The Issue Whether Respondent violated section 475.624(15), Florida Statutes (2010), as alleged in the Administrative Complaint; and if so, the appropriate penalty.1/
Findings Of Fact Department is the state agency charged with regulating the practice of real estate appraisal pursuant to section 20.165 and chapters 455 and 475, Florida Statutes. Mr. Butterfield is licensed as a state-certified general real estate appraiser, holding state license number RD 1063. Consequently, he is certified to give residential and commercial appraisals in Florida. Further, Mr. Butterfield has been a licensed appraiser in Florida since 1991. In addition to being licensed in Florida, Mr. Butterfield is licensed in 11 other states, holding seven active and four inactive licenses. There is no evidence that Mr. Butterfield has any prior discipline. On April 26, 2010, Mr. Butterfield issued the Appraisal Report, which is at issue in this administrative hearing. He prepared the Appraisal Report for Charles Morgan, P.A., a law firm located in North Miami Beach, Florida. The Appraisal Report identified the law firm as the intended user and that the appraisal would be used in litigation. The stated purpose of the Appraisal Report was to provide a market value for the subject property. The subject property of the appraisal is located at 1500 Brickell Avenue, Miami, Florida.2/ The subject property is a unique parcel located on Brickell Avenue, near the heart of Miami's Financial District. The subject property's site is approximately 15,286 square feet with a 6,497 square foot building. The building is a French Chateau home constructed in 1928 by John Murrell, a prominent Miami attorney that helped develop Miami and Coral Gables. The subject property was the home of Mr. Murrell and his wife Ethel Murrell. Ms. Murrell was a noted attorney, author, lecturer and known as one of Florida's leading feminists. Consequently, the subject property has significant historical value. The building, as described by the Appraisal Report, "contains two octagonal towers with tent roof, parpet roof and dormers, crenellated garage roof, and trefoil arch windows with leaded and stained glass." Clearly, this is a unique historical building situated on one of Miami's most prestigious streets, Brickell Avenue. The Appraisal Report does not identify whether it is a self-contained appraisal report, a summary appraisal report or a restricted use appraisal report, as required by Standards Rule 2-2 of USPAP. Similarly, Mr. Butterfield's work file does not identify the type of appraisal he performed on the subject property. Rather, Mr. Butterfield's work file shows that he contracted to provide a "Commercial Narrative Appraisal Report." Mr. Butterfield's uncontradicted testimony that the Appraisal Report is a summary appraisal report for the intended user, a law firm, is credible. The complaint against Mr. Butterfield was instigated by Scott Taylor (Mr. Taylor). Mr. Taylor, a licensed residential appraiser, initially contacted Mr. Butterfield requesting assistance in appraising the subject property. Because the subject property appeared to be a commercial property, Mr. Taylor was not qualified to give an appraisal. Consequently, Mr. Taylor requested Mr. Butterfield's assistance. Mr. Taylor assisted Mr. Butterfield in the preparation of the appraisal with the taking of photographs and gathering of information. However, Mr. Taylor became unhappy with Mr. Butterfield concerning the payment of Mr. Taylor's fee. According to Mr. Butterfield, Mr. Taylor threatened to file a complaint with the Department, if Mr. Butterfield did not pay the fee. Mr. Butterfield refused to pay the disputed amount. Consequently, Mr. Taylor filed a complaint against Mr. Butterfield for perceived errors in the appraisal. The record contains no evidence that the intended user, the law firm, had any complaint concerning the quality of the work or that the law firm was misled by the Appraisal Report. The Department's expert witness, Mr. Spool, has 39 years of experience as an appraiser in the Miami-Dade, County area. Further, he has taught appraisal practice at Miami-Dade College, and published numerous articles concerning appraisal practice. Mr. Spool identified USPAP as the standards used by appraisers in conducting real estate appraisals. Further, he credibly testified that USPAP standards related to an appraiser using "reasonable diligence" in preparing an appraisal by requiring that the appraiser correctly use recognized methods and techniques to create a credible appraisal. The Appraisal Report contains Mr. Butterfield's certification that the appraisal was conducted in compliance with USPAP. The Department's case at the hearing proceeded to show that Mr. Butterfield did not use reasonable diligence in the preparation of the Appraisal Report along the following four general lines: The Highest and Best Use section of the Appraisal Report did not contain any supporting analyses or discussion; The Zoning section of the Appraisal Report did not contain any supporting analyses or discussion; The comparables used by Mr. Butterfield were inappropriate, and that he used an incorrect methodology for determining the subject property's market value; and The Appraisal Report contained numerous errors that call into question its credibility. Each of these areas is discussed separately in this Recommended Order. Highest and Best Use The Appraisal Report here sets out the Highest and Best Use of the subject property as following: The Highest and Best Use of the subject property could accommodate office usages. The structure represents a significant portion of the total value of the whole property. Therefore, due to the contributory value of the improvements and our estimate of the Highest and Best use of the subject property is its present usage, as would benefit an owner occupant, or as present building may generate lease income. The Appraisal Report's discussion of the subject property's highest and best use contains what could be best described as "boilerplate language," setting out definitions and the appropriate tests to be applied when reviewing the subject property.3/ Mr. Spool's criticism of the Appraisal Report is not that Mr. Butterfield reached an inappropriate conclusion, but rather the lack of analysis. Mr. Butterfield credibly testified, however, that this appraisal was a summary appraisal report, and that further analysis was not required. The undersigned rejects Mr. Spool's testimony that a more detailed analysis needed to be contained in the Appraisal Report because the report is a summary. A review of the appraisal shows that it summarized the highest and best use of subject property as its existing use. Consequently, the undersigned finds that Mr. Butterfield's determination of the subject property's highest and best use complied with USPAP 2-2(b). Moreover, the Comment to Standard 2-2(b)(vii) provides that "[b]ecause intended users' reliance on a appraisal may be affected by the scope of work, the report must enable them to be properly informed and not misled." In the instant case, the Department did not bring forward any evidence showing that the intended user, a law firm, had been misled by Mr. Butterfield's determination of the subject property's highest and best use. The record shows that the Department did not prove by clear and convincing evidence that Mr. Butterfield failed to use reasonable diligence in the preparation of the appraisal's determination of highest and best use. Zoning Mr. Butterfield specifically identified the subject property's zoning, at the time of the appraisal, as "R-3 Multi- Family with HC-Residential Office Heritage Conservation District overlay." Mr. Spool's criticism of the Appraisal Report's zoning section is that Mr. Butterfield's analysis is lacking. A review Appraisal Report's section titled zoning again includes mostly "boilerplate language" without analysis, as to the meaning of the zoning and historical overlay. However, considering that the Appraisal Report here is a summary appraisal report prepared for a law firm, the Department did not prove by clear and convincing evidence that Mr. Butterfield did not use reasonable diligence. There was no evidence that Mr. Butterfield's identification of the zoning, without further analysis, was a lack of reasonable diligence in the context of a summary. Moreover, there was no evidence that the intended user, the law firm, was misled by Mr. Butterfield's identification of the proper zoning, without a further analysis. Market Value Determination The Department questioned Mr. Butterfield's choice of his direct sales and rental comparisons, and his methodology in determining the subject property's market value. Mr. Spool offered properties that, in his opinion, were more appropriate comparisons with the subject property and questioned Mr. Butterfield's methodology. The discussion of each test used to determine the subject property's market value is discussed separately. Direct sales comparison The Appraisal Report here shows that Mr. Butterfield identified the three approaches used by appraisers to determine a property's market value: 1) the cost approach; 2) direct sales comparisons; and 3) an income approach. Further, the Appraisal Report shows that Mr. Butterfield used a direct sales comparison methodology and income approach to determine the subject property's market value. In the direct sales comparison, the Appraisal Report shows that Mr. Butterfield used four comparable direct sales within the location of the subject property for his analysis. Of the four comparable sales identified by Mr. Butterfield, one involved an office and three involved residential homes. The record shows that Mr. Butterfield chose to use both an office and residential properties in the sales comparison because both uses were permitted by the subject property's zoning. At the time of the appraisal, the subject property could have been used as either a residence or an office. Consequently, the direct sales comparison which included both office and residential sales was appropriate for valuing the subject property. Based on Mr. Butterfield's testimony and the Appraisal Report, the key consideration in choosing these comparable sales was the proximity to the subject property's Brickell Avenue address. Further, a review of Mr. Butterfield's work file shows that he considered numerous properties for direct sales comparisons in developing his market value opinion. The key factor for Mr. Butterfield in preparing his sales comparisons was the Brickell Avenue location. The undersigned finds Mr. Butterfield's testimony concerning his use of the comparative properties and methodology credible. Mr. Spool's first criticism was that Mr. Butterfield used an incorrect methodology in conducting the direct sales comparison. Specifically, Mr. Spool testified that the highest and best use of the property, as identified by Mr. Butterfield, was an office. Consequently, Mr. Butterfield used an incorrect methodology when he used direct sales from residences for comparison. In essence, the correct methodology required that any comparison be made with direct sales of office space or rather compare "apples to apples and oranges to oranges." Mr. Spool's criticism that Mr. Butterfield used an incorrect methodology is rejected because it is based on a wrong premise. Mr. Butterfield did not identify the subject property's highest and best use as only an office. The record shows that Mr. Butterfield identified the subject property's highest and best use as its permissible uses, which at the time was either a residence or office. Mr. Butterfield used reasonable diligence in comparing direct sales from nearby residences and an office in his analysis. Next, Mr. Spool identified other properties, which in his opinion, were more appropriate as sales comparisons, such as a historic home near the Miami River that had been converted into office space. However, the identification of other properties that could have been used by Mr. Butterfield does not show that Mr. Butterfield did not use reasonable diligence in preparing his report. It is noted that the properties offered by Mr. Spool did not share the Brickell Avenue address, which is highly desirable. Consequently, the undersigned finds that the Department did not prove by clear and convincing evidence that Mr. Butterfield failed to use reasonable diligence in the preparation of his direct sales comparison. Income approach Next, the Appraisal Report shows that Mr. Butterfield used an income approach to determine the subject property's market value. The record credibly shows that Mr. Butterfield identified four rental comparables all located on Brickell Avenue within close proximity to the subject property, and verified the rental rate per square foot in the range of $24.00 to $37.00 per square foot. Mr. Spool offered alternative properties that in his opinion were more appropriate for making a rental comparison. The crux of the Department's testimony was that Mr. Butterfield's use of rental space from new high rises was inappropriate for comparing with the subject property, which is an older property. The undersigned, however, finds that Mr. Butterfield's explanation that he chose comparable rental properties based on the Brickell Avenue address credible. Again, the fact that other properties may be used as comparable properties does not show that Mr. Butterfield did not prepare the Appraisal Report without reasonable diligence. Next, Mr. Spool's explanation that Mr. Butterfield used an incorrect methodology for determining an income approach by using residential properties is rejected. As found earlier, Mr. Butterfield determined that the subject property's highest and best use could be either as an office or residence. Therefore, it was appropriate to determine the rental income from residences and office space. Moreover, the record shows that Mr. Butterfield gathered information to determine the per square-foot income. Therefore, the Department did not prove by clear and convincing evidence that Mr. Butterfield failed to use reasonable diligence in the preparation of the appraisal's income approach analysis. Miscellaneous Errors The Appraisal Report does contain several admitted errors. Examples of the errors are that the Appraisal Report wrongly indicates that ingress and egress to the subject property was from Brickell Avenue; that Brickell Avenue was a minor north-south thoroughfare; that the three residences used for direct sales comparison were "historic," as opposed to being located in "historic South Miami"; that it failed to designate the type of appraisal that was conducted; and that it did not state in the certification that Mr. Butterfield had not personally viewed the subject property. The undersigned finds that these errors do not rise to the level of showing a lack of reasonable diligence or could mislead the intended user. For example, the Appraisal Report attached photographs of the three residences used in the direct sales comparison. The photographs clearly show that the three residences were not historical homes, but modern construction. Therefore, it is clear that Mr. Butterfield took steps to insure that the intended user of the report would know the type of residences which were being used for comparison with the subject property. Moreover, concerning the errors about Brickell Avenue, one could safely assume that a law firm in Miami Beach would know that Brickell Avenue is a major and desirable location in Miami. Therefore, the undersigned finds that although the appraisal contains errors, which were admitted by Mr. Butterfield, those errors are not of such a nature as to show a lack of reasonable diligence.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Appraisal Board enter a final order dismissing the Administrative Complaint against Mr. Butterfield. DONE AND ENTERED this 12th day of December, 2012, in Tallahassee, Leon County, Florida. S THOMAS P. CRAPPS 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 December, 2012.
The Issue Whether the Respondent committed the violations alleged in the Administrative Complaint dated March 3, 2004, and, if so, the penalty that should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Division is the state agency responsible for investigating complaints filed against registered, licensed, or certified real estate appraisers and for prosecuting disciplinary actions against such persons. § 455.225, Fla. Stat. (2005). The Florida Real Estate Appraisal Board ("Board") is the state agency charged with regulating, licensing, and disciplining real estate appraisers registered, licensed, or certified in Florida. § 475.613(2), Fla. Stat. (2005). At the times material to this proceeding, Mr. Rutan was a certified residential real estate appraiser in Florida, having been issued a license numbered RD 2791. Mr. Rutan had been a certified residential real estate appraiser in Florida for approximately 10 years. At the time of the events giving rise to this action, Mr. Rutan was employed by Excel Appraisal. Mr. Rutan interviewed and hired Frank Delgado, Juan Carlos Suarez, and Ricardo Tundador to work at Excel Appraisal as state-registered assistant real estate appraisers. At all times material to this proceeding, Mr. Rutan was Mr. Suarez’s supervisor and was responsible for Mr. Suarez’s appraisals. On or about June 16, 1999, Mr. Suarez prepared an appraisal for property located at 9690 Northwest 35th Street, Coral Springs, Florida, in which he valued the property at $325,000. The property is a multi-family, four-plex property. Mr. Rutan signed Mr. Suarez's appraisal as the supervisory appraiser and certified on the appraisal that he had inspected the property by placing an “X” in the "Inspect Property" box. The appraisal form signed by Mr. Rutan contains a "Supervisory Appraiser's Certification" that provides: If a supervisory appraiser signed the appraisal report, her or she certifies and agrees that: I directly supervise the appraiser who prepared the appraisal report, have reviewed the appraisal report, agree with the statements and conclusions of the appraiser, agree to be bound by the appraiser's certifications numbered 4 through 7 above, and am taking full responsibility for the appraisal and the appraisal report. It is the custom in the industry that a supervisory appraiser who certifies that he or she has inspected the property in question must inspect the property inside as well as outside before he or she can sign the appraisal. Mr. Rutan inspected the property the day after he signed the appraisal and only inspected the property from the outside. The appraisal report on the property at issue herein listed a prior sale of the property from Rodney Way to Doyle Aaron for $325,000 on April 28, 1999. The appraisal failed to list the sale of the property on the same day from Julius Ohren to Rodney Way for $230,000. Mr. Rutan did not investigate the relevant sales history of the property and was unaware, therefore, that the property had been “flipped” and was considerably overvalued in the appraisal report.2 Mr. Rutan admitted that he did not investigate prior sales and that the property was substantially overvalued. Mr. Suarez listed in the appraisal report three "comparable sales," that is, sales of properties similar in type and location to the property being appraised, to support the valuation of $350,000. The first comparable property used in the appraisal was property located at 4102 Riverside Drive, Coral Springs, which was listed in the appraisal report as being previously sold for $315,000. Earlier on the day that the Riverside Drive property was sold for $315,000, however, it had been sold for $185,000. Mr. Rutan failed to research and review the sales of the comparable properties that were included in Mr. Suarez's appraisal report, and the "comparable sale" of property on Riverside Drive was not properly used to value the property that was the subject of the appraisal report at issue herein. Mr. Suarez failed to make the proper adjustments in value on the Riverside Drive property based on the features of that property that were superior to the features of the subject property. The Riverside Drive property was located on a canal and should have had a negative adjustment with respect to the subject property, which was not on a canal. Mr. Suarez included a positive adjustment in the comparable sales data for the Riverside Drive property. Mr. Rutan failed to review the comparable property adjustments submitted by Juan Carlos Suarez for the appraisal of the subject property. Mr. Suarez overstated the rental income of the subject property in his appraisal report. Mr. Rutan failed to research and review the rental figures Mr. Suarez submitted. When Mr. Rutan was notified by Brokers Funding, a company that purchased the loans on the subject property, that there were problems with the appraisal done by Mr. Suarez, Mr. Rutan checked additional comparable sales and interviewed the tenants in the building. He also hired another appraiser to conduct an appraisal of the subject property. Based on his investigation and Mr. Salimino’s appraisal, Mr. Rutan discovered the problems in Mr. Suarez's appraisal and report of the subject property. Mr. Salimino’s appraisal for the subject property was $290,000, but Mr. Rutan estimated that his appraisal would have been approximately $250,000. Mr. Rutan fired Mr. Suarez, as well as Frank Delgado, and Ricardo Tundador, all three of whom were subsequently indicted on federal charges relating to real-estate-appraisal scams. In a Final Order entered on April 22, 2002, Mr. Rutan was found guilty by the Board of violating Sections 475.624(14) and 475.624(15), Florida Statutes, and was ordered to pay an administrative fine of $1,000. Mr. Rutan trusted Mr. Suarez to do an honest and competent appraisal and was rushed by Mr. Suarez to approve the appraisal on the subject property. The evidence presented by the Division is sufficient to establish with the requisite degree of certainty that Mr. Rutan failed to carry out his responsibilities as Mr. Suarez's supervisory appraiser, failed to review Juan Carlos Suarez’s appraisal for accuracy, and failed to inspect the inside of the subject property, which caused or contributed to the substantially over-stated valuation of the subject property.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Appraisal Board enter a final order finding that William Rutan is guilty of violating Section 475.624(10), (14), and (15), Florida Statutes, as alleged in Counts I through IV of the Administrative Complaint and revoking Mr. Rutan's Florida certification as a real estate appraiser. DONE AND ENTERED this 31st day of August, 2005, in Tallahassee, Leon County, Florida. S PATRICIA M. HART 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 31st day of August, 2005.
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.
The Issue Should the Florida Real Estate Appraisal Board (the Board) take action against Respondent, a licensed real estate appraiser (appraiser), for violations set forth in Chapter 475, Part II, Florida Statutes (1995)?
Findings Of Fact Stipulated Facts: Respondent is a state-licensed appraiser. On or about January 9, 1997, Respondent, Fred Catchpole, and Rhonda Guy developed and communicated an appraisal report for property commonly known as 693 Broad Street, Pensacola, Florida 32819. In developing the subject property appraisal report, the Cost Approach and the Sales Comparison Approach were utilized. Additional Facts: Eventually the circumstances concerning the Uniform Residential Appraisal Report (the Report) at the 693 Broad Street, Pensacola, Florida, property (the Property) came to Petitioner's attention upon a complaint. On February 13, 2001, the complaint was made. The complaint was made by Daniel Alvin Ryland, a Florida-licensed appraiser who has provided appraisal services in Escambia and Santa Rosa counties in Florida. The investigation of the complaint covered the period February 20, 2001, through December 26, 2001. Benjamin F. Clanton was the principal investigator. At present, he is an investigator supervisor for Petitioner. He has held that position since 2002. Mr. Clanton started investigating appraisal cases in 1995, when he retired from the Birmingham Police Department in Birmingham, Alabama. In that year, he was employed by the Alabama Real Estate Appraisal Board. While there, he took three courses: the Appraisal of Real Estate, a 45-hour course; the Basic How to Appraise, a 25-hour course; and Uniform Standards of Professional Appraisal Practices (USPAP), a 16-hour course. He took an update in USPAP in 1997, a four-hour course. Mr. Clanton continued with Appraisal Institute courses or courses involving appraisal principles and procedures, basic income capitalization, residential case studies and a national USPAP course and other updates. As part of the investigation, Mr. Clanton interviewed Respondent Harrison. Mr. Clanton sought documentation from the Respondent in the interest of the recreation of the Cost Approach in the Report. Mr. Clanton asked for the work files supporting the Report. Respondent provided work files. Discrete information concerning recreation of the Cost Approach was not received by Mr. Clanton. From his observations related to the Cost Approach within the Report, Mr. Clanton describes problems with the calculations of the Cost Approach where the stated effective age in the comments on the Cost Approach was 25 years. That calculated to be significantly different, in his understanding, than the number used in the depreciation in the Cost Approach. The Report reflected a remaining economic life of 35 years and a total life expectancy of 60 years. He refers to the Report's statement of the effective age of the Property as 15 years. In his testimony, Mr. Clanton describes the age life depreciation method leading to establishment of the effective age but he was never qualified as an expert to allow consideration of the testimony on the age life depreciation method or other issues related to the Cost Approach. Therefore, no further facts are found on that topic. When interviewed by Mr. Clanton, Respondent Catchpole in DOAH Case No. 06-3389PL acknowledged that there were errors in the Cost Approach formulations attributed to Respondent Harrison. The nature of any errors was not explained. Without that explanation they become inconsequential. More particularly, the Property neighborhood is slightly north of Interstate 10 in Pensacola, Florida, west of Pine Forrest Road, to the west side of Highway 29, and south of Alternate 90. The Property is located in what is referred to as the Ensley area. The Property is one of the largest residences in the Ensley area, in particular in Ensley Gardens. Immediately off of Highway 29 are rows of commercial buildings. Behind those rows is a railroad track. The Property is about 200 feet from the railroad track. An Escambia County utilities substation, pumping station, is located north of the Property. The Escambia County public utilities facility is about 200 feet from the Property. The Property is located north of Broad Street. The Property is on a large lot. Homes across from the Property on Broad Street are located on smaller lots. The property is not in a Planned Unit Development (PUD). The area of the subject property is not homogenous, in that the homes vary widely in quality, design, age and size. By choice of the appraiser, the Sales Comparison Approach was used in determining the appraisal for the Property. There were three comparable sales. At the time the Report was written the Property was 27 years old. Comparable sale one was two years old. Comparable sale two was 12 years old. Comparable sale three was 9 years old. The Property site was 120 feet by 260 feet according to the Report. This was larger than the comparable sales sites. Respondent, in providing information from the work file related to the Report, included information from a Multiple Listing Service (MLS) for January 1997 from the Pensacola Association of Realtors. In reference to comparable sale one, the MLS refers to the location as Creekside Oaks Subdivision, a luxury home under construction and a Parade Home entry. It refers to a sprinkler system, pantry, cathedral ceilings, security alarm, two+ closets in the master bedroom, separate shower in the master bedroom, an open patio, laundry/utility room, on a golf course, with a two-car garage. It has a whirlpool for the master bedroom bath. It has double pane glass. In relation to comparable sale two, the MLS refers to soaring cathedral ceilings with a fireplace in living room and screen porch, a hot tub and gorgeous yard with pool. The pool is described as an in-ground pool. There is a reference to a unique atrium, an inside laundry, walk-in closets, sprinkler systems, laundry/utility room and security alarm. The MLS pertaining to comparable sale three refers to the Kings Road Subdivision in Cantonment, whereas the Report refers to the location as Pensacola. In relation to comparable sale three on Kings Road in Cantonment, that neighborhood has deed restrictions limiting the type of homes and the size of homes. It has a public sewer. It has underground utilities. It has a concrete curb and gutter. The house is described as having a fireplace, sprinkler system, screen porch, high ceilings, security alarm, two-car garage, with a garden tub in the master bath. It refers to a laundry inside. There is a pool. The Report in the section under the Comparable Sales Approach, under the sales comparison analysis that refers to design and appeal described the Property and the comparables as ranch/average. The Property and the comparable sales properties were all described as suburban-average as to location. The sites were described as average for the Property and inferior for the comparables with a $3000 positive adjustment in each comparable sale to compensate for the difference. The Property did not have a pool. Two of the comparable sales had pools. Mr. Clanton asked the Respondent to provide him with a second appraisal report on the Property. Respondent agreed to provide it and mailed it to Mr. Clanton. A second appraisal report was not received by Mr. Clanton. Nothing more is known about a second appraisal report. In the appraiser certification signed by Respondent as appraiser and signed by Respondent Catchpole, DOAH Case No. 06- 3389PL, as supervisory appraiser, under item 8 it was stated: "I have personally inspected the interior and exterior areas of the subject property . . . ." Within item 8 to the appraisers certification, it went on to say that there was a personal inspection of " . . . the exterior of all properties listed as comparables in the appraisal report " Respondent in this case did not inspect the interior of the Property as part of the appraisal, by contrast to an awareness of the exterior. Respondent Catchpole, DOAH Case No. 06-3389PL, served as the supervisory appraiser and as such did not inspect the Property in any respect. Respondent Fred R. Catchpole, DOAH Case No. 06-3389PL, reviewed comparable property data in relation to the sales comparison analysis but was not involved in the selection process in choosing comparable sales. The form used in preparing the Report is referred to variously as Freddie Mac Form 70 6/93 and Fannie Mae Form 1004 6/93. In the Report in the section involving subject matter, Fred and Juanita Hicks were listed as borrowers and the current owner of the Property. The property rights being appraised were under the heading "fee simple." There was a reference to a lender/client as Home Star Mortgage Lending. The results of the Report did not lead to any direct harm to a consumer, in particular, the listed borrowers, Fred and Juanita Hicks.
Recommendation Upon consideration of the facts found and the conclusions of law reached, it is RECOMMENDED: That a final order be entered dismissing the Administrative Complaint against Respondent. DONE AND ENTERED this 30th day of May, 2007, in Tallahassee, Leon County, Florida. S CHARLES C. ADAMS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings This 30th day of May, 2007.
