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client wants me to review and consider their comps - USPAP VIOLATION?

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by joe lee, Jul 26, 2007.

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  1. joe lee

    joe lee Sophomore Member

    0
    Jul 18, 2006
    Professional Status:
    Licensed Appraiser
    State:
    Indiana
    Sent report to client and they sent back a note with additional comparable sales which would indicate a higher value. They want me to review each comp and state why each is not better than the ones I used in the original report. Not only is this an issult but I feel it boarders on the ethics provision of USPAP in that they are trying to influence the outcome of the valuation.

    what do you all think?


    thanks
     
  2. Greg davenport

    Greg davenport Member

    0
    Mar 30, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    Arkansas
    I think $50.00 each should cover the cost of your time. just add them to your workfile
     
  3. ccooper

    ccooper Junior Member

    0
    Mar 9, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Missouri
    Ditto the $50.

    I'll look at anything. I have actually found out about comps that I had no knowledge of (not in MLS) from borrowers and lenders. If its a better comp (very rarely), I'll use it. Most of the time, its some $1M home down the street when I'm appraising a singlewide subject.

    Look at the comps and go out to Red Lobster tonight on the $50.
     
  4. Christine Marie

    Christine Marie Senior Member

    0
    Jan 6, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Mississippi
    Joe,

    Going out on a limb here, so don't follow me, necessarily. First, how did they come to possess additional comparable sales, as in are you looking at page 2 of somebody else's URAR?

    Second, It is possible, that you are the second appraiser, if the above [page 2 of urar scenario is true].. And that the difference between your report and the other one exceeds their comfort level.

    Third, In my opinion, you can review the comps they supplied, and most likely, since you didn't use them to begin with, adequately support your position for not utilzing them as comparable sales from the onset.

    Lastly, don't be insulted, be flattered, looks to me like they are asking for your assistance, which may mean the value your opinion.

    Will wait for the limb to break and my cradle fall now....
     
  5. Derek Harkrider

    Derek Harkrider Sophomore Member

    0
    Aug 23, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Texas
    They are not requiring you to include them, but to review them. Assuming you have done your due diligence, then you can clearly show in a letter to them why these properties were excluded as comparables (too far away, dissimilar condition or level of amenties, etc...). They may have a reviewer that is not as familiar with the area as you are, and who may feel a different value is indicated by their research. This is a chance to show the client your knowledge and expertise. Review the comps, write the letter explaining your decisions, and do not take it personally. This is something that comes up periodically. It is a business decision as to whether you should charge for it or not. A word of caution, I have dealt with this situation several times and have always been able to support my opinion of value. However, one time I was sent a comp to consider on a complex assignment. I had performed multiple types searches through MLS and tax records and never came across this comp. It was on the same street and much more similar to the subject than any other comp I had found. As it turned out, the realtor had mispelled the street name and placed it in the wrong map grid, so it never pulled up in my searches. After looking at it, I agreed that it was a better indicator of value than the comps I had used and took the necessary actions. At no point was I told I had to use it, just was asked to consider it. While we all try to be professional and thorough, it is important to remember that even appraisers are not perfect and it is possible, however unlikely, that the client may have a point. If I had acted insulted, I may have lost a client. Especially a good one who has never tried to pressure a value from me. Instead, I showed them my willingness to consider their information and kept a client which has resulted in many orders over the years.
     
  6. George Hatch

    George Hatch Elite Member

    48
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    There's always more data, but not all data is relevant.

    Your definition of value is "most probable price", not "highest plausible price". Your key phrase for comps is "most proximate and similar". You don't really need to go into chapter and verse on each variation. It's not like your client is going to read any of it anyway.

    "The sale on Elm Street isn't as proximate (or similar) to my subject on Oak Street as any of the 3 (or 5 or 6) sales I originally presented in my report. Note the distance."

    Of course, you would only say that if it was true.
     
  7. leelansford

    leelansford Elite Member

    28
    Mar 29, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    Well, the client may be trying to influence the outcome or the client has been provided with additional data and the client has a question, or concern, about your appraisal. Every request for further consideration of data does not require the appraiser to violate the Ethics Rule of the USPAP.

    For most every client of mine, I would accept and consider the new data.

    I would communicate (in writing) to the client that there are THREE POSSIBLE outcomes of my consideration of the data provided to me:
    1st: No change in the opinon of value.
    2nd: An increase in the opinion of value.
    3rd. A reduction in the opinion of value.
     
  8. David Wimpelberg

    David Wimpelberg Moderator Staff Member Moderator

    29
    Mar 30, 2005
    Professional Status:
    Certified General Appraiser
    State:
    New York
    I would first inquire as to what is wrong with the sales I used in my valuation, and as to what the purpose of the "new sales" are.

    If I made a mistake, I would correct it free of charge. If it's a value hunt they are on and wasting my time, I would charge for my time.
     
  9. Wally Jones

    Wally Jones Senior Member

    0
    Jan 23, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    As others stated, respond professionally and thank them for their suggestions. If they have better comps, use them. If not, don't and explain why they're not better.

    I'm going through this exact scenario now, except the underwriter has stated they consider the appraisal unacceptable unless I use comparables closer (geographically) to the subject and arrive at a lower opinion of value (that's a switch!).

    So far, they haven't offered anything more suitable or any rationale for changing my opinion.

    Try not to take offense. Sometimes, they aren't trying to be cranky but it's easy for us to misinterpret feelings in written communications.

    Hang in there!
     
  10. Ed Falkowski

    Ed Falkowski Senior Member

    2
    Jun 25, 2007
    Professional Status:
    Certified General Appraiser
    State:
    Pennsylvania
    Wally, I had that happen to me once where the U/W asked me to lower my opinion of value. At first, I thought to myself: "Wow! That's cool... I have no problem doing that!". Then, after a few minutes of thinking about it, I decided against it. The value that I gave put the borrowers at 70% LTV but the lender's value would have made it 75%. Why could they have wanted this? Maybe to charge the borrowers more points for the higher LTV? Maybe to raise the interest rate (and thus enabling them to earn more on a back-end deal when they sell the loan)? No thanks. There's a reason that they hired me (to give an opinion of value) and I was not about to let them change that opinion - especially where it was possible for them to benefit financially from it. The only reason that I EVER change my opinion is if better comparables were found and presented to me... and not once have better comps been presented to me which were found on the MLS. They have always been private sales where you would have needed superior local knowledge (i.e. you would have needed to live on that street) to know about them.

    Sorry for the rant... just taking out my frustrations due to another stupid U/W request that I just received... :new_snipersmilie:
     
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