National media explores issue of appraisal report ownership

A new article by a nationally-syndicated real estate columnist is bringing the issue of data stripping and ownership of appraisal reports to the fore.

Kenneth Harney's article, which appeared in such newspapers as the Washington Post (under the headline, "Traditional Appraisers in High-Tech Battle"), San Jose Mercury News, Chicago Tribune, Boston Herald and Arizona Daily Star, turns on a dispute our customers and readers are familiar with. What parts of an appraisal report are "facts" in the public domain and what parts owe themselves to the effort, judgment and analysis of a professional appraiser?

You can view Harney's article on the Washington Post website by clicking here.
He writes:

[Appraisers] claim that their appraisal reports are being systematically looted of key information without compensation or permission.

Appraisers say that one of the dominant electronic real property data companies, FNC of Oxford, Miss., is "extracting" proprietary data compiled by appraisers and reselling it to lenders and others who may load it into AVMs. To add insult to injury, appraisers say, they pay FNC $5 per report when they send valuations to lenders in electronic form using FNC's online platform, AppraisalPort.com.

"We are paying them and they are stripping out our work product without paying us a dime," said Patrick Turner, a Richmond appraiser.

Angela Atkins, a spokeswoman for FNC, said the firm is within its legal rights and extracts only property-description data from appraisal reports, not proprietary narrative analyses or value estimates.

Our readers will recall that this has come up recently – click here for our recent coverage of FNC's attempts to justify stripping reports of copyrightable material without permission.

Harney's article was a balanced, fair treatment of the issue of report ownership. But, we were more impressed with what a fine example the article is of the significant effect that can be had using a "grass roots" approach to issues such as copyrighting and data extraction.

When we began educating appraisers about copyright protection nearly two years ago, companies such as FNC dismissed it. Now you see lenders wondering if they have liability from using an AVM whose comps came from a report filed with a registered copyright, and you see and hear FNC being forced to respond in the media and to appraisers themselves, as they've done lately, attempting to convince them that you can't copyright a form report.

That's not stemming from a PR campaign or any other orchestrated process. It's a simple reflection of the fact that a hundred thousand appraisers know about it, talk about it, and contact the media themselves about it.

Companies like FNC can easily obtain the material they want legally if they simply license it from the appraisers with whom they do business. Some of those appraisers might do it for free, and others might require an additional fee. It's their business and their intellectual property and their choice.

FNC may have a hard time negotiating with appraisers on the issue, though, since they did such a good job of calling appraisers "buggy whip manufacturers" years ago, and heralding their coming demise. Appraisers have long memories.