A penney for your appraisal

For today's discussion I will be drawing information from the Uniform Standards of Professional Appraisal Practice, which is located on the appraisal foundation's web page. Now, there a few things you need to know when a firm is contracted to perform a reservation-wide appraisal to determine leasing stipulations.

Appraisals for Tribes/reservations are located under the Office of Special Trustee, office of appraisal services.


Now, you should also know that when an reservation-wide appraisal is performed, that office is also the "Client," not the actual tribe where the reservation-wide appraisal is done. So any requests for information must be done through the Office of Special Trustee's office of appraisal services. Ahhh, therein lies the ugliness of the process.

I looked at a reservation wide appraisal, and at first I was surprised at the fact that they sampled 15 different farming operations for determining fair value for leases. Unfortunately, the appraisal firm forgot to tell everybody that they were only talking to 6 farmers in all actuality. This meant that when questioned for fair market value, each farmer would get two votes for their 1/4, 3/4 crop share lease plan. 3 farmers would get three votes to cast for leases more favorable for them. That is an important omission of fact in my book. Now maybe it is not an "error of omission" as the USPAP would see it, but it is an omission never-the-less.

Now before you assume that I am being harsh, you should also know that I called the appraisal firm up to ask where they got their information to back up their recommendation that the leases should be 1/4, 3/4. Currently leases on the reservation usually go for 1/3, 2/3. Instead of calling me back, they called the office of appraisal services, because they are the client of the appraisal firm, not the tribe. We never did get an answer on this subject. I recommend to all land owners that if they want 1/3, 2/3 crop share then that is what they should ask for and if the farmers give their usual excuse that times are hard and they can't afford to pay 1/3, 2/3, then be fair and ask the farmer to open his books up to show that. Prove that 1/3, 2/3 is too much. So far, no farmers have opened their books. And neither did the appraisal firm that performed the appraisal. They can make recommendations to the Office of Special Trustee which they will use to tell BIA how much leases should go for, but they can't tell the tribe how they got that conclusion. That is hardly in the true essence of "employing those recognized methods and techniques that are necessary to produce a credible appraisal;" That would be standard 1-1 a for those of you following in the good book of USPAP. Credible means offering reasonable grounds for being believed according to a dictionary definition. I would like to believe the appraisal firm, but just show me one time how you came to your conclusion when you never interviewed any objective source.

Another strange thing is that Idaho is a non-disclosure state. So how did the appraisal firm come to their conclusion? If they used available information to come to their conclusion, lets all take a look at it. Because if not, then it could fall under the color of a secret hand shake. Now listen to that carefully. It's not that all appraisal firms work in collusion with farmers to screw the tribes. It just looks that way for now. It is that their process cannot be independently substantiated by the tribes who will later be regulated by their decision. It is that their process, especially in my case, will be advantageous to the local farmers, and not to the tribal Land Owners.

You see they can't have it both ways. The appraisal firms use farmer-fed-suggestions to arrive at a new leasing recommendation that the tribes must comply with, but they don't give the tribes any due process to refute these alleged facts, to have the real facts disclosed by farmers (open them books up!), to negotiate fair leases. I am not a fan of non-disclosure rules and apparently neither are a fair share of other people whose states are a changin' their ways.

A good read for realtors, appraisers, people interested in knowing how hard your realtor will work for you, and tribes would be Freakanomics. It is especially enlightening to the effects that knowing the secret price has on the sale of your property.

Now, what is the fix? How do we make this objective? Can everybody be happy? I don't know about happy. But then that should concern people. Why is it many farmers are so happy and so many tribal members are very unhappy with their leases? (or in many cases oblivious to the whole process)

The fix, is to have farmers back up their claims with an opening of their accounting books. Let's see where their money is really going. If it was so un-profitable, why do they keep coming back? We won't change the non-disclosure any time soon. So make them open their books. Not much else is going to change either so let's put the tribes on the contract as a co-client. Office of Special trustee should give tribes due process.

Ah, now you're thinking that tribes should just ask for this now anyways. Interesting, so that works in all situations except where BIA offices handle the leasing provisions for the tribes.

My friend Ron in the CFEDs program needed to hear that the tribes will not necessarily know things similar to this are happening, just like they don't know about the CFEDS appraiser selection process, and even if they are handling their own leasing office, they won't know in all situations that they should have some recourse. They won't understand how the process works enough to stand up and ask for their rights to be restored. The tribes have a right to be objectively, and culturally regulated and have leases negotiated by the BIA, with OST that defer to the landowners' determination that the lease is in their best interest, to the maximum extent possible.

Go forth and do not concquer, simply cooperate, and if you don't get cooperation, stand your line until they come to the line prepared to offer everything contained in the term fiduciary responsiblity.