insignificant. "Failure to explain inconsistent site size adjustments made to comparable sale 1, comparable sale 2, and comparable sale 3." The subject property was located on a site (or lot) that was .3 acres. Comparable Sale 1 was located on a site that was .52 acres. Respondents subtracted $40,000 from the sale price of Comparable Sale 1. Comparable Sale 2 was located on a site that was .7 acres. Respondents subtracted $60,000 from the sale price of Comparable Sale 2. Comparable Sale 3 was located on a site that was .44 acres. Respondents added $25,000 to the sale price of Comparable Sale 3. It is the appraiser's duty to value a comparable in such a way that differences between the comparable and the subject property are accounted so that a common denominator may be found. For example, Comparable Sale 1 was approximately .2 of an acre larger than the subject property and thus more valuable solely because it is on a larger site. To equalize the situation, the price of Comparable Sale 1 must be reduced, and it was. Comparable Sale 2 also was reduced, but Comparable Sale 3 that was on a larger lot than the subject property, was credited with a $25,000 addition to its price. Nothing in Respondents' work file provides how the figures for the comparables were found. Moreover, if two of the comparables experienced a downward adjustment because of a larger lot size, then the third comparable, having a larger lot size, should have been adjusted downward also. Therefore, there were inconsistencies requiring explanation, and no explanation was found in the file. "Failure to note that comparable sale 1 has a fireplace." The Division's expert witness said that the failure to adjust for the fireplaces was of no consequence. No evidence was adduced to demonstrate that the failure to adjust for fireplaces was necessary. Accordingly, this factual allegation was not proven. "Failure to make an adjustment or provide an explanation for no adjustment on comparable sale 1 for its fireplace." The Division's expert witness said that the failure to adjust for the fireplaces was of no consequence. No evidence was adduced to demonstrate that the failure to adjust for fireplaces was necessary. Accordingly, this factual allegation was not proven. "Incorrect actual age for comparable sale 2." Comparable Sale 2 was built in 1990. At the time of the appraisal, it was approximately 17 years old. It last sold November 2006. It was reported to be 16 years of age with an effective age of five years on the Form 1004. This is both incorrect and insignificant. "Adjustment for both room count and square footage, without explanation of its necessity or market support of its accuracy, for comparable sale 2." The Division's expert found this to be inconsequential. There was no proof adduced indicating that this was a violation of any standard. "Incorrect actual age for comparable sale 2." This allegation repeats that stated in "O" above. "Failure to not [sic] that comparable sale 2 has three fireplaces." The Division's expert witness said that the failure to adjust for the fireplaces was of no consequence. No evidence was adduced to demonstrate that the failure to adjust for fireplaces was necessary. Accordingly, this allegation was not proven. "Failure to make an adjustment or provide an explanation for no adjustment on comparable sale 2 for its multiple fireplaces." The Division's expert witness said that the failure to adjust for the fireplaces was of no consequence. No evidence was adduced to demonstrate that the failure to adjust for fireplaces was necessary. Accordingly, this allegation was not proven. "Failure to make an adjustment or provide an explanation for no adjustment on comparable sale 2 for its lake view." Comparable Sale 2 is located on Star Lake, a lagoon-like body of water with access to open water, similar to the location of the appraised property, which is on a canal with access to open water on Big Lagoon. The views on these properties are sufficiently similar that no adjustment is required. This allegation was not proven. "Incorrect actual age of comparable sale 3." Comparable Sale 3 was built in 1989. At the time of the appraisal, it was approximately 18 years old. It last sold in August of 2005. It was reported to be 16 years of age with an effective age of 10 years on the Form 1004. This age was reported incorrectly. "Use of comparable sale 3 which sold 19 months prior to the Report." The Form 1004 noted that finding comparables was difficult due to market disruption caused by Hurricane Ivan. As noted by Ms. Storm, the change in the real estate market during the years 2004, 2005, and 2006, have been profound everywhere. Primarily, market prices have declined during those years. She was of the opinion that the August 18, 2005, sale date of Comparable Sale 3 was too remote. She stated, correctly, that a market condition adjustment should have been made to the price reported for Comparable Sale 3. Ms. Storm found in the work file analyst listings of the comparables that were utilized, and pages from the Marshall and Swift, but did not see any actual paired sale analyses for any of the adjustments that were used in the report. She could not determine from where they obtained these sales and the adjustments for differences. She opined that this made the report less credible. According to Ms. Storm, the insufficient analysis runs afoul of USPAP. The opinion of Ms. Storm, however, fails to take into account the insufficient data in the Pensacola area that resulted from hurricane-induced market disruption and the consequent lack of sales. Because of the lack of viable alternatives, using this property as a comparable was necessary. This factual allegation was not proven. "Adjustment for both room count and square footage, without explanation of its necessity or market support of its accuracy, for comparable sale 3." The Division's expert found this to be inconsequential. There was no proof adduced indicating that this was a violation of any standard. "Failure to calculate and list the net adjustment and gross adjustment totals for comparable sale 1, comparable sale 2, and comparable sale 3." The Division's expert found this to be inconsequential. There was no proof adduced indicating that this was a violation of any standard. "Failure to utilize current Marshall & Swift information for the Cost Approach section of the Report." Marshall and Swift is a reference service that is used to develop information in the cost approach analysis. It provides "local multipliers" to provide for cost differentials in various geographic areas, including differentials for garages and two-story houses. It also provides "local multipliers" for the cost per square foot for construction. The pages used by Respondents expired at the end of February 2007, eight days before the Form 1004 issued. Respondents receive quarterly updates. The issue after February 2007 showed no change. To the extent Respondents failed to get the most current information, it had no impact on the appraisal amount. "Failure to complete the PUD information section of the Report, when Subject Property, as noted by Respondent in Report, is located in a PUD." The Division acknowledged during the hearing that there was no support for this allegation, and withdrew it. AA) "Failure to date when Respondent inspected the Subject Property and comparable sales listed in the Report." (This allegation was made in the case of Ms. Green, but not in the case of Ms. Moody.) In the blocks on the Form 1004, below the Supervisory Appraiser's signature, Ms. Green signed statements indicating that she inspected the interior and exterior of the subject property and that she inspected the exterior of the comparable sales properties. She did not date either of these statements. There is no documentation in the work file to support the $40,000 "site size" adjustment made to comparable sale 1 in the Sales Comparison section of the Report. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment to the "site size" of Comparable Sale 1. There is no documentation in the work file to support the $60,000 "site size" adjustment made to comparable sale 2 in the Sales Comparison section of the Report. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment to the "site size" of Comparable Sale 2. There is no documentation in the work file to support the $25,000 "site size" adjustment made to comparable sale 3 in the Sales Comparison section of the Report. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment to the "site size" of Comparable Sale 3. There is no documentation in the work file to support the $50,000 "view" adjustment made to comparable sale 1 in the Sales Comparison section of the Report. Comparable Sale 1 is on Big River. The Form 1004 notes that Big River is similar to Big Lagoon. A $50,000 downward adjustment was made in the "view" category. Ms. Storm stated that she had searched for documentation and did not find it. The work file does not have documentary support for the adjustments. Respondents and Ms. Storm agreed that the lack of sales in the area made such adjustments like this problematic. As Ms. Storm said, "I know there haven't been that many sales of waterfronts so it's really difficult to arrive at that data." Nevertheless, the lack of any information in the work file to support the adjustment means that this factual allegation is proven. There is no documentation in the work file to support the $5,000 "age" adjustment made to comparable sale 2 in the Sales Comparison section of the Report. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment to the "age" of Comparable Sale 2. There is no documentation in the work file to support the $10,000 "age" adjustment made to comparable sale 3 in the Sales Comparison section of the Report. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment to the "age" of Comparable Sale 3. There is no documentation in the work file to support the $3,000 "triple garage" adjustment made to comparable sale 3 in the Sales Comparison section of the Report. A downward adjustment of $3,000 was made to Comparable Sale 3 because of its triple garage. No testimony supporting this allegation was presented. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, includes Marshall and Swift data for garages. Although exactly how the $3,000 adjustment was calculated is not clear, the Marshall and Swift information was in the file and provided a method for making the calculation. There is no documentation in the work file to support the $10,000 "dock/pier" adjustment made to comparable sale 1 in the Sales Comparison section of the Report. A downward adjustment of $10,000 was made to Comparable Sale 1 because of the presence of a "dock/pier." No testimony supporting this allegation was presented. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment. There is no documentation in the work file to support the $15,000 "pool" adjustment made to comparable sale 2 in the Sales Comparison section of the Report. A downward adjustment of $15,000 was made to Comparable Sale 2 because of the presence of a pool on the property. No testimony supporting this allegation was presented. Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, does not contain documentation for this adjustment. There is no documentation in the work file to support the $39/square foot adjustment for gross living area made tocomparable sale 1, comparable sale 2, and comparable sale 3 in the Sales Comparison section of the Report. No testimony supporting this allegation was presented. The Division has not directed the attention of the Administrative Law Judge to any reference in the record to a "$39/square foot adjustment for gross living area." An independent search of Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, did not reveal documentation for this adjustment or any documentation mentioning it. Accordingly, this allegation is not proven. The work file lacks current Marshall and Swift pages for the time frame that the Reports were completed, as well as any local builder information, to justify the dwelling square footage price in the Cost Approach section of the Report. Marshall and Swift is a reference service that is used to develop information for use in the cost approach. It provides "local multipliers" to provide for cost differentials in various geographic areas, including differentials for garages and two-story houses. It also provides information used to calculate the construction cost per square foot. The pages used by Respondents expired at the end of February 2007, eight days before the report issued. Respondents receive quarterly updates. The issue subsequent to February 2007 showed no change. To the extent Respondents failed to get the most current information, it had no impact on the appraisal amount. The work file lacks any documentation to support the $30,000 As-Is Value of Site Improvements adjustment in the Cost Approach section of the Report. As-is value of site improvements adjustment, in the cost approach section, is a positive value of $30,000. There is no explanation in the record as to what an "as-is value of site improvements adjustment" is or from what source came the $30,000 value. The work file lacks any documentation to support the $60,000 Porches/Appliances adjustment in the Cost Approach section of the Report Respondents' work file, attached as Exhibit 1 to the Administrative Complaints, contains Marshall and Swift information for porches and appliances. Thus, documentation is present.
Recommendation RECOMMENDED that the Florida Real Estate Appraisal Board find Respondents guilty of violating Subsection 475.624(14), Florida Statutes, by failing to document adjustments made to comparable sales and reprimand Respondents. DONE AND ENTERED this 27th day of January, 2009, in Tallahassee, Leon County, Florida. S HARRY L. HOOPER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of January, 2009. COPIES FURNISHED: Thomas M. Brady, Esquire 3250 Navy Boulevard, Suite 204 Post Office Box 12584 Pensacola, Florida 32591-2584 Robert Minarcin, Esquire Department of Business & Professional Regulation 400 West Robinson Street, N801 Orlando, Florida 32801-1757 Ned Luczynski, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Thomas W. O'Bryant, Jr., Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Suite 802, North Orlando, Florida 32801 Frank K. Gregoire, Chairman Real Estate Appraisal Board Department of Business and Professional Regulation 400 West Robinson Street, Suite 801N Orlando, Florida 32802-1900
The Issue Whether Christopher Wilson (Respondent) violated real estate appraisal license laws as alleged by the Department of Business and Professional Regulation (Petitioner or Department) in the Administrative Complaint.
Findings Of Fact Petitioner is the state agency charged with regulating the practice of real estate pursuant to section 20.165, Florida Statutes, and chapters 120, 455 and 475, Florida Statutes.1 1 All references to Florida Statutes, the Florida Administrative Code, or other applicable rules are to versions in effect in June 2020. At all material times to this case, Respondent was licensed as a state- certified residential appraiser in the State of Florida. Respondent has been preparing appraisal reports for approximately 31 years and has taken numerous courses over the years in appraisal practice. In June 2020, Respondent received an appraisal assignment from Pennymac Loan Services to appraise real property located at 317 Dreadnaught Court, Tallahassee, Florida (Subject Property). Respondent is very familiar with the area where the Subject Property was located, in that most of his appraisal assignments have been for appraisals in the area of the Subject Property. On or about June 11, 2020, Respondent arranged with the owner of the Subject Property to inspect the Subject Property. The owner of the Subject Property gave him access and Respondent inspected the Subject Property, which included taking numerous pictures of the Subject Property. Prior to his inspection, Respondent attempted, on three occasions, to call the owner of the Subject Property to advise her that he would be at the Subject Property 15 minutes earlier than previously scheduled. Respondent arrived at the Subject Property 15 minutes early and the owner of the Subject Property allowed him access to inspect, measure, and take pictures of the Subject Property. When Respondent took photographs of the Subject Property, he did not notice that somebody was in bed under a blanket when he took a picture of a bedroom. The owner of the Subject Property provided Respondent a list of improvements to the Subject Property. Pursuant to the scope of his appraisal assignment, Respondent researched through the Multiple Listing Service (MLS) comparable sales and listings that were similar in square footage and room count, and located within the same zip code as the Subject Property. Based on his research, Respondent selected nine comparable properties, six sales and three listings. On or about June 15, 2020, with an effective date of June 11, 2020, Respondent developed and communicated an appraisal report for the Subject Property (Appraisal Report). In the photo addendum section of the Appraisal Report, Respondent inadvertently included a photograph of a resident of the Subject Property asleep in bed. Respondent submitted his Appraisal Report to his client and his client had no objection to Respondent’s opinion of value for the Subject Property. Respondent was paid a fee of $225 for the appraisal. In his Appraisal Report, Respondent indicates Comparable Sale #2 (141 Ivernia Loop, Tallahassee, Florida) was an “arm’s length” transaction.2 Respondent determined Comparable Sale #2 was an “arm’s length” transaction even though it was sold to a tenant of the property. Comparable Sale #2 was identical to his Comparable Sale #1 and sold for the same price as Comparable Sale #1. Petitioner’s expert, Greg Lane, agreed that there was no evidence indicating that Respondent’s Comparable Sale #2 was not an “arm’s length” transaction. Comparable Sale #2 was not a foreclosure or short sale, and the evidence was otherwise insufficient to show that it was not an “arm’s length” transaction. 2 An “arm’s length” transaction is “[s]aid of a transaction negotiated by unrelated parties, each acting in his or her own self-interest; the basis for a fair market value determination.” Black’s Law Dictionary, p. 100 (5th ed. 1979). Respondent maintained MLS sheets and tax sheets for all of his comparable sales and comparable listings in his workfile for the Subject Property and has them readily available. In his Appraisal Report, Respondent made positive adjustments to the Subject Property appraisal in relation to Comparable Sale #1 ($500), Comparable Sale #4 ($500), Comparable Sale #5 ($500), Comparable Sale #6 ($500), Comparable Sale #7 ($1,000) and Comparable Sale #8 ($1,000). These adjustments were made because the Subject Property had a screen porch and patio, which Comparable Sales #1, 4, 5, 6, 7, and 8 did not have according to Respondent’s MLS sheets and tax records. Respondent based his adjustments on these documents and on his knowledge of the market and his experience in knowing the value of a screen porch and/or patio. Respondent made a negative $2,000 adjustment to the Subject Property appraisal in relation to Comparable Sales #6, 7, 8, and 9 because the Subject Property had a one-car garage and those other comparable sales had a two-car garage. Respondent made his adjustments for a one-car garage versus a two- car garage based on his experience of the subdivision and what the price difference is between similar properties having a one- or two-car garage. While Respondent’s work file contains data on all comparable sales, at the hearing, Petitioner attempted to show that Respondent failed to apply any recognized methods in the development of adjustments in the Appraisal Report. Petitioner’s expert witness, Greg Lane, testified that Respondent’s workfile was thorough in that all of his sales data are in the Appraisal Report, but that there was lack of data indicating how adjustments were made. In explaining that his adjustments were based on the differences in the comparable sales data and listings, Respondent testified that he also used his experience and familiarity with the area in making his adjustments. The fact that Respondent also used his experience in making adjustments does not show that data was missing, that Respondent failed to employ any methods recognized in the industry, or that Respondent failed to exercise reasonable diligence in developing his Appraisal Report. Petitioner’s witness, Joel Salley, performed a second appraisal of the Subject Property and his opinion of value of the Subject Property was higher than Respondent’s opinion of value for the Subject Property. Mr. Salley made a negative $5,000 adjustment to the Subject Property appraisal in relation to his Comparable Sale #3 condition because his Comparable Sale #3 had new countertops and the Subject Property just had resurfaced countertops. Mr. Salley admitted that he had no data in his workfile to support his $5,000 negative adjustment and that his adjustment was made based on his knowledge of what countertops cost. In addition, Mr. Salley made a negative $4,300 adjustment to the Subject Property appraisal for date of sale/time to his Comparable Sale #4, even though Comparable Sale #4 was a listing and not a sale. He made a guess that there was a two-percent downward price adjustment with no data in his workfile to support his guess. In sum, applying reasoning and experience to comparative information in the files does not equate to lack of data supporting adjustments, and the evidence does not otherwise support a finding that Respondent failed to employ methods recognized in the industry or failed to exercise reasonable diligence in developing his Appraisal Report of the Subject Property.
Conclusions For Petitioner: Mackenzie K. Medich, Esquire Delhon Braaten, Esquire Department of Business and Professional Regulation 2601 Blair Stone Road Tallahassee, Florida 32399 For Respondent: Daniel Villazon, Esquire Daniel Villazon, P.A. 5728 Major Boulevard, Suite 535 Orlando, Florida 32819
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Real Estate, enter a final order dismissing the Administrative Complaint. DONE AND ENTERED this 30th day of August, 2021, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of August, 2021. COPIES FURNISHED: Daniel Villazon, Esquire Daniel Villazon, P.A. Suite 535 5728 Major Boulevard Orlando, Florida 32819 Delhon Braaten, Esquire Department of Business and Professional Regulation 2601 Blair Stone Road Tallahassee, Florida 32399 David Axelman, General Counsel Office of the General Counsel Department of Business and Professional Regulation 2601 Blair Stone Road Tallahassee, Florida 32399-2202 Mackenzie K. Medich, Esquire Department of Business and Professional Regulation 2601 Blair Stone Road Tallahassee, Florida 32399 Cristy Conolly, Chair Real Estate Appraisal Board Department of Business and Professional Regulation 400 West Robinson Street, N801 Orlando, Florida 32801 Julie I. Brown, Secretary Department of Business and Professional Regulation 2601 Blair Stone Road Tallahassee, Florida 32399-2202
The Issue Whether the Respondent, Andrew S. Meltzer, committed the violations alleged in the Administrative Complaint involving the standards for the development of or the communication of real estate appraisals and, if so, what penalty should be imposed.
Findings Of Fact The Petitioner (Department) is the state agency charged with the responsibility of regulating persons holding real estate appraisers' licenses in Florida. At all times material to the allegations of this matter the Respondent has been a State-certified residential real estate appraiser holding license number 3190. He is 38 years old and has been a real estate appraiser for approximately seventeen years. During that time, he has never been disciplined nor has he been removed from a bank's approved list of appraisers. On or about October 23, 2006, the Respondent prepared a Uniform Residential Appraisal Report for property located at 9900 Southwest 72nd Avenue, Pinecrest, Florida ("the subject property"), for the F S Lending Group. In September 2007, an investigator for the Department received a copy of an appraisal report (Report One) from a closing agent. The report showed that "Aida Martinez" was the name of the buyer. Based on his investigation and her admissions, the investigator found that Martinez was a "straw buyer" and was paid $10,000 for the use of her name and credit report. The person who is alleged to have paid her was not available to talk to investigators due to possible criminal proceedings, but the Department's investigator made it clear that he found no evidence of a connection between that person and the Respondent. A copy of the contract, also provided by the closing agent, showed a different name for the buyer, "Aida Barrero" or "Aida Barren," as best the handwriting and poor quality of the copy could be read. In addition, an addendum to the contract for a purchase price of $999,000, provided that "seller will contribute [provide concessions in the amount of] $173,000 at closing with (sic) to the buyer (for repair of subject property and buyer closing costs). The amount that seller will receive for the property will be $825,000 less seller (sic) closing costs and mortgage payoff if any." Report One has the Respondent's digital signature on it. A mortgage loan on the subject property is now in foreclosure, but no one from the Department contacted the lender to see what appraisal was the basis for making the loan. Based on the fact that the property was listed for sale, Report One has an incorrect "no" answer on page 1 to a question regarding a current or other sales listings in the last 12 months. Based on the provisions in the contract, it also has an incorrect "no" answer to whether there are seller's concessions. When an investigator showed Report One to him, the Respondent immediately retrieved what has been designated "Report Two" from his computer files. Report Two on page 1 named the buyer as "Barren" using only the last name as is customary for the Respondent, and using the same name that was on the appraisal order form sent to the Respondent. Report Two has what appears to be a signed transmittal page to F S Lending Group. It also has a correct "yes" answer on page 1 to the question regarding a current or sales listings in the last 12 months, unlike Report One. Like Report One, it erroneously has a "no" answer on page 1 regarding seller's concessions and is, in all other respects, the same as Report One. The witnesses agreed that the most likely explanation for Report One is that page 1 was altered fraudulently after Report Two was no longer within the Respondent's control. The Respondent's appraisal work file for the subject property included another report (Report Three) that also listed "Barren" as the buyer, but had no signature on it, and was an earlier draft of Report Two. Although the Department's expert said an oral communication of its contents could make Report Three an appraisal, he and the Department's investigator had no evidence of that and agreed that it was not an appraisal. A three-page excerpt of the contract in the Respondent's work file did not include and did not refer to the addendum to the contract with concessions that indicated work needed to be done on the house and that the purchase price was reduced. The three pages were clearly not the entire sales contract, based on missing page and item numbers on the standard form. The Respondent admitted that he only instructs clients to send the "first page, signature pages, addendum pages, and anything that would [a]ffect the purchase price." He said that he only asks for pertinent pages and he could not survive in the industry if he reviewed seventy or a hundred page construction contracts, although he checked the box on the appraisal from that says, "I did analyze the contract for sale of the subject property." The Department's expert prepared a One-Unit Residential Appraisal Field Report (field report) to evaluate Report One that is, except for the name of the buyer and the answer regarding the sales listing, applicable to Report Two. He cited numerous errors and omissions in Report One. He admitted, however, that his work was "sloppy" because he listed the incorrect property address as 12745 Southwest 72 Avenue, the address for the subject property, not 9900 Southwest 72nd Avenue. In his review, the Department's expert found that the Respondent incorrectly categorized the pool on the subject property as a structural improvement rather than a site improvement. Comparable one in Report Two was a superior property, so the Respondent used matched paired sales data that he keeps in his office among other reference material, including the Marshall and Swift publication on cost estimates. He made adjustments for square footage and room count accordingly. The Department's expert testified that USPAP required documentation for any adjustments, and, regarding where the records had to be kept, responded as follows: Q. Now, and again I'm referring to comp number, report number two, comp number one. What documentation does he need in his file to support his adjustment for the site square footage? A. Either -- I would say the best support would be a paired, p-a-i-r-e-d, sales analysis. Q. Does that have to be in the work file? A. Yes. No-no-no-no. It does not have to be in the work file. It could be somewhere in your office readily accessible . . . Adjustments to comparable two were reasonable based on the Respondent's observation that it was "a lot more superior," and his determination, after talking to the realtor that it was completely "renovated like new" which he wrote in his notes. The MLS listing also reported that the renovations were made in 2006. The Respondent received conflicting information from two different data sources concerning the square footage for comparable two, so he called the realtor and used the figure that the realtor verified in his analysis, as the Department's expert testified he should have done. No adjustment was made based on his note that the comparable was "similar in square footage" and less than a 100-square foot difference. The Department's expert differed with the selection and adjustment of comparables three and four due to lot sizes and bedroom/bathroom counts. The subject property is on a lot of 15,832 square feet, or less than half an acre, has four bedrooms and two and a-half baths, with 2,639 square feet of livable, air conditioned space. Comparable three has a lot size of 32,670 square feet, although the living area is similar, and it has only one half bath more than the subject. Although comparable three has a much larger site, the sales price was only $25,000 difference, because of its condition. So the Respondent reasonably made a consistent negative adjustment based on sales history. Comparable four is within a half mile of the subject property, in the Pinecrest area, but it has a lot size of 33,541 square feet, has five bedrooms and four full baths, and has 4,283 square feet of livable space. The Respondent agreed that, as a rule, comparables should have not more than a ten percent adjustment, and that, as the Department's expert noted, lenders require only three comparables. To provide as much information as possible, the Respondent included a fourth comparable with a greater adjustment down because it had a tar and gravel roof, and because the realtor told him "it needed updating." He made it the fourth comparable because it was the least desirable one, but he did not include the fact that it had a tennis court, as he should have. He failed to note that it was gated property, although the Department's expert agreed that whether a gate adds or does not add value to property is "a matter of professional opinion." He also agreed that the differences between a tar and gravel roof and a tile roof would not usually be documented in a work file. It was appropriate to make adjustments based on the condition of the property. As USPAP required, the Respondent inspected the comparables from the street. In reviewing the Respondent's work, the Department's expert observed only the subject property from the street, but not the comparables and testified as follows: Q. But you did not inspect each of the comparable sales at least from the street? A. Correct, correct. * * * Q. -- you testified that you did not inspect the comparables? A. I agree. * * * Q. Correct. And that goes to the whole point where you were earlier discussing that it's hard to verify what he did because you actually didn't go out and see the comparables? A. Correct. Q. Which is contrary to what you were supposed to do? A. Correct. The Respondent made a mathematical error in the calculation of the depreciation at 22% when it should have been 20%, resulting in an underestimate of $8,541. Although he correctly noted that the subject property was listed for sale for $999,000, the Respondent failed to include the Multiple Listing Service (MLS) history, including,". . . data source(s), offering price(s), and date(s)" of listings in the twelve months prior to the effective date of the appraisal. The sales prices for the subject property were listed as $885,000 in June 2006; reduced to $875,000 in July 2006, reduced again to $849,990 in August 2006; and increased to $999,000 on October 14, 2006. The Department's investigator testified that the listing broker said she raised the price based on an appraisal that was faxed to her, but he agreed that it could not have been based on the Respondent's appraisal since the price increase took effect on October 14, 2006, and the Respondent's appraisal report was dated October 23, 2006. Concerning the MLS listings, the Respondent said he called and asked the realtor why the listing price was increased. He accepted the realtor's explanation that improvements in the last six months, a new roof and a new garage door, would justify the increase in the sales price. In his notes, the Respondent wrote "property renovated" and "big realtor" because the realtor was well-known and he believed he could rely on her representations. He also saw the new roof himself, and it made sense to him that a million dollar house could have a 10% increase in value because of those improvements. While this may have been a logical explanation, the Respondent failed to document it in his work file despite the fact that the MLS fluctuations were a "red flag," possibly indicating fraud. The Department's expert found no support in the work files for the Respondent's allocation of 61% of the total value of $903,100, or $550,000 ($34.74), to the site value, but agreed that differences in value based on what buyers might pay for additional land is a matter of legitimate differences in "appraiser opinion." In summary, the Department's expert established that Report Two was inaccurate and misleading because it (1) did not include the terms of the entire contract that affected the price; (2) did not show the value of the pool in the appropriate category; (3) did not report the MLS listings history for the subject property for the past year; (4) had an incorrect value for depreciation; and (5) did not show the tennis court on comparable four. Based on the evidence, the Department did not show, as alleged in paragraph 7 (A) through (D) of the Administrative Complaint, that the Respondent made errors and omissions on Report One other than those carried over from Report Two, before it was altered. Report One was not alleged or proven to be the document communicated by the Respondent's client. Based on the evidence, Report Two is the only accurate representation of the Respondent's work appraising the subject property. Paragraph 8 (A) of the Administrative Complaint alleging that the name of the borrower was incorrect is not supported by the evidence. The Department's assertion in paragraph 8 (B) that the MLS listing history is incomplete is clearly and convincingly supported by the evidence. Paragraph 8 (C) of the Administrative Complaint, alleging that the Respondent failed to review all agreements for sale, and paragraph 8 (D), regarding the misstatement on seller's concessions, are clearly and convincingly established by the evidence. The Department's allegations in paragraphs 9 (A)-(D), related to Report Three, are not established by clear and convincing evidence based on the witnesses' agreement that Report Three was not an appraisal report. With regard to Report Two, the only appraisal report for the subject property that was shown to have been developed and communicated by the Respondent, the evidence is not clear and convincing that the Respondent made the following errors and omissions: as alleged in paragraph 10 (A) and (B), that adjustments for room count and square footage were not explained for comparable sales one and that discrepancies were not resolved for comparable sale two; in paragraph 10 (C), that room count and square footage adjustments for comparable three are not accurate and supported; and in paragraph 10 (D), that room count and square footage adjustments for comparable four are not accurate and supported. With regard to Report Two, the evidence is clear and convincing, as alleged, in paragraph 10 (E) and (F), that the Respondent omitted the tennis court on comparable four and showed no adjustment or reasonable explanation for not doing so. The evidence was not clear and convincing, as alleged in paragraph 10 (G), that different comparables should have been used. The evidence is clear and convincing that the Respondent made a mathematical error in determining the amount of depreciation in Report Two, as alleged in paragraph 11 (A). Depreciation of improvements, as alleged in paragraph 11 (b), is not clearly and convincingly shown to be erroneous. The comparisons of Reports One, Two, and Three in paragraph 12 are rejected as irrelevant, because Report One is altered except for the mistakes carried over from Report Two, and Report Three was a draft. Charges related to Report Three are also not proved for the same reason. Paragraph 13 is established by clear and convincing evidence because the entire sales contract is not in the working files for the subject property. 32. Paragraphs 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25 and 26, all related to the absence of documentation for comparable adjustments, the square footage price, value of improvements, and condition are not supported by clear and convincing evidence based on the testimony of Department's expert regarding the required documentation and his incomplete review of the comparables. Paragraph 27, alleging that Aida Martinez was a "straw buyer" is supported by the undisputed evidence presented by the Department.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Florida Real Estate Appraisal Board: Finding the Respondent guilty on Counts I, II, III, IV, V, VI, VII, IX, X and XI. Recommending suspension of the Respondent's appraisal license for a period of 30 days, followed by probation for a period of six months. Requiring the Respondent to pay an administrative fine of $7,500; and Requiring the Respondent to pay the investigative costs of $1,501.50. DONE AND ENTERED this 17th day of March, 2009, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of March, 2009. COPIES FURNISHED: Robert Minarcin, Esquire Department of Business & Professional Regulation 400 West Robinson Street, N801 Orlando, Florida 32801-1757 Daniel Villazon, Esquire Daniel Villazon, P.A. 1420 Celebration Boulevard, Suite 200 Celebration, Florida 34747 Thomas W. O'Bryant, Jr., Director Division of Real Estate Department of Business & Professional Regulation 400 West Robinson Street, N802 Orlando, Florida 32801-1757 Ned Luczynski, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact On June 6, 1975, respondent entered into a written agreement with John R. Lovett, III, a real estate salesman. Among other things, this agreement provided: When Salesman performs any service whereby a commission is earned, the commission when collected, shall be divided between the Broker and Salesman in the manner as set out in Schedule attached hereto, or the office policy manual of the broker. The agreement also specified that a [s]alesman's right to commissions or divisions thereof, which accrued prior to the termination of this contract shall not be divested by the termina- tion hereof. The parties stipulated that no written schedule or office policy manual ever existed but that, under an oral agreement between respondent and Mr. Lovett, respondent would have paid Mr. Lovett $441.00 if he had been employed when the Oliver-Kelly transaction closed and had otherwise performed the duties of a listing salesman. Mr. Lovett and respondent never discussed what would happen as to listing commissions when he left her employ. While employed by respondent, Mr. Lovett obtained for the firm the exclusive right to sell a home belonging to Mr. and Mrs. Oliver. Thereafter, Mr. Lovett facilitated execution of a contract between the Olivers and the Kellys in which the Kellys agreed to buy the house for $34,000.0 "contingent upon purchaser qualifying for a VA insured loan in the amount specified." On August 11, 1975, the property was appraised at less than $34,000.00; and a "VA insured loan in the amount specified" proved unavailable to the Kellys. About the time this contract fell through, Mr. Lovett said he was going to Mt. Dora to look for work. The last week of August, 1975, Mr. Lovett spent in Orlando looking for a job. At the end of the week, Mr. Lovett returned to respondent's office, cleaned out his desk and announced that he was leaving. Respondent heard him say this before she left town for a long weekend. The following Tuesday, when the office reopened after Labor Day, respondent wrote petitioner, advising that Mr. Lovett was no longer associated with her as of the date of the letter. Mr. Oliver, who had moved to Georgia, returned to Brevard County for the Labor Day weekend and contacted respondent's office. Respondent's son, who was working as a real estate salesman for his mother, reopened discussions with the Kellys. As a result, the Kellys agreed a second time to buy the Olivers' house, this time at a price of $31,500.00. This second agreement, styled an "Amendment" (sic) to the first contract, was reduced to writing and signed by the principals on August 30, 1975. This second agreement provided that respondent's office be paid a commission of $2,205.00. The transaction closed the following month. Respondent originally refused Mr. Lovett's demands for commissions on account of the Oliver-Kelly sale. After Mr. Lovett left respondent's office, however, respondent paid him both listing and sales commissions on account of another transaction which closed before he left respondent's employ. After Mr. Lovett enlisted the aid of petitioner, respondent paid Mr. Lovett $220.00 in settlement of his claim for the listing commission on account of the Oliver- Kelly sale.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That petitioner dismiss the administrative complaint against respondent. DONE and ENTERED this 7th day of May, 1979, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: John Huskins, Esquire Post Office Box 1900 Orlando, Florida 32802 Charles Holcomb, Esquire Post Office Box 1657 Cocoa, Florida 32922
The Issue Whether Respondent committed the violations alleged in the Administrative Complaint in the manner specified therein and, if so, what penalty should be imposed.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made: Respondent is now, and has been since March 25, 2004, a Florida-certified residential real estate appraiser, holding license number RD 4405. She has not been the subject of any prior disciplinary action. From 1998 until becoming certified as a residential real estate appraiser, Respondent was a Florida-registered trainee appraiser. At all times material to the instant case, the Subject Property was a single-family residential property, owned by Pablo Perez, housing the residents of an assisted living facility (ALF) operated by South Florida Home Services, Inc., pursuant to a license issued by the Agency for Health Care Administration (AHCA). At all times material the instant case, the Subject Property was zoned by the City of Miami for residential use. The ALF that operated on the premises of the Subject Property was inspected by Miami-Dade County Health Department Code Inspector Manuel Alzugaray on April 6, 2007. This was the only Miami-Dade County Health Department inspection of the premises conducted in April 2007. The "results" of Mr. Alzugaray's April 6, 2007, inspection were "unsatisfactory." The written "inspection report" that Mr. Alzugaray completed following the inspection contained the following "comments and instructions": Repair wall in the 2nd stall of the restroom across from Rm. #5. Repair all holes throughout the facility & floor tiles also. Maintain restrooms & facilities clean. Provide screen for kitchen restroom. Evidence of rodents in the kitchen. Evidence of termites in restroom across from Rm. 5. Mr. Alzugaray noted, during his inspection, that the doors of the residents' bedrooms had removable numbers displayed on them and that the "restroom across from Rm. #5" had two toilets separated by a "divider." Mr. Alzugaray returned to the Subject Property to conduct a follow-up inspection on May 17, 2007. The "results" of Mr. Alzugaray's May 17, 2007, inspection were "unsatisfactory." The written "inspection report" that Mr. Alzugaray completed following this May 17, 2007, inspection contained the following "comments and instructions": Evidence of rodent droppings in the kitchen. Provide screen for window in the kitchen bathroom. Remove mold & mildew from shower in the kitchen restroom. Repair restroom in the 2nd floor (toilet doesn't flush). During both the April 6, 2007, and May 17, 2007, inspections, there were, by Mr. Alzugaray's count, 14 ALF residents present on the premises. (The facility had a licensed capacity of 14 residents.) Mr. Alzugaray conducted two additional inspections of the ALF in 2007, one on September 12, 2007, and the other on November 2, 2007, with the former yielding "unsatisfactory" "results" (due to "drawers in [the] kitchen [not being] clean" and there being "evidence of roach droppings in the kitchen area") and the latter yielding "satisfactory" "results." In April 2007, Respondent was working as a residential real estate appraiser for Atlantic Appraisal Consultants Corporation, when she received an assignment to conduct a residential appraisal of the Subject Property for Affordable Finance Group (Affordable). Affordable was in the business of making residential mortgage loans, and only residential mortgage loans. It did not make commercial mortgage loans. Affordable had received an application from Adolfina Ortega for a residential mortgage loan to purchase the Subject Property from its owner, Mr. Perez. The purpose of the appraisal was to determine whether the market value of this single-family residential property justified Affordable's making the loan. Affordable had telephoned Respondent's secretary on April 10, 2007, to order the appraisal. Respondent's secretary inputted the information she had received from Affordable "in the [office] computer" and generated a printed appraisal order (Order), which she gave to Respondent. The Order indicated that Affordable was requesting an "SFA" (a shorthand reference to a "single family appraisal") of the Subject Property in connection with a mortgage loan sought by Ms. Ortega. This was an appraisal Respondent was competent and qualified to perform by herself as a Florida-certified residential real estate appraiser. The same day the appraisal was requested (April 10, 2007), Respondent telephoned Affordable and discussed the appraisal assignment with an Affordable representative. During this telephone conversation, Respondent was told that the Subject Property was owner-occupied and that its sale was "pending contract." She was also given the name of the owner/seller, Mr. Perez, and his telephone number. Nothing was said to Respondent to suggest that she was expected to perform anything other than the "SFA" indicated on the Order. No mention was made of any business that was part of the sale. Later in the day on April 10, 2007, Respondent telephoned Mr. Perez and made arrangements to visit the Subject Property on the morning of April 12, 2007, as part of the appraisal process. Before her visit, to find out more information about the Subject Property and to obtain possible "comparable sales" properties, Respondent performed internet-based research using generally accepted data sources (MLS, FARES, and RealQuest) that Florida-certified residential real estate appraisers typically employ for such purposes. According to the data her research uncovered, the Subject Property was a one-story, single-family residence, with three bedrooms and two bathrooms, that was owned by Mr. Perez and had R-4 zoning. There was nothing in any of the data sources that she used to indicate that an ALF or any other business was operating on the premises of the Subject Property. Respondent visited the Subject Property the morning of April 12, 2007, as scheduled. When she arrived (somewhere between 10:00 and 10:30 a.m.), she was greeted by a "gentleman."4 Respondent and this "gentleman" were the only persons present at the Subject Property during the entire time Respondent was there. After measuring the exterior of the structure, Respondent asked for and was granted permission to go inside to do a "very basic" "walk[] through," the purpose of which was to note the number and location of the rooms and the general condition of the residence. Respondent's "walk[] through" took approximately ten minutes, which was an adequate amount of time for her to accomplish what she needed to. As part of the "walk[] through," she "peek[ed] in" the bathrooms. The last thing that Respondent did during her visit was to take photographs outside the residence.5 Respondent witnessed nothing during her visit to suggest that the Subject Property was anything other than a single-family residential property. She had no reason to believe, based on the observations she made,6 that the property was being used as an ALF or to conduct any other business activity. She did discover, however, as a result of the observations she made during her visit, that the on-line information she had obtained about the Subject Property was inaccurate to the extent that it indicated that the Subject Property was a one-story structure with three bedrooms, not a two-story structure with five bedrooms. Appropriately, in completing her appraisal, she relied, not on this erroneous information, but on what she had actually observed during her visit. On her way back from the Subject Property, Respondent drove to, and parked on the street outside of, each of the three possible "comparable sales" properties she had selected before setting out that morning (all of which were located within 1.28 miles of the Subject Property). She looked at and took exterior photographs of each property, but did not go inside any of them. On the Order, which she had taken with her, she wrote notes recording her observations about each property. Thereafter, Respondent sought to verify the information she had gleaned from her internet-based research about these three "comparable sales" properties (as she was professionally required to do, if she wanted to use them for her appraisal). She did so, appropriately, by contacting individuals who had been involved in these "comparable sales" transactions (realtors, in the case of two of the transactions, and the purchasers, in the case of the other). Where there was a conflict between what her research had revealed and what she was told by these individuals, she, again appropriately, relied on the latter in completing her appraisal. Using a pre-printed Fannie Mae form, Respondent completed a Summary Appraisal Report (Report), dated April 30, 2007, containing her opinion that the market value of the Subject Property as of April 25, 2007 (the date Respondent started preparing the Report) was $590,000.00 (which was price Ms. Ortega had agreed to pay Mr. Perez for the Subject Property). Respondent arrived at her opinion by conducting a sales comparison analysis. (She conducted neither a cost analysis nor an income analysis.) As she indicated in the Report, Respondent, appropriately, appraised the Subject Property as a single-family residential property, as she had been asked to do by Affordable. The first page of Respondent's Report contained five sections: "Subject," "Contract," "Neighborhood," "Site," and "Improvements." The "Subject" section of the Report read, in pertinent part, as follows: Property Address: 140 NW 9 AVENUE City: MIAMI State: FL Zip Code: 33128 County: MIAMI DADE Borrower: ORTEGA Owner of Public Record: PEREZ Neighborhood Name: RIVERVIEW * * * Occupant: X Owner _ Tenant _ Vacant * * * Property Rights Appraised: X Fee Simple _ Leasehold _ Other (Describe) * * * Assignment Type: X Purchase Transaction _ Refinance Transaction _ Other (describe) Lender/Client: AFFORDABLE FINANCIAL GROUP . . . . . Report data source(s) used, offering price(s), and date(s): PUBLIC RECORDS, MLS TAX ROLLS, REALQUEST The "Contract" section of the Report read, in pertinent part, as follows: I _ did X did not analyze the contract for sale for the subject purchase transaction. Explain the results of the analysis of the contract for sale or why the analysis was not performed. SALE PRICE IS $590,000 AND 4/2007 CONTRACT DATE PER SALES CONTRACT. Contract Price: $590,000 Date of Contract: 4/2007 Is the property seller the owner of public record: X Yes _ No Data Sources: PUBLIC RECORDS Is there any financial assistance (loan charges, sale concessions, gift or down payment assistance, etc.) to be paid by any party on behalf of the borrower? X Yes _ No If Yes, report the total dollar amount and describe the items to be paid: 20,000 SELLER TO PAY $20,000 TOWARDS BUYER[']S CLOSING COST[s]. Respondent did not "analyze the contract for sale for the subject purchase transaction" because she was not in possession of a written contract at the time she prepared her Report. She had merely been told (by the Affordable representative) of the purported existence of such a contract and of its salient terms. It was not unreasonable, however, for her to have relied on these oral representations and included in the Report the information with she had been provided, as she did. Following the development and communication of the Report, Respondent received a copy of a written contract, dated May 11, 2007, signed by Mr. Perez, as the seller of the Subject Property, and Ms. Ortega, as the buyer. Respondent maintained this written contract in her work file.7 The contract was a "standard purchase and sale contract for the sale of a residential home." Consistent with the information contained in the "Contract" section of the Report, the "contract price" was $590,000.00, and provision was made in the contract for a $20,000.00 "seller contribution toward closing costs." The contract made clear that what was being purchased and sold was the Subject Property, "together with all improvements and attached items," as well as "all appliances in working condition[]," and nothing else (including any business enterprise that might have been operating on the premises or any items associated therewith).8 In the "Neighborhood" section of the Report, Respondent identified the boundaries of what she considered, in her judgment, to be the "neighborhood" in which the Subject Property was located. She identified these boundaries as follows: "US-1 TO THE SOUTH, I-95 TO THE EAST, SR 836 TO THE NORTH, AND SW 17TH AVENUE TO THE WEST." She then provided the following "Neighborhood Description" and "Market Conditions": Neighborhood Description: Subject is located in a typical neighborhood. Typical neighborhood amenities such as schools, shopping, parks, houses of worship and transportation are within a reasonable distance of the subject but do not intrude on residential areas. No unfavorable factors affect marketability. Subject is convenient to employment centers and is stable at present time. The predominate price for the area does not appear to [sic]. Market Conditions (including support for the above conclusions): Property values are stable along with supply and demand. Competitive listings are selling within 3-6 months. Typical sales are at 93-95% of listing price. Sellers need not negotiate financing related concessions as most sales are conventional or FHA/VA financed. Identifying the precise boundaries of a property's "neighborhood" is largely a subjective exercise.9 While Petitioner's expert, Mr. Spool, may have drawn different, narrower "neighborhood" boundaries had he been the one doing the appraisal (as he testified he would have at hearing), it cannot be clearly said that the boundaries identified by Respondent in her Report were "incorrect," as alleged in numbered paragraph 13A. of the Administrative Complaint's "Essential Allegations of Material Fact." Where the boundaries of the Subject Property's "neighborhood" lie is a matter of judgment about which reasonable people may disagree. The "Site" section of the Report read, in part, as follows: * * * View: RESIDENTIAL Specific Zoning Classification: R-4 (AS PER TAX ROLL). Zoning Description: MULTI-FAMILY HIGH- DENSITY RESIDENTIAL. Zoning Compliance: X Legal _ Legal Nonconforming (Grandfathered Use) _ No Zoning _ Illegal (describe) Is the highest and best use of subject property as improved (or as proposed per plans and specifications) the present use? X Yes _ No If no, describe. * * * In the "Improvements" section of the Report, Respondent indicated, among other things, that the Subject Property was a one-unit structure built in 1920, with an "effective age" of 30 years. Next to "# of stories," Respondent inadvertently entered, "One," but next to "Design (Style)," she put, "2 Story" (which, as the "Subject Front" photograph appended to the Report plainly showed, was, of these two conflicting entries, the correct one). Other information provided in this section included the following: Finished area above grade contains: 8 Rooms, 5 Bedrooms, 2 Bath(s) 1,971 Square Feet of Gross Living Area Above Grade. Additional features (special energy efficient items, etc.) THE SUBJECT HAS A COVERED ENTRY, TILE/WOOD FLOORS, CENTRAL AND UNIT A/C, CHAIN LINK FENCE, OPEN PARKING, ALUM. PATIO, AND GRAVEL DRIVEWAY. Describe the condition of the property (including needed repairs, deterioration, renovation, remodeling, etc.). NORMAL PHYSICAL DEPRECIATION FOR AGE. THE SUBJECT APPEARS TO BE IN OVERALL AVERAGE CONDITION. Are there any physical deficiencies or adverse conditions that affect livability, soundness, or structural integrity of the property? _ Yes X No If Yes, describe Does the property generally conform to the neighborhood (functional utility, style, condition, use, construction, etc.)? X Yes _ No If No, describe The second page of Respondent's Report contained two sections: "Sales Comparison Approach" and "Reconciliation." In the "Sales Comparison Approach" section of the Report, Respondent identified the three "comparable sales" properties ("comparables") that she initially examined to estimate (using a sales comparison analysis) the market value of the Subject Property, and she provided information about these "comparables," as well as the Subject Property. The following were the three "comparables" Respondent selected for her sales comparison analysis: Comparable Sale 1, located at 2805 Southwest 4th Avenue in Miami (1.28 miles from the Subject Property); Comparable Sale 2, located at 460 Southwest 18th Terrace in Miami (.92 miles from the Subject Property); and Comparable Sale 3, located at 1285 Southwest 16th Street in Miami (1.18 miles from the Subject Property). It is alleged in numbered paragraph 13D. of the Administrative Complaint's "Essential Allegations of Material Fact" that Respondent erred in using these "comparables" because none of them were "located in the Subject Property's defined market area."10 It is not at all clear from a review of the evidentiary record, however, what constituted the "Subject Property's defined market area," as that phrase is used in the Administrative Complaint,"11 and it therefore cannot be said, without hesitation, that any of these "comparables" were located outside of this "market area." The Report accurately reflected that the "comparables," as well as the Subject Property, were "Residential" properties. Contrary to the assertion made in numbered paragraph 13E. of the Administrative Complaint's "Essential Allegations of Material Fact," "Respondent's use of single family Comparable Sales was [not] inappropriate," given that the Subject Property was a single-family residential property (that, according to the information Respondent had obtained from the client, Affordable, was being sold to an individual seeking a mortgage loan from Affordable to finance the purchase transaction), and Affordable had requested, and Respondent was performing, appropriately, an "SFA" to determine the value of this single-family residential property. That an ALF (which was not part of the purchase transaction) was operating on the premises of this single-family residential property did not render "Respondent's use of single family Comparable Sales . . . inappropriate." Comparative information relating to the three "comparables" chosen by Respondent and the Subject Property was set forth in a grid (Sales Comparison Grid) in the "Sales Comparison Approach" section of the Report. On the "Design (Style)" line of the Sales Comparison Grid, Respondent indicated that the Subject Property was a "2 Story" structure. On the "Above Grade Room Count" line of the Sales Comparison Grid, Respondent entered the following with respect to the Subject Property and the three "comparables": Subject Property: 8 (Total); 5 (bdrms.); (Baths). Comparable Sale 1: 6 (Total); 3 (bdrms.); (Baths). Comparable Sale 2: 6 (Total); 3 (bdrms.); 1 (Bath). Comparable Sale 3: 7 (Total); 4 (bdrms.); 3 (Baths). The following "Adjusted Sale Price[s]" for the three "comparables" were set forth on the last line of the Sales Comparison Grid: Comparable Sale 1: $595,800.00; Comparable Sale 2: $571,400.00; and Comparable Sale 3: $628,700.00. At the end of the "Sales Comparison Approach" section (beneath the grid) was the following "Summary of Sales Comparison Approach" and "Indicated Value by Sales Comparison Approach": Summary of Sales Comparison Approach: SEE ATTACHED ADDENDUM. THE SUBJECT PROPERTY IS SIMILAR TO ALL THREE COMPARABLE CLOSED SALES WHICH WERE CAREFULLY SELECTED AFTER AN EXTENSIVE SEARCH IN AND OUT OF THE SUBJECT NEIGHBORHOOD. THIS SEARCH CONSISTED OF ANALYZING NUMEROUS CLOSED SALES AND NARROWING THIS LIST DOWN TO THE THREE MOST SIMILAR. AFTER CLOSE EVALUATION OF THE THREE COMPARABLE SALES UTILIZED, ADJUSTMENTS TO ALL COMPARABLES[S] WERE MADE ACCORDINGLY. Indicated Value by Sales Comparison Approach: $590,000. In the first part of the "Reconciliation" section of the Report, Respondent reiterated that $590,000.00 was the "Indicated Value by [the] Sales Comparison Approach," and she added that she used this approach in valuing the Subject Property because it "best reflect[ed] [the] action of buyers and sellers in the market place." The second and final part of the "Reconciliation" section of the Report read, in part, as follows: This appraisal is made x "as is," . . . . . Based on a complete visual inspection of the interior and exterior areas of the subject property, defined scope of work, statement of assumptions and limiting conditions, and appraiser's certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this report is $590,000, as of APRIL 25, 2007, which is the date of inspection and the effective date of this appraisal. The "date of inspection" was actually April 12, 2007, not April 25, 2007. On the third page of the Report, Respondent indicated that the "income approach [was] not applied [to determine the Subject Property's value] due to lack of rental data." The fourth page of the Report contained pre-printed boilerplate, including the following: This report form is designed to report an appraisal of a one-unit property . . . . The appraisal report is subject to the following scope of work, intended use, definition of market value, statement of assumptions and limiting conditions, and certifications. Modifications, additions, or deletions to the intended use, intended user, definition of market value, or assumptions and limiting conditions are not permitted. The appraiser may expand the scope of work to include any additional research or analysis necessary, based on the complexity of this appraisal assignment. Modifications or deletions to the certifications are also not permitted. However additional certifications that do not constitute material alterations to this appraisal report, such as those required by law or those related to the appraiser's continuing education or membership in an appraisal organization, are permitted. SCOPE OF WORK: The scope of work for this appraisal is defined by the complexity of this appraisal assignment and the reporting requirements of this appraisal report form, including the following definition of market value, statement of assumptions and limiting conditions, and certifications. The appraiser must, at a minimum: perform a complete visual inspection of the interior and exterior areas of the subject property, (2) inspect the neighborhood, (3) inspect each of the comparable sales from at least the street, research, verify, and analyze data from reliable public and/or privates sources, and report his or her analysis, opinions, and conclusions in this appraisal report. INTENDED USE: The intended use of this appraisal report is for the lender/client to evaluate the property that is the subject of this appraisal for a mortgage finance transaction. INTENDED USER: The intended user of this appraisal report is the lender/client. DEFINITION OF MARKET VALUE: The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. * * * STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS: The appraiser's certification in this report is subject to the following assumptions and limiting conditions: The appraiser will not be responsible for matters of a legal nature that affect either the property being appraised or the title to it, except for information that he or she became aware of during the research involved in performing this appraisal. The appraiser assumes that the title is good and marketable and will not render any opinions about the title. The appraiser has provided a sketch in this appraisal report to show the approximate dimensions of the improvements. The sketch is included only to assist the reader in visualizing the property and understanding the appraiser's determination of its size. * * * The fifth and sixth pages of the Report contained additional pre-printed boilerplate in the form of an "Appraiser's Certification," wherein "the Appraiser [Respondent] certifie[d] and agree[d] that": I have, at a minimum, developed and reported this appraisal in accordance with the scope of work requirements stated in this appraisal report. I performed a complete visual inspection of the interior and exterior areas of the subject property. I reported the condition of the improvements in factual, specific terms. I identified and reported the physical deficiencies that could affect the livability, soundness or structural integrity of the property. I performed this appraisal in accordance with the requirements of the Uniform Standards of Professional Appraisal Practice that were adopted and promulgated by the Appraisal Standards Board of The Appraisal Foundation and that were in place at the time this appraisal report was prepared. I developed my opinion of the market value of the real property that is the subject of this report based on the sales comparison approach to value. I have adequate comparable market data to develop a reliable sales comparison approach for this appraisal assignment. I further certify that I considered the cost and income approaches to value but did not develop them, unless otherwise indicated in this report. I researched, verified, analyzed, and reported on any current agreement for sale for the subject property, any offering for sale of the subject property in the twelve months prior to the effective date of this appraisal, and the prior sales of the subject property for a minimum of three years prior to the effective date of this appraisal, unless otherwise indicated in this report. I researched, verified, analyzed, and reported on the prior sales of the comparable sales for a minimum of one year prior to the date of sale of the comparable sale, unless otherwise indicated in the report. I selected and used comparable sales that are locationally, physically, and functionally the most similar to the subject property. I have not used comparable sales that were the result of combining a land sale with the contract purchase price of a home that has been built or will be built on the land. I have reported adjustments to the comparable sales that reflect the market's reaction to the differences between the subject property and the comparable sales. I verified, from a disinterested source, all information in this report that was provided by parties who have a financial interest in the sale or financing of the subject property. I have knowledge and experience in appraising this type of property in this market area. I am aware of, and have access to, the necessary and appropriate public and private data sources, such as multiple listing services, tax assessment records, public land records and other such data sources for the area in which the property is located. I obtained the information, estimates, and opinions furnished by other parties and expressed in this appraisal report from reliable sources that I believe to be true and correct. I have taken into consideration factors that have an impact on value with respect to the subject neighborhood, subject property, and the proximity of the subject property to adverse influences in the development of my opinion of market value. I have noted in this appraisal report any adverse conditions (such as, but not limited to, needed repairs, deterioration, the presence of hazardous wastes, toxic substances, adverse environmental conditions, etc.) observed during the inspection of the subject property or that I became aware of during research involved in performing this appraisal. I have considered these adverse conditions in my analysis of the property value, and have reported on the effect of the conditions on the value and marketability of the subject property. I have not knowingly withheld any significant information from this appraisal and, to the best of my knowledge, all statements and information in this appraisal report are true and correct. I stated in this appraisal report my own personal, unbiased, and professional analysis, opinions, and conclusions, which are subject only to the assumptions and limiting conditions in this appraisal report. I have no present or prospective interest in the property that is the subject of this report, and I have no present or prospective personal interest or bias with respect to the participants in the transaction. I did not base, either partially or completely, my analysis and/or opinion of market value in this appraisal report on the race, color, religion, sex, age, marital status, handicap, familial status, or national origin of either the prospective owners or occupants of the subject property or of the present owner or occupants of the properties in the vicinity of the subject property or on any other basis prohibited by law. My employment and/or compensation for performing this appraisal or any future or anticipated appraisals was not conditioned on any agreement or understanding, written or otherwise, that I would report (or present analysis supporting) a predetermined specific value, a predetermined minimum value, a range or direction in value, a value that favors the cause of any party, or the attainment of a specific result or occurrence of a specific subsequent event (such as approval of a pending mortgage loan application). I personally prepared all conclusions and opinions about the real estate that were set forth in this appraisal report. If I relied on significant real property appraisal assistance from any individual or individuals in the performance of this appraisal or the preparation of this appraisal report, I have named such individual(s) and disclosed the specific tasks performed in this appraisal report.[12] I certify that any individual so named is qualified to perform the tasks. I have not authorized anyone to make a change to any item in this appraisal report; therefore any change made to this appraisal is unauthorized and I will take no responsibility for it. I identified the lender/client in this appraisal report who is the individual, organization, or agent for the organization that ordered and will receive this appraisal report. The lender/client may disclose or distribute this appraisal to the borrower; another lender at the request of the borrower; the mortgagee or its successors and assigns; mortgage insurers; government sponsored enterprises; other secondary market participants; data collection or reporting services; professional appraisal organizations; any department, agency, or instrumentality of the United States; and any state, the District of Columbia, or other jurisdictions; without having to obtain the appraiser's or supervisory appraiser's (if applicable) consent. Such consent must be obtained before this appraisal report may be disclosed or distributed to any other party, including, but not limited to, the public through advertising, public relations, news, sales, or other media. I am aware that any disclosure or distribution of this appraisal report by me or the lender/client may be subject to certain laws and regulations. Further, I am also subject to the provisions of the Uniform Standards of Professional Appraisal Practice that pertain to disclosure or distribution by me. The borrower, another lender at the request of the borrower, the mortgagee or its successors and assigns, mortgage insurers, government sponsored enterprises, and other secondary market participants may rely on this appraisal report as part of any mortgage finance transaction that involves any one or more of these parties. If this appraisal was transmitted as an "electronic record" containing my "electronic signature," as those terms are defined in applicable federal and/or state laws (excluding audio and video recordings), or a facsimile transmission of this appraisal report containing a copy or representation of my signature, the appraisal report shall be as effective, enforceable and valid as if a paper version of this appraisal report were delivered containing my original hand written signature. Any intentional or negligent misrepresentation contained in this appraisal report may result in civil liability and/or criminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United States Code, Section 1001, et seq., or similar state laws. Directly beneath the foregoing boilerplate was Respondent's signature. Appended to the Report was a "Supplemental Addendum," which read, in pertinent part, as follows: ALL SALES WERE CLOSED SALES AND CONSIDERED STRONG MARKET VALUE INDICATORS FOR THE SUBJECT PROPERTY. THEY ARE RELATIVELY SIMILAR TO THE SUBJECT IN TERMS OF LOCATION, QUALITY OF CONSTRUCTION, RELATIVE SIZE, ROOM COUNT AND MARKET APPEAL. THEY ARE LOCATED IN THE SUBJECT'S IMMEDIATE AREA AND ALL SHARE THE SAME IF NOT SIMILAR NEIGHBORHOOD AMENITIES. ADJUSTMENTS WERE REQUIRED FOR SITE CONDITION, BATH, GLA, CARPORT AND POOL. AFTER EXTENSIVE RESEARCH, THE THREE SALES USED WERE DEEMED GOOD INDICATORS OF MARKET VALUE. EQUAL EMPHASIS WAS PLACED ON ALL THREE SALES. * * * SCOPE OF APPRAISAL The appraisal is based on the information gathered by the appraiser from public records, other identified sources, inspection of the subject property and neighborhood, and selection of comparable sales within the market area. The original source of the comparables is shown in the Data Source section of the market grid along with the source of confirmation, if available. The original source is presented first. The sources and data are considered reliable. When conflicting information was provided, the source deemed most reliable has been used. Data believed to be unbelievable was not included in this report nor was used as a basis for the value conclusion. * * * HIGHEST AND BEST USE The Highest and Best Use of a site is that reasonable and probable use that supports the highest present value, as defined, as of the effective date of the appraisal. For improvements to represent[] the highest and best use of a site, they must be legally permitted, be financially feasible, be physically possible and provide[] more profit than any other use of the site would generate. SITE The improvements on the property are legal and conform to current zoning regulations. In the event of a loss by fire [] all improvements could be rebuilt without obtaining a zoning variance. The opinion of zoning compliance requirements expressed in this appraisal is based on the appraiser's inspections of the subject property and comparison to the appropriate zoning ordinance. This opinion does not represent a certification which can only be obtained from the proper jurisdictional authority. * * * ROOM LISTS The number of rooms, bedrooms, baths and lavatories is typical of houses in this neighborhood. Foyers, laundry rooms and all rooms below grade are excluded from the total room count. * * * CONDITION OF COMPONENTS Any opinion expressed in this appraisal pertaining to the condition of the appraised property's, or comparable property's components, is based on observation[s] made at the time of inspection. They rely on visual indicators as well as reasonable expectations as to adequacy and dictated by neighborhood standards relative to marketability. These observations do not constitute certification of condition, including roof or termite problems, which may exist. If certification is required, a properly licensed or qualified individual should be consulted. * * * DIRECT SALES COMPARISON APPROACH Direct Sales Comparison Approach is based on the comparison of the subject with sales of similar type properties. Adjustments are made to these sales for differences with the subject. [T]his is generally considered the best indicator of value. * * * CONDITIONS OF APPRAISAL PERSONAL PROPERTY/INTANGIBLE/NON-REALTY ITEMS Items of personal property and other non- realty items have not been included in the appraisal o[f] the subject property. The indicated Market Value for the subject property does not include items o[f] personal property or other non-realty property. * * * Via the "Supplemental Addendum," Respondent advised the reader of the Report that, where she had "conflicting information," she included in the Report only the data that was, in her view, "most reliable." While she did not, anywhere in the Report, specify or describe how this included data differed from the less reliable data she excluded, she was under no professional obligation to do so (contrary to the allegation made in numbered paragraph 13C. of the Administrative Complaint's "Essential Allegations of Material Fact"). Appended to the Report, in addition to the "Subject Front" photograph referenced above, were five other photographs: two additional photographs Respondent took when she was at the Subject Property on April 12, 2007 (a "Subject Rear" photograph and a "Subject Street" photograph); and an exterior photograph of each of the three "comparables." Also appended to the Report was a sketch of the Subject Property, showing it to be a two-story, five-bedroom, two-bath structure. Approximately two months after Respondent had developed and communicated the Report, Affordable asked her to examine two "additional comparables to support [the determination of] value" she had made. Respondent complied with this request. The two "additional comparables" she selected were Comparable Sale 4, located at 330 Southwest 29th Road in Miami (1.02 miles from the Subject Property), and Comparable Sale 5, located at 441 Southwest 29th Road in Miami (1.29 miles from the Subject Property). According to Respondent's calculations, Comparable Sale 4 had an "Adjusted Sale Price" of $603,800.00, and Comparable Sale 5 had an "Adjusted Sale Price" of $599,200.00. She further determined, and on or about June 25, 2007, reported to Affordable, that her analysis of these two additional comparables "support[ed] [her prior determination of] market value."13
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Board issue a Final Order finding the record evidence insufficient to support a finding of Respondent's guilt of any of the counts of the Administrative Complaint and, based upon such finding, dismissing the Administrative Complaint in its entirety. DONE AND ENTERED this 28th day of January, 2010, in Tallahassee, Leon County, Florida. S STUART M. LERNER 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 28th day of January, 2010.
The Issue The issues in this case are whether Respondent violated Subsections 475.624(2), 475.624(14), and 475.624(15), Florida Statutes (2005),1 and, if so, what discipline should be imposed.
Findings Of Fact Mr. Sigmond is now and was, at all times material to this proceeding, a state-certified residential real estate appraiser in the State of Florida, having been issued license number 2479 in 1994. Mr. Sigmond has never had any prior disciplinary action taken against him. On January 2, 2006, Rels Valuation, an appraisal management company for Wells Fargo Bank, ordered an appraisal from Mr. Sigmond of a condominium unit located at 2740 Cypress Trace Circle, Unit 2715, Naples, Florida (Subject Property). The client for the appraisal was Wells Fargo Bank. The purpose of the appraisal was for mortgage lending. On or about January 6, 2006, Mr. Sigmond developed and communicated an appraisal report (Report) on the Subject Property valuing the Subject Property at $375,000. The Subject Property is a two-bedroom, two-bath unit with 1,171 square feet of gross living area. The unit is located on the first floor of the building and has a carport. At the time of the Report, the Subject Property was one year old. The unit was freshly painted, had ceramic floor tile in the foyer, living room, kitchen, and dining areas. The bedrooms were carpeted. The foyer, living room, dining, and kitchen areas had crown molding. The Subject Property was appraised as unfurnished and listed for sale as unfurnished; however, some furniture was left in the unit. Mr. Sigmond stated in his report: As stated in contract: “Property is being sold ‘turnkey.’ Furnishings have little or no value and are being left as a convenience to the seller.” Also buyer agrees to pay $1,500 for kitchen set at closing. The Subject Property was sold prior to the issuance of the Report. The first sale was a preconstruction purchase on December 2, 2004, for a purchase price of $213,900. The Subject Property was listed on September 27, 2005, for $342,900, and the Subject Property was under contract for sale by October 10, 2005. The second sale was closed on December 13, 2005, and the sale price was $335,000. The buyers in the second sale entered into a sale and purchase contract with John Schrenkel on December 20, 2005, to sell the Subject Property for $375,000. After the sale of the Subject Property on December 13, 2005, the buyers put crown molding in the unit, painted all the walls of the unit, put in ceiling fans, and upgraded some electrical fixtures. Mr. Sigmond valued the Subject Property for $40,000 more than the Subject Property sold on December 13, 2005. He considered the upgrades that were made to the Subject Property after the December 13, 2005, sale, and the amount of time that had elapsed from the listing of the Subject Property in September 2005 for the sale that closed on December 13, 2005, and the date of the appraisal. Mr. Sigmond testified that he did not know the actual execution date of the sales contract for the December 13, 2005, sale. However, in his response to the Department dated July 16, 2008, he acknowledged that the pending date for the December 13 sale was October 10, 2005. He did not include the pending sale date in his Report. Mr. Sigmond did not adequately explain in his Report the $40,000 difference in valuation from the last sale of the Subject Property and his appraisal valuation. He admitted in his letter dated July 16, 2008, to the Department’s investigator that that he did not include an analysis of the December 13 sale in his Report. He stated: The prior sales of the subject property were identified in the addendum to the appraisal, however, the analysis of the 12/13/05 sale was inadvertently omitted from the addendum. The following comment was originally in the appraisal report: “At the time of the inspection, the subject property had been renovated since its previous sale on 12/13/05. The subject improvements were: Custom crown molding throughout, updated/additional electrical repairs and/or replacement throughout the subject unit; the interior had been completely repainted; replaced and/or upgraded light fixtures and ceiling fans. The subject has been well maintained and is considered to be in good physical condition with no functional inadequacies noted. No external inadequacies were noted in the subject’s immediate area.” That comment should not have been omitted from the appraisal, however, it did not materially affect the reporting standards or the opinion of the market value as the condition of the subject was referred to as good throughout the report. The Subject Property is part of a condominium complex known as Terrace IV at Cypress Trace. Terrace IV consists of 60 units. Cypress Trace is a conglomerate of individual condominium projects that have banded together through an agreement to share certain common amenities. The total number of condominiums in the conglomerate is 799. There are three methods for valuing all forms of real estate: the cost approach, the sales comparison approach, and the income approach. Mr. Sigmond used the sales comparison approach, which is the appropriate method for valuating condominium units such as the Subject Property. The goal of a sales comparison approach is to find a set of comparable sales as similar as possible to the property being appraised. Mr. Sigmond selected and listed three properties in his Report, which he considered to be comparable to the Subject Property. The first property listed as a comparable sale was located at Veranda III at Cypress Trace (Comparable Sale 1), less than .01 mile northwest of the Subject Property. It is a two-bedroom, two-bath unit with 1,414 square feet of gross living area located on the second floor of the building. The unit has a detached garage. At the time of the Report, Comparable Sale 1 was two years old. A contract for sale was entered into on July 5, 2005, for $399,000. The sale of Comparable Sale 1, which included furniture, was closed on September 23, 2005. Mr. Sigmond adjusted the value of Comparable Sale 1 downward by $15,000 for the detached garage and by $17,000 for the additional square footage. He also made a positive time adjustment for Comparable Sale 1 of $15,900. A time adjustment is an adjustment for the amount of time that has elapsed since the property last sold. In a market which is climbing, an upward adjustment for appreciation would be appropriate, but, if the market has peaked and is declining, a positive adjustment would not be appropriate. Mr. Sigmond made time adjustments from the time that the contracts for sale were entered for the properties used as comparables. The time adjustments were 1 percent per month from the date of the pending sale. The second property listed as a comparable sale was located at Terrace II at Cypress Trace (Comparable Sale 2), approximately .35 miles northeast of the Subject Property. Comparable Sale 2 is a two-bedroom, two-bath unit consisting of 1,194 square feet of gross living area located on the third floor of the building. The unit was two years old at the time of the report. Comparable Sale 2 has a carport. Comparable Sale 2 was sold furnished in November 2005. The multiple listing for Comparable Sale 2 described the furnishings as follows: “This 3rd floor condo has over $20,000.00 in furnishings including Tommy Bahama style furniture and drapes.” Mr. Sigmond or his assistant contacted the listing agent for Comparable Sale 2 and was told that the value of the furniture was nominal. Mr. Dennis J. Black, expert for the Department, contacted the owner of Comparable Sale 2, who advised Mr. Black that one of the selling points of the unit was the furnishings. A contract for sale for Comparable Sale 2 was pending on October 3, 2005, and the sale closed on November 16, 2005, for $355,000. Mr. Sigmond made a $15,000 positive adjustment to Comparable Sale 2 for options and upgrades and a positive time adjustment of $7,100. Mr. Sigmond made no adjustments for differences in floor locations, feeling that the floor location is typically a personal preference of the buyer. He also made no adjustments for the furniture that was sold with the unit. Comparable Sale 2 was the most current sale of a basic unit exactly like the Subject Property; however, Comparable Sale 2 did not have crown molding, was not freshly painted, and had carpet as opposed to ceramic tile in the living areas. The multiple listing for Comparable Sale 2 did indicate that the unit had some ceramic tile, but did not specify in what areas the tile was located. The third property listed as a comparable sale was located at Carrington at Stonebridge (Comparable Sale 3), approximately 2.1 miles southwest of the Subject Property. Comparable Sale 3 is a two-bedroom, two-bath unit consisting of 1,184 square feet of gross living area located on the first floor of the building. The unit has a carport and, at the time of the Report, was nine years old. A contract for sale of Comparable Sale 3, unfurnished, was entered into on June 22, 2005, and the sale was closed on July 13, 2005, for $350,000. Mr. Sigmond chose Comparable Sale 1 to bracket the sale price in order to meet an underwriting guideline of Wells Fargo Bank, which requires that a similar unit be listed which has a value that is more than what the appraiser may value the property being appraised. Bracketing is a common and accepted appraisal practice in the Collier County area when doing appraisals for mortgage lenders. He felt that Comparable Sale 2 was the most recent similar sale in the project. He went out of the project for Comparable Sale 3, because he felt that the banks wanted to have a comparable sale out of the project. Mr. Sigmond’s Report contained a description of the general market conditions as follows: There are no loan discounts, interest buy downs or concessions noted in the marketplace at this time. Conventional financing is readily available and interest rates are at competitive levels. Demand outweighs supply at this time, and market values have been increasing. The marketing time for condominium[s] in this area has ranged from one to three months and is considered to be typical. Mr. Sigmond also discussed the increasing market in the Sales Comparison Approach section of the Supplemental Addendum of the Report. Time adjustments were necessary due to a market in which demands [sic] exceeds supply, and properties are commonly sold within 60 days of their listing. These adjustments were calculated at a conservative 1% per month from “pending” date. A 25%-40% increase in the Naples Real Estate market over the last 12 months has been well documented by MLS and local print media. Based on the overall evidence, the real estate market was not declining at the time the appraisal was done. There were other units which Mr. Sigmond considered, but did not use as a comparable sale. One such unit was located at Terrace IV at Cypress Trace, Unit 2738. Built in 2005, this unit has two bedrooms and two bathrooms and is located on the third floor of the building. The living area of the unit is 1,232 square feet. The freshly painted unit has crown molding and ceramic tile throughout the unit. Unit 2738 was a new listing on August 5, 2005, for $339,900. A pending sale on August 16, 2005, showed a selling price of $335,000. The sale was closed on October 4, 2005. Another unit which Mr. Sigmond considered but did not use as a comparable sale was located at 2730 Cypress Trace Circle, Unit 2813. This condominium is a first-floor two- bedroom, two-bath unit, which was built in 2004. It has ceramic tile and carpeting. The living area is 1,194 square feet. Unit 2813 was listed on August 18, 2005, for $339,000. On September 7, 2005, a sale was pending for $320,000. The sale closed on November 30, 2005. The evidence does not establish that Mr. Sigmond intentionally crafted his Report so that his valuation of the Subject Property would equal the contract price of the Subject Property. In his Report, Mr. Sigmond certified the following: I performed this appraisal in accordance with the requirements of the Uniform Standards of Professional Appraisal Practice that were adopted and promulgated by the Appraisal Standards Board of The Appraisal Foundation and that were in place at the time this appraisal report was prepared. The Uniform Standards of Professional Appraisal Practice (USPAP) (2005), which were in effect at the time the Report was developed and communicated, provide the following: Standards Rule 1-1 (This Standards Rule contains binding requirements from which departure is not permitted.) In developing a real property appraisal, an appraiser must: be aware of, understand, and correctly employ those recognized methods and techniques that are necessary to produce a credible appraisal. not commit a substantial error of omission or commission that significantly affects an appraisal; and not render appraisal services in a careless or negligent manner, such as by making a series of errors that, although individually might not significantly affect the results of an appraisal, in the aggregate affects the credibility of those results. Standards Rule 1-2 (This Standards Rule contains binding requirements from which departure is not permitted.) In developing a real property appraisal, an appraiser must: * * * (e) identify the characteristics of the property that are relevant to the type and definition of value and intended use of the appraisal, including: * * * (iii) any personal property, trade fixtures, or intangible items that are not real property but are included in the appraisal; * * * Standards Rule 1-4 (This Standards Rule contains specific requirements from which departure is permitted. See the DEPARTURE RULE.) In developing a real property appraisal, an appraiser must collect, verify, and analyze all information applicable to the appraisal problem, given the scope of the work identified in accordance with Standards Rule 1-2(f). (a) When a sales comparison approach is applicable, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion. * * * Standards Rule 1-5 (This Standards Rule contains binding requirements from which departure is not permitted.) In developing a real property appraisal, when the value opinion to be developed is market value, an appraiser must, if such information is available to the appraiser in the normal course of business: analyze all agreements of sale, options, or listings of the subject property current as of the effective date of the appraisal; and analyze all sales of the subject property that occurred within the last three (3) years prior to the effective date of the appraisal. * * * Standards Rule 2-1 (This Standards Rule contains binding requirements from which departure is not permitted.) Each written or oral real property appraisal report must: clearly and accurately set forth the appraisal in a manner that will not be misleading; contain sufficient information to enable the intended users of the appraisal to understand the report properly; * * * Standards Rule 2-2 (This Standards Rule contains binding requirements from which departure is not permitted.) Each written real property appraisal report must be prepared under one of the following three options and prominently state which option is used: Self-Contained Appraisal Report, Summary Appraisal Report, or Restricted Use Appraisal Report. * * * (b) The content of a Summary Appraisal Report must be consistent with the intended use of the appraisal and, at a minimum: * * * (iii) summarize information sufficient to identify the real estate involved in the appraisal, including the physical and economic property characteristics relevant to the assignment. * * * clearly and conspicuously: state all extraordinary assumptions and hypothetical conditions; and state that their use might have affected the assignment results; * * * Standards Rule 2-3 (This Standards Rule contains binding requirements from which departure is not permitted.) Each written real property appraisal report must contain a signed certification that is similar in content to the following form: I certify to the best of my knowledge and belief: --the statements of fact contained in this report are true and correct. --the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. --I have no (or the specified) present or prospective interest in the property that is the subject of this report and no (or specified) personal interest with respect to the parties involved. --I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. --my engagement in this assignment was not contingent upon developing or reporting predetermined results. --my compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. --my analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice. --I have (or have not) made a personal inspection of the property that is the subject of this report. (If more than one person signs this certification, the certification must clearly specify which individuals did and which individuals did not make a personal inspection of the appraised property.) --no one provided significant real property appraisal assistance to the person signing this certification. (If there are exceptions, the name of each individual providing significant real property appraisal assistance must be stated.)
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Mr. Sigmond violated Subsections 475.624(2) and 475.624(15), Florida Statutes; dismissing Counts Three through Ten; issuing a public reprimand; and imposing a $5,000 administrative fine. DONE AND ENTERED this 12th day of January, 2010, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of January, 2010.
