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Lender Guidelines

Discussion in 'General Appraisal Discussion' started by Tom Barclay, Jul 29, 2005.

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  1. Tom Barclay

    Tom Barclay Senior Member

    0
    Apr 7, 2002
    Professional Status:
    Retired Appraiser
    State:
    Oregon
    Have a request from a well known; and sufficiently trashed(at least on this forum) lender for what appears to be a pre-foreclosure drive by on a manufactured home on a city lot. I quit doing work for them a few years back due to lender pressure for values, condition, etc. Now they apparently want to know the real value of the subject property; or do they? In their "Mandatory Appraisal Requirements", or supplemental guidelines, they require me to use only non-REO sales as comps, and absolutely no distressed cash sales. History of the subject property is that it sold in April of last year as an "as-is" Repo, 5 yr. old man. home, average quality, water damage, missing appliances, doorknobs, etc.; and an illegal encroachment of the fencing on to city owned property.
    Anybody else receiving these kinds of requests, to limit your comparables to what your client has been told, apparently by Skippy, of what the market is? This property could be worth 30% less or more depending on the comps used. 60% spread is more than a little bit of liability IMHO. It appears to me that in a round about way they are trying to get me to rubber stamp some previous appraisal value for their books.
    Am I just being paranoid? I already know that just because you're paraniod that does not mean that nobody is out to get you. Just having a little trouble with the lender pre selecting what comps I may feel are appropriate after inspecting the subject, and what to add in my CYA addendum. Any thoughts?
    After posting, I received this request from a regular client(AMC) who agrees to my fees and turn times. Didn't know who the lender was until I accepted the assignment.
     
  2. Mountain Man

    Mountain Man Elite Member

    12
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Georgia
    I've turned those jobs down before, and will continue to. Unless it's a red hot market, your only buyer is an investor who will pay cash... at a discount.
     
  3. Ross (CO)

    Ross (CO) Senior Member

    0
    Jan 17, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    One might not gloat about their agreement with your fee and turn-time. I'm sure that is a VERY small trade-off for them, and giving you that certain good-vibe with which to feel a sense of victory, and all the while expecting that you WILL comply with their "mandatory" requirements. I guess that is what they mean by engagement process and the acceptance of (most) an assignment.

    From all you already know about the property, and the stench that eminates from their mandatory requirements to cook your report according to their recipe, I'd give the weekend its time for reconsideration about just how badly one needs.....ONE......fee, with the potential for hassle that could surely follow.

    There is honor in rejecting certain assignments, but your approach might be slightly reconfigured. You could phone them Monday morning and clearly announce the recipe (your scope or work and data/comp selection process, should you decide to proceed) that you feel should be followed. Now the decision is again their's to re-consider. The fee and turn-time have already been established. If they balk, then humbly suggest that they re-assign this to someone else, and thank them for contacting you. I have a few enjoyable moments before when I have been able to add......that I'm turning down this assignment because I simply know too much about this property, and it would not be a good idea for me to get involved with it here. Take care, bye.

    I know my methods are not p.c., but no single fee is worth assignment conditions like they have proposed. Earlier this week I tuned back an order for a drive-by report on a property that would easily top $1M ! Paranoid ? No, not really. Just recognizing the great imbalance between fee and assignment conditions. I didn't even want to pursue proposing an upgrade to an interior observation. I was not asked about why I was turning it back (I had a list of about 5 key points), they simply had a quick and nonchalant reply about....giving it to someone else. Oh well.

    This sort of scenario is just one skirmish in the war we wage on (lender) "pressure" as that p-word has been posted about several times in recent days. It's a jungle out there. Imagine the cartoon picture you have seen before with the transcontinental explorer with his khaki shirt and pith helmet on, a glum look on his face, sitting in a big iron cook kettle, and a raging fire beneath it. Avoid the kettle.
     
  4. Farm Gal

    Farm Gal Elite Member

    0
    Jan 14, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Nebraska
    Some appraisers take the assignment, use three sales which meet the cleint requirements, adjust as appropriate, and then also use three additional sales which are more realisitic to the subject actual market.

    Some charge an appropriate fee for the additional service in providing the "non-comparable" sales...

    Scope and disclosure both before and after acceptance of the assignment are neccesary.
     
  5. Tom Barclay

    Tom Barclay Senior Member

    0
    Apr 7, 2002
    Professional Status:
    Retired Appraiser
    State:
    Oregon
    Ross,
    Thanks for the input, but was certainly not gloating about the fee and turn time. Just explaining that I do sometimes accept work from AMC's, on my own terms. Avoiding the eventual slings and arrows. I have regularly turned down requests from other AMC's anytime this lender is mentioned prior to accepting the assignment, didn't care less about the fee or turn times.
    But as an aside, I do have sales that would show that the value is roughly 70-80% of what it sold for, and was financed for last year, even using their guidelines. Of course, I am not being pressured for value, just attempting to limit my comparable selection.
     
  6. DB

    DB Elite Member

    0
    Apr 29, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Tennessee
    I just finished one of these types ... and I did exactly what Lee Ann suggested .... Sales #1-#3 were used for the hypothetical condition "As Repaired" ... Sale #4-#6 were used for subject "As Is" ... Lender wanted this REO completed "Subject to repairs" but wanted the value on the URAR "As If Repaired" ..... so I did it the way they wanted, but I claimed, disclaimed, explained, over explained, reiterated, and then reiterated again ..... no way was I going to let their guidelines paint me into a corner .... They didn't like some of the verbiage I used, but they had to live with it .... ;)
     
  7. Karl

    Karl Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Arizona
    Send them this: The purpose of the Uniform Standards of the Uniform Standards of Professional Appraisal Practice (USPAP) is to promote and maintain a high level of public trust in appraisal practice by establishing requirements for appraisers. essential that appraisers develop and comunicate thier analyses, opinions, and conclusions to intended users of THIER services that is meaningful and NOT misleading.


    Ladies & Gentlemen where in that preamble does it say you must kiss the @$$ of your client? I read WE the Appraiser give service NOT THEM WE! where does it say .anything about the CLIENT will come to your defense IF you do what they say & it become apparent that YOU gave MISLEADING report???
    GUYS look down see if you have any b@!!$ left ladies do whatever it is you do & bring some professionalism back to the profession>

    TRUST it may pay off SOON>
     
  8. Richard Carlsen

    Richard Carlsen Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Michigan
    Before I did any appraisals using bank-owned or foreclosed properties as comps, I'd reread the definition of market value that is contained in my report. It is what you are using as the benchmark and qualifier as to the applicability of a sale to be used as a comparable.

    There is no way that a bank which has foreclosed on a property can be considered a typically motivated seller. They are not even knowledgeable, never having spent one night in the house.

    Certainly the presence of significant numbers of foreclosed properties will bring the average property sale down. However, you have to use real transactions where the buyer and the seller meet the criteria contained in the definition of market value.

    You certainly do not ignore the foreclosed REO properties but consider them in your exposure time, where you form your opinion of value within the indicated value range etc.

    Unless the client gives you a new definition of market value, you are stuck with the one we have. And bank sellers do not fit the definition contained therein.
     
  9. Otis Key

    Otis Key Elite Member

    0
    May 15, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    Okay.......Lee Ann, Doug & Richard beat me to the punch line. :rolleyes: :rolleyes: :rolleyes:

    Seriously, you can accept it and do as they stated. It's a supplemental requirement and you can do that, but, like these three said, don't ignore the REO's and the way in which the market views those properties when they are put up for sale. I'm finishing one right now and I'm using, as required, the regular market sale but I'm also adjusting for a "dramatic" amount of "prospective purchaser" perceived and observed repairs and detrimential influences. REO & foreclosure appraising does take some work and experience. Like Doug and others, I like it because there's no pressure to inflate, increase, stretch, ignore, and etc., the facts and the opinion of market value.

    Use the sales like they demand. Disclose it in the scope of work and then also supplement, if you need, with REO sales. I'm also sure that they want the REO addendum with listings on there as well. If you read the instructions, I would bet that there's nothing there that does not state that you cannot use REO listings (hint, hint, hint) to show what the market is like for the "as is". I will typically include at least one REO listing, if appropriate, if not more.
     
  10. Don Clark

    Don Clark Elite Member

    3
    Jan 17, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Virginia
    B) I agree with Richard. If the definition is market value, using distressed sales, foreclosures, and other bak owned properties will not provide that definition. I am assuming that you have the ability to make adjustments for condition? Then the value you will opine will be market value minus actual condition.
     
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