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Old 11-27-2003, 11:57 AM
Karl Karl is offline
Join Date: Jan 2002
Location: Arizona City AZ
State: Arizona
Professional Status: Licensed Appraiser
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Y is it that the Purchase price MUST be known & Stated on the URAR , & IN the event that the Sales Price Chances U MUST (By underwriters request) change it. (I put in addendum about the change & has no affect on this Appraisers opinion of value as originally stated in this report). BUT if a request comes for a REFI with the Owner & or LO's Estimate of Value SOME APPRAISERS come UNGLUED!.? What is the DIFFERENCE?? ( AS long as it is stated that the Estimated Value that was supplied in the request for this Appraisal had no bearing or influence on This Appraiser's opinion of value. or something to this affect.
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Old 11-27-2003, 12:19 PM
Mike Garrett, RAA's Avatar
Mike Garrett, RAA Mike Garrett, RAA is offline
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Location: Colorado Springs, CO
State: Colorado
Professional Status: Certified Residential Appraiser
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I understand your confusion. Per USPAP, the appraiser MUST consider any sales contract or listing on the subject property. That does not hold true to a refinance. Most appraisers assume that if a "proposed refinance amount" is listed on the appraisal assignment (order) it constitutes an agreement to appraise to a pre-determined value. This is a grey USPAP.

Language like...."Needed Value" or "If you cannot reach this value, stop and call the lender" is an unacceptable clause in the assignment; however, technically since the appraiser does not sign the order form as he/she would do in an engagement letter...can one say "I agreed to those terms"? I think not. I just cross it off and initial the order and proceed full steam ahead.
A Former AQB Certified USPAP Instructor
Old 11-27-2003, 12:26 PM
Restrain Restrain is offline
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Location: Port Charlotte, FL
State: Florida
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If you have a contract, it is assumed that the home was placed on the market under typical marketing conditions, etc... even though we know that this is not always the case. But what it does do is make us at least check the contract. It might be mother to son, etc. where it's not an arm's length sale, or an internet sale where someone is moving from a high-priced area to a lower-priced area and as such the buyer is not informed. This is why we look at the contract and put the price in.

As to the "Requested" value, or "Borrower's estimate of value", this is generally an amount by which the optimum loan terms can be obtained. It may include an equity line of credit, an 80% or less loan amount, whatever. I do perk up when I am informed that they had an appraisal 9 months ago at $XXXXXX. That means that I'm going to ask for a copy when I go by. If I'm going to disagree, I'd better have my ducks in a row so forewarned is forearmed.

Old 11-27-2003, 12:30 PM
Peacemaker Peacemaker is offline
Join Date: Oct 2003
Location: Phoenix/rearranging deck chairs on the Titanic
State: Arizona
Professional Status: Licensed Appraiser
Posts: 519

Well I think there is a difference. In a sale, you're getting at least an additional indicator of what that house would sell for in that current market. Given a typical sale, you have a buyer who presumably has looked around in the area and feels the price is right. Now I know there are a lot of uneducated, or out of state buyers etc so this of course is why they hire us. In a sale you also have someone who is willing to plunk down some of their own money (usually) and take on a mortgage in this amount.

With a refi there's a big difference in the motivation for the loan.
The outrageous cases people scream about are usually when
the loan is for buyers trying to climb out from under a mountain of debt. They need the house to appraise higher because they can't make their VISA payments anymore but if they roll the debt into a 30 year amortization it becomes manageable (until they keep shopping.) Not in every case, but usually true in the cases of "estimated values" 10-15 grand higher than the market. Where did they get that number? Ask the LO they'll tell you that's the number they need to make their loan because they're paying off debt yadayadayada. Or due to high debt they need a better LTV ratio etc.

Sure I've seen plenty of sales priced too high, greedy or dumb*ss realtors are to blame for that. Somehow I always get a phone call from a very nervous realtor on those, "Do you see a problem?"

So while I am skeptical of estimated values in both cases, the refi's make me way more skeptical.
Old 11-27-2003, 12:38 PM
Ryan Nyberg's Avatar
Ryan Nyberg Ryan Nyberg is offline
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State: Washington
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Mike has pretty much summed it up for you.

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:
(a) analyze all agreements of sale, options, or listings of the subject property current as of the effective date of the appraisal; and
(B) analyze all sales of the subject property that occurred within the three (3) years prior to the effective date of the appraisal.
From the ethics rule.

An appraiser must not accept an assignment that includes the reporting of predetermined opinions and conclusions.
As Mike stated when on the order form verbage comes across of stop if the value opinion provided can not be reached. This is a violation of USPAP. There is a reason that the opinion of market value is one of the last things on the form reports. If as you stated an appraiser does not consider the opinion of value provided by the client then he/she has not violated USPAP.

Old 11-27-2003, 02:39 PM
Richard Carlsen's Avatar
Richard Carlsen Richard Carlsen is offline
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Location: Tip of the Mitt: Northern Michigan
State: Michigan
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I want to know the refinance amount as it helps me understand what the UW will be looking for and up against in selling the loan. If I can answer the questions before they arise, it saves all of us time.

Example: refi borrowing $80,000 on estimated $140,000 is less than 60% LTV and underwriting is not going to be as tough as $90,000 on a $100,000 with cash out at closing.
Now it's time to go fishing and ride the bike........
Old 11-27-2003, 05:03 PM
Pat Butler Pat Butler is offline
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State: Illinois
Professional Status: Certified Residential Appraiser
Posts: 4,011

On the other hand, the first step in the appraisal process is to 'consider the problem.' Your client is asking you if the property is possibly worth $xxx,000-- that's their description of the problem. That's a legitimate question from them so long as you don't agree that your services have been engaged upon promising that value or promising to cancel the order if the value isn't there.

Interestingly, even if the client says, "stop if the value isn't there" you can just stop at that point where you have properly developed the appraisal according to USPAP, THEN give them a call. You haven't cancelled anything at that point- you've just called them when the order is done and told them, "Yep, it didn't make it."
Old 11-27-2003, 07:49 PM
Karl Karl is offline
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Location: Arizona City AZ
State: Arizona
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Again R.C. & M.G. (These guys are top of the line in my book) & I pretty much agree. Was wondering IF I was the only one that DOESN'T really mind if an "ESTIMATE OF VALUE" is on a request.
As long as I state something to the fact: That neither the LO's or Borrowers need or want of a estimate of value, stated on the order form for this Appraisal, has any impact as to this Appraisers final reconciled opinion of value. My main part of the question is still the need to change a URAR Purchase Price when it is changed just prior to a closing when it is still has no significants to the stated opinion of value from this Appraiser. I understand the NEED for us to have a copy of a Purchase & Sales, just not the need to change purchase price at the last minute. The price was what it was at time of report.
Old 11-27-2003, 08:35 PM
Don Clark's Avatar
Don Clark Don Clark is offline
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Location: Virginia Beach, Virginia
State: Virginia
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B) Sorry, I look at it another way. If I act on a request where there is a line that states that they need $XXXXX, or I am to call if the value is not there, etc. If I take any action to proceed with the request, other than to inform them that I will not and cannot do an appraisal under the terms and conditions expressed in the request, then I have agreed with those terms by my actions in proceeding to do what they have requested, which may be a violation of USPAP. This is called a unilateral contract. Such contracts are offered all the time in the business world. Putting in a disclaimer after the fact probably will not relieve you of having already taken action that infured your acceptance of this contract. To give a simple example, if a company like say McDonalds runs a contest and they have pictures of objects, say a car, and the offer through this contest, is that if anyone matches both ends of the car, they win the car or whatever is offered. On the other hand, when you have a unilateral offer to do an appraisal, and that offer contains provisions such as needing a certain amount, a certain time frame to do the work in, or to call if you can't hit the number, and you proceed with the request, you have accepted the terms of this unilateral offer, and it now becomes a contract through an offer and an acceptance.

I always cross out such language, send it back, and state that I will only honor the request if such language is removed.

AQB Certified USPAP Instructor,Member VaCAP,NCPAC, Expert Witness, Consultant/Peer Assistance
Old 11-27-2003, 09:47 PM
Terrel L. Shields's Avatar
Terrel L. Shields Terrel L. Shields is offline
Join Date: May 2002
Location: Springtown, AmeRica
State: Arkansas
Professional Status: Certified General Appraiser
Posts: 40,744

a "proposed refinance amount" is
I get may requests that state the mortgage amount requested. But sometimes these are triple the value of the property. In a rural setting, there may be a lot more than mere refinancing going on.

Farmers often buy cattle, sometimes $50,000 or more at a time. Lenders rarely are willing to carry more than 50% on cattle that have a really bad habit of disappearing. The real mortgage is to secure the balance. Ditto for vehicles.

The smart small farmer buys his pickup cash if he is deducting mileage and puts the mortgage on his house. He can deduct 100% of the house mortgage interest, but has to pro-rate the business / non-business mileage and can only deduct a percentage of the mortgage interest. That tactic works for us gentiles who work from our houses as well.

I just ignore the mortgage amount...rarely have a complaint from an in-house source.
"Bigamy is having one wife too many. Monogamy is much the same." Oscar Wilde
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